Intrinsic value of SMTC Corporation - SMTX

Previous Close

$3.83

  Intrinsic Value

$99.02

stock screener

  Rating & Target

str. buy

+999%

Previous close

$3.83

 
Intrinsic value

$99.02

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of SMTX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  56.00
  50.90
  46.31
  42.18
  38.46
  35.11
  32.10
  29.39
  26.95
  24.76
  22.78
  21.00
  19.40
  17.96
  16.67
  15.50
  14.45
  13.51
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.30
  7.97
  7.67
  7.40
Revenue, $m
  217
  327
  479
  681
  942
  1,273
  1,682
  2,177
  2,763
  3,448
  4,233
  5,122
  6,116
  7,215
  8,417
  9,722
  11,127
  12,629
  14,228
  15,919
  17,702
  19,575
  21,537
  23,587
  25,726
  27,954
  30,273
  32,685
  35,191
  37,796
Variable operating expenses, $m
  161
  242
  355
  504
  698
  944
  1,247
  1,613
  2,048
  2,555
  3,137
  3,795
  4,532
  5,346
  6,237
  7,204
  8,245
  9,358
  10,543
  11,796
  13,117
  14,505
  15,959
  17,478
  19,063
  20,714
  22,433
  24,219
  26,077
  28,007
Fixed operating expenses, $m
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  60
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  83
Total operating expenses, $m
  205
  287
  401
  551
  746
  993
  1,297
  1,664
  2,100
  2,608
  3,192
  3,851
  4,589
  5,404
  6,297
  7,265
  8,307
  9,422
  10,608
  11,862
  13,185
  14,574
  16,030
  17,550
  19,137
  20,790
  22,510
  24,298
  26,158
  28,090
Operating income, $m
  12
  40
  78
  129
  196
  281
  386
  513
  663
  839
  1,042
  1,271
  1,527
  1,810
  2,120
  2,457
  2,820
  3,207
  3,620
  4,057
  4,517
  5,001
  5,507
  6,037
  6,589
  7,164
  7,763
  8,386
  9,034
  9,707
EBITDA, $m
  16
  46
  87
  141
  213
  303
  416
  551
  713
  901
  1,117
  1,362
  1,636
  1,939
  2,270
  2,630
  3,018
  3,432
  3,873
  4,340
  4,832
  5,349
  5,891
  6,456
  7,047
  7,662
  8,302
  8,968
  9,660
  10,379
Interest expense (income), $m
  1
  1
  3
  5
  8
  12
  17
  23
  32
  41
  53
  66
  82
  99
  119
  141
  164
  190
  218
  248
  279
  312
  348
  385
  423
  464
  506
  550
  596
  643
  693
Earnings before tax, $m
  11
  37
  73
  122
  184
  264
  362
  481
  622
  787
  975
  1,189
  1,428
  1,691
  1,980
  2,293
  2,629
  2,990
  3,372
  3,778
  4,205
  4,653
  5,123
  5,613
  6,125
  6,659
  7,214
  7,791
  8,391
  9,014
Tax expense, $m
  3
  10
  20
  33
  50
  71
  98
  130
  168
  212
  263
  321
  385
  457
  535
  619
  710
  807
  911
  1,020
  1,135
  1,256
  1,383
  1,516
  1,654
  1,798
  1,948
  2,103
  2,265
  2,434
Net income, $m
  8
  27
  53
  89
  135
  193
  264
  351
  454
  574
  712
  868
  1,042
  1,235
  1,445
  1,674
  1,919
  2,182
  2,462
  2,758
  3,069
  3,397
  3,740
  4,098
  4,471
  4,861
  5,266
  5,687
  6,125
  6,580

