Intrinsic value of Universal Electronics Inc. - UEIC

Previous Close

$41.35

  Intrinsic Value

$11.56

stock screener

  Rating & Target

str. sell

-72%

Previous close

$41.35

 
Intrinsic value

$11.56

 
Up/down potential

-72%

 
Rating

str. sell

We calculate the intrinsic value of UEIC 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 0.6

 

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, %
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
Revenue, $m
  724
  754
  785
  819
  854
  892
  932
  974
  1,018
  1,065
  1,115
  1,167
  1,222
  1,280
  1,341
  1,406
  1,473
  1,544
  1,619
  1,698
  1,781
  1,868
  1,960
  2,056
  2,157
  2,263
  2,375
  2,492
  2,616
  2,745
Variable operating expenses, $m
  695
  723
  753
  785
  819
  855
  893
  933
  975
  1,020
  1,059
  1,108
  1,161
  1,216
  1,274
  1,335
  1,399
  1,467
  1,538
  1,613
  1,692
  1,774
  1,861
  1,953
  2,049
  2,150
  2,256
  2,367
  2,484
  2,607
Fixed operating expenses, $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 operating expenses, $m
  695
  723
  753
  785
  819
  855
  893
  933
  975
  1,020
  1,059
  1,108
  1,161
  1,216
  1,274
  1,335
  1,399
  1,467
  1,538
  1,613
  1,692
  1,774
  1,861
  1,953
  2,049
  2,150
  2,256
  2,367
  2,484
  2,607
Operating income, $m
  29
  30
  32
  33
  35
  37
  39
  41
  43
  46
  56
  59
  61
  64
  67
  71
  74
  78
  81
  85
  89
  94
  98
  103
  108
  114
  119
  125
  131
  138
EBITDA, $m
  62
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  101
  105
  110
  116
  121
  127
  133
  140
  146
  154
  161
  169
  177
  186
  195
  205
  215
  226
  237
Interest expense (income), $m
  1
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  40
  42
  45
  48
  51
  54
  57
  60
Earnings before tax, $m
  21
  22
  23
  23
  24
  25
  26
  27
  28
  29
  38
  40
  41
  42
  44
  45
  47
  49
  51
  52
  54
  56
  59
  61
  63
  66
  69
  71
  74
  78
Tax expense, $m
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
Net income, $m
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  28
  29
  30
  31
  32
  33
  34
  36
  37
  38
  40
  41
  43
  45
  46
  48
  50
  52
  54
  57

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
  633
  659
  686
  716
  747
  780
  814
  851
  890
  931
  975
  1,020
  1,068
  1,119
  1,172
  1,229
  1,288
  1,350
  1,415
  1,484
  1,557
  1,633
  1,713
  1,797
  1,885
  1,978
  2,076
  2,179
  2,286
  2,400
Adjusted assets (=assets-cash), $m
  633
  659
  686
  716
  747
  780
  814
  851
  890
  931
  975
  1,020
  1,068
  1,119
  1,172
  1,229
  1,288
  1,350
  1,415
  1,484
  1,557
  1,633
  1,713
  1,797
  1,885
  1,978
  2,076
  2,179
  2,286
  2,400
Revenue / Adjusted assets
  1.144
  1.144
  1.144
  1.144
  1.143
  1.144
  1.145
  1.145
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
  1.144
Average production assets, $m
  151
  157
  164
  171
  179
  186
  195
  204
  213
  223
  233
  244
  255
  268
  280
  294
  308
  323
  338
  355
  372
  390
  410
  430
  451
  473
  496
  521
  547
  574
Working capital, $m
  151
  157
  163
  170
  178
  186
  194
  203
  212
  222
  232
  243
  254
  266
  279
  292
  306
  321
  337
  353
  370
  389
  408
  428
  449
  471
  494
  518
  544
  571
Total debt, $m
  152
  167
  183
  200
  218
  238
  258
  279
  302
  326
  351
  378
  406
  436
  467
  499
  534
  570
  608
  648
  691
  735
  782
  831
  882
  937
  993
  1,053
  1,116
  1,182
Total liabilities, $m
  369
  384
  400
  417
  435
  454
  475
  496
  519
  543
  568
  595
  623
  652
  684
  716
  751
  787
  825
  865
  908
  952
  999
  1,048
  1,099
  1,153
  1,210
  1,270
  1,333
  1,399
Total equity, $m
  264
  275
  286
  298
  311
  325
  340
  355
  371
  388
  406
  425
  445
  467
  489
  512
  537
  563
  590
  619
  649
  681
  714
  749
  786
  825
  866
  908
  953
  1,001
Total liabilities and equity, $m
  633
  659
  686
  715
  746
  779
  815
  851
  890
  931
  974
  1,020
  1,068
  1,119
  1,173
  1,228
  1,288
  1,350
  1,415
  1,484
  1,557
  1,633
  1,713
  1,797
  1,885
  1,978
  2,076
  2,178
  2,286
  2,400
Debt-to-equity ratio
  0.580
  0.610
  0.640
  0.670
  0.700
  0.730
  0.760
  0.790
  0.810
  0.840
  0.860
  0.890
  0.910
  0.930
  0.950
  0.970
  0.990
  1.010
  1.030
  1.050
  1.060
  1.080
  1.090
  1.110
  1.120
  1.140
  1.150
  1.160
  1.170
  1.180
Adjusted equity ratio
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417
  0.417