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  109
  164
  241
  342
  474
  640
  845
  1,094
  1,389
  1,732
  2,127
  2,574
  3,073
  3,625
  4,230
  4,885
  5,591
  6,346
  7,150
  8,000
  8,896
  9,837
  10,823
  11,853
  12,928
  14,047
  15,213
  16,425
  17,684
  18,993
Adjusted assets (=assets-cash), $m
  109
  164
  241
  342
  474
  640
  845
  1,094
  1,389
  1,732
  2,127
  2,574
  3,073
  3,625
  4,230
  4,885
  5,591
  6,346
  7,150
  8,000
  8,896
  9,837
  10,823
  11,853
  12,928
  14,047
  15,213
  16,425
  17,684
  18,993
Revenue / Adjusted assets
  1.991
  1.994
  1.988
  1.991
  1.987
  1.989
  1.991
  1.990
  1.989
  1.991
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
  1.990
Average production assets, $m
  19
  29
  43
  61
  84
  113
  150
  194
  246
  307
  377
  456
  544
  642
  749
  865
  990
  1,124
  1,266
  1,417
  1,575
  1,742
  1,917
  2,099
  2,290
  2,488
  2,694
  2,909
  3,132
  3,364
Working capital, $m
  36
  55
  80
  114
  158
  214
  283
  366
  464
  579
  711
  861
  1,027
  1,212
  1,414
  1,633
  1,869
  2,122
  2,390
  2,674
  2,974
  3,289
  3,618
  3,963
  4,322
  4,696
  5,086
  5,491
  5,912
  6,350
Total debt, $m
  49
  89
  145
  218
  314
  435
  584
  765
  979
  1,229
  1,516
  1,841
  2,204
  2,605
  3,045
  3,521
  4,035
  4,584
  5,167
  5,785
  6,437
  7,121
  7,838
  8,587
  9,368
  10,182
  11,029
  11,910
  12,826
  13,778
Total liabilities, $m
  79
  120
  175
  249
  344
  465
  615
  795
  1,010
  1,259
  1,546
  1,871
  2,234
  2,636
  3,075
  3,552
  4,065
  4,614
  5,198
  5,816
  6,467
  7,151
  7,868
  8,617
  9,398
  10,213
  11,060
  11,941
  12,856
  13,808
Total equity, $m
  30
  45
  66
  93
  129
  175
  231
  299
  379
  473
  581
  703
  839
  990
  1,155
  1,334
  1,526
  1,733
  1,952
  2,184
  2,428
  2,685
  2,955
  3,236
  3,529
  3,835
  4,153
  4,484
  4,828
  5,185
Total liabilities and equity, $m
  109
  165
  241
  342
  473
  640
  846
  1,094
  1,389
  1,732
  2,127
  2,574
  3,073
  3,626
  4,230
  4,886
  5,591
  6,347
  7,150
  8,000
  8,895
  9,836
  10,823
  11,853
  12,927
  14,048
  15,213
  16,425
  17,684
  18,993
Debt-to-equity ratio
  1.640
  1.990
  2.200
  2.340
  2.430
  2.490
  2.530
  2.560
  2.580
  2.600
  2.610
  2.620
  2.630
  2.630
  2.640
  2.640
  2.640
  2.650
  2.650
  2.650
  2.650
  2.650
  2.650
  2.650
  2.650
  2.660
  2.660
  2.660
  2.660
  2.660
Adjusted equity ratio
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  27
  53
  89
  135
  193
  264
  351
  454
  574
  712
  868
  1,042
  1,235
  1,445
  1,674
  1,919
  2,182
  2,462
  2,758
  3,069
  3,397
  3,740
  4,098
  4,471
  4,861
  5,266
  5,687
  6,125
  6,580
Depreciation, amort., depletion, $m
  4
  6
  9
  12
  17
  23
  30
  39
  49
  61
  75
  91
  109
  128
  150
  173
  198
  225
  253
  283
  315
  348
  383
  420
  458
  498
  539
  582
  626
  673
Funds from operations, $m
  12
  33
  62
  101
  151
  215
  294
  390
  503
  636
  787
  959
  1,151
  1,363
  1,595
  1,847
  2,118
  2,407
  2,715
  3,041
  3,384
  3,745
  4,123
  4,518
  4,929
  5,358
  5,805
  6,269
  6,752
  7,253
Change in working capital, $m
  13
  19
  25
  34
  44
  56
  69
  83
  99
  115
  132
  149
  167
  185
  202
  219
  236
  252
  269
  284
  300
  315
  330
  344
  359
  374
  390
  405
  421
  438
Cash from operations, $m
  -1
  14
  37
  67
  107
  160
  226
  307
  405
  521
  655
  810
  984
  1,178
  1,393
  1,627
  1,882
  2,155
  2,447
  2,757
  3,085
  3,430
  3,793
  4,173
  4,570
  4,984
  5,415
  5,864
  6,330
  6,815
Maintenance CAPEX, $m
  -2
  -4
  -6
  -9
  -12
  -17
  -23
  -30
  -39
  -49
  -61
  -75
  -91
  -109
  -128
  -150
  -173
  -198
  -225
  -253
  -283
  -315
  -348
  -383
  -420
  -458
  -498
  -539
  -582
  -626
New CAPEX, $m
  -7
  -10
  -13
  -18
  -23
  -29
  -36
  -44
  -52
  -61
  -70
  -79
  -88
  -98
  -107
  -116
  -125
  -134
  -142
  -151
  -159
  -167
  -175
  -182
  -190
  -198
  -206
  -215
  -223
  -232
Cash from investing activities, $m
  -9
  -14
  -19
  -27
  -35
  -46
  -59
  -74
  -91
  -110
  -131
  -154
  -179
  -207
  -235
  -266
  -298
  -332
  -367
  -404
  -442
  -482
  -523
  -565
  -610
  -656
  -704
  -754
  -805
  -858
Free cash flow, $m
  -11
  1
  17
  40
  72
  113
  167
  233
  314
  411
  524
  655
  804
  972
  1,158
  1,362
  1,583
  1,823
  2,080
  2,353
  2,643
  2,949
  3,270
  3,607
  3,960
  4,328
  4,711
  5,110
  5,526
  5,957
Issuance/(repayment) of debt, $m
  28
  40
  55
  74
  96
  121
  149
  181
  214
  250
  287
  325
  363
  401
  439
  477
  513
  549
  584
  618
  651
  684
  717
  749
  781
  814
  847
  881
  916
  952
Issuance/(repurchase) of shares, $m
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  31
  40
  55
  74
  96
  121
  149
  181
  214
  250
  287
  325
  363
  401
  439
  477
  513
  549
  584
  618
  651
  684
  717
  749
  781
  814
  847
  881
  916
  952
Total cash flow (excl. dividends), $m
  20
  41
  73
  114
  168
  234
  316
  414
  528
  660
  811
  980
  1,167
  1,373
  1,597
  1,838
  2,097
  2,372
  2,663
  2,971
  3,294
  3,633
  3,987
  4,356
  4,741
  5,142
  5,558
  5,991
  6,441
  6,909
Retained Cash Flow (-), $m
  -11
  -15
  -21
  -28
  -36
  -45
  -56
  -68
  -80
  -94
  -108
  -122
  -136
  -151
  -165
  -179
  -193
  -206
  -219
  -232
  -245
  -257
  -269
  -281
  -293
  -306
  -318
  -331
  -344
  -357
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  10
  26
  52
  87
  132
  189
  260
  346
  448
  567
  703
  858
  1,031
  1,222
  1,432
  1,659
  1,904
  2,166
  2,444
  2,739
  3,050
  3,376
  3,718
  4,075
  4,448
  4,836
  5,240
  5,661
  6,097
  6,551
Discount rate, %
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
  9
  22
  40
  60
  81
  103
  124
  143
  158
  169
  174
  174
  169
  160
  146
  130
  112
  94
  77
  61
  47
  35
  25
  18
  12
  8
  5
  3
  2
  1
Current shareholders' claim on cash, %
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2

SMTC Corporation (SMTC) is a provider of electronics manufacturing services (EMS). The Company's manufacturing services include product design and sustaining engineering services, printed circuit board assembly (PCBA), production, enclosure fabrication, systems integration and testing services, configuration to order, build to order and direct order fulfillment. Its geographic segments include the United States, Mexico and China. SMTC offers integrated contract manufacturing services to global original equipment manufacturers and technology companies primarily within the industrial, networking and computing, communications and medical market sectors. SMTC offers over three vertically integrated manufacturing streams, such as enclosures and precision metal fabrication products, PCBA products and larger-scale systems. For each of these streams, SMTC provides a range of manufacturing services, from assembly, test to system level test and end customer order fulfillment.

FINANCIAL RATIOS  of  SMTC Corporation (SMTX)

Valuation Ratios
P/E Ratio 0
Price to Sales 0.4
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 9
Price to Free Cash Flow 12.6
Growth Rates
Sales Growth Rate -24%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.3%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 30.8%
Total Debt to Equity 50%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. -2.7%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. -4.8%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 8.9%
Gross Margin - 3 Yr. Avg. 8.5%
EBITDA Margin 3%
EBITDA Margin - 3 Yr. Avg. 2.2%
Operating Margin 0.6%
Oper. Margin - 3 Yr. Avg. 0.5%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. -0.1%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. -0.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SMTX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SMTX stock intrinsic value calculation we used $139 million for the last fiscal year's total revenue generated by SMTC Corporation. The default revenue input number comes from 0001 income statement of SMTC Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SMTX stock valuation model: a) initial revenue growth rate of 56% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.3%, whose default value for SMTX is calculated based on our internal credit rating of SMTC Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of SMTC Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SMTX stock the variable cost ratio is equal to 74.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $43 million in the base year in the intrinsic value calculation for SMTX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for SMTC Corporation.

Corporate tax rate of 27% is the nominal tax rate for SMTC Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SMTX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SMTX are equal to 8.9%.

Life of production assets of 3.4 years is the average useful life of capital assets used in SMTC Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SMTX is equal to 16.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $19.074 million for SMTC Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 23.189 million for SMTC Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of SMTC Corporation at the current share price and the inputted number of shares is $0.1 billion.

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