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  28
  29
  30
  31
  32
  33
  34
  36
  37
  38
  40
  41
  43
  45
  46
  48
  50
  52
  54
  57
Depreciation, amort., depletion, $m
  34
  35
  36
  37
  39
  40
  41
  43
  44
  46
  40
  42
  44
  46
  48
  51
  53
  56
  58
  61
  64
  67
  71
  74
  78
  82
  86
  90
  94
  99
Funds from operations, $m
  49
  51
  53
  54
  56
  58
  60
  63
  65
  68
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  109
  113
  119
  124
  130
  136
  142
  149
  156
Change in working capital, $m
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
Cash from operations, $m
  43
  45
  46
  47
  49
  50
  52
  54
  56
  58
  58
  60
  62
  65
  68
  70
  73
  76
  80
  83
  87
  90
  94
  99
  103
  108
  112
  118
  123
  129
Maintenance CAPEX, $m
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -71
  -74
  -78
  -82
  -86
  -90
  -94
New CAPEX, $m
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
Cash from investing activities, $m
  -31
  -32
  -34
  -35
  -36
  -39
  -40
  -43
  -44
  -47
  -48
  -51
  -54
  -56
  -59
  -61
  -65
  -68
  -72
  -74
  -78
  -82
  -86
  -91
  -95
  -100
  -105
  -111
  -116
  -121
Free cash flow, $m
  13
  12
  12
  12
  12
  12
  12
  12
  11
  11
  9
  9
  9
  9
  9
  9
  9
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  7
  7
  7
Issuance/(repayment) of debt, $m
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
  57
  60
  63
  66
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
  57
  60
  63
  66
Total cash flow (excl. dividends), $m
  27
  28
  28
  29
  30
  31
  32
  33
  34
  35
  34
  36
  37
  38
  40
  41
  43
  45
  47
  48
  50
  52
  55
  57
  59
  62
  64
  67
  70
  73
Retained Cash Flow (-), $m
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
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
  16
  17
  17
  17
  17
  17
  17
  18
  18
  18
  16
  17
  17
  17
  18
  18
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  24
  25
  25
  26
Discount rate, %
  5.50
  5.78
  6.06
  6.37
  6.69
  7.02
  7.37
  7.74
  8.13
  8.53
  8.96
  9.41
  9.88
  10.37
  10.89
  11.43
  12.01
  12.61
  13.24
  13.90
  14.59
  15.32
  16.09
  16.89
  17.74
  18.62
  19.56
  20.53
  21.56
  22.64
PV of cash for distribution, $m
  15
  15
  14
  13
  12
  12
  11
  10
  9
  8
  6
  6
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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Universal Electronics Inc. (UEI) develops control and sensor technology solutions and manufactures a line of pre-programmed and universal remote control products, audio-video (AV) accessories, and intelligent wireless security and automation components. The Company's offerings include pre-programmed universal infrared (IR) and radio frequency (RF) remote controls that are sold primarily to subscription broadcasting providers, original equipment manufacturers (OEMs), retailers, and private label customers, and integrated circuits, on which its software and universal device control database is embedded, sold primarily to OEMs, subscription broadcasting providers, and private label customers. Its offerings also include software, firmware and technology solutions that enable devices, such as televisions, set-top boxes, stereos, smart phones tablets, gaming controllers and other consumer electronic devices, to wirelessly connect and interact with home networks and interactive services.

FINANCIAL RATIOS  of  Universal Electronics Inc. (UEIC)

Valuation Ratios
P/E Ratio 30.1
Price to Sales 0.9
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 12
Price to Free Cash Flow 85.9
Growth Rates
Sales Growth Rate 8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 22.9%
Cap. Spend. - 3 Yr. Gr. Rate 29.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 3.6%
Total Debt to Equity 21.4%
Interest Coverage 26
Management Effectiveness
Return On Assets 4.1%
Ret/ On Assets - 3 Yr. Avg. 5.9%
Return On Total Capital 6.1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.7%
Return On Equity 7.4%
Return On Equity - 3 Yr. Avg. 9.5%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 25.2%
Gross Margin - 3 Yr. Avg. 27.5%
EBITDA Margin 8.1%
EBITDA Margin - 3 Yr. Avg. 9.2%
Operating Margin 3.8%
Oper. Margin - 3 Yr. Avg. 5.7%
Pre-Tax Margin 3.8%
Pre-Tax Margin - 3 Yr. Avg. 5.6%
Net Profit Margin 3.1%
Net Profit Margin - 3 Yr. Avg. 4.6%
Effective Tax Rate 20%
Eff/ Tax Rate - 3 Yr. Avg. 19%
Payout Ratio 0%

UEIC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UEIC stock intrinsic value calculation we used $696 million for the last fiscal year's total revenue generated by Universal Electronics Inc.. The default revenue input number comes from 0001 income statement of Universal Electronics Inc.. 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 UEIC stock valuation model: a) initial revenue growth rate of 4% 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 5.5%, whose default value for UEIC is calculated based on our internal credit rating of Universal Electronics Inc., 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 Universal Electronics Inc..
    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 UEIC stock the variable cost ratio is equal to 96.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for UEIC 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 Universal Electronics Inc..

Corporate tax rate of 27% is the nominal tax rate for Universal Electronics Inc.. 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 UEIC 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 UEIC are equal to 20.9%.

Life of production assets of 5.8 years is the average useful life of capital assets used in Universal Electronics Inc. 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 UEIC is equal to 20.8%. 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 - $253.549 million for Universal Electronics Inc. - 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 13.816 million for Universal Electronics Inc. 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 Universal Electronics Inc. at the current share price and the inputted number of shares is $0.6 billion.

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