Intrinsic value of Universal Electronics - UEIC

Previous Close

$30.88

  Intrinsic Value

$12.35

stock screener

  Rating & Target

str. sell

-60%

Previous close

$30.88

 
Intrinsic value

$12.35

 
Up/down potential

-60%

 
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 0.4

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  710
  726
  745
  766
  789
  814
  842
  872
  904
  939
  976
  1,016
  1,058
  1,103
  1,150
  1,201
  1,254
  1,311
  1,370
  1,433
  1,500
  1,570
  1,644
  1,721
  1,803
  1,890
  1,981
  2,076
  2,177
  2,282
Variable operating expenses, $m
  682
  697
  715
  735
  757
  781
  808
  836
  867
  900
  927
  965
  1,005
  1,048
  1,093
  1,141
  1,191
  1,245
  1,302
  1,361
  1,424
  1,491
  1,561
  1,635
  1,713
  1,795
  1,881
  1,972
  2,067
  2,168
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
  682
  697
  715
  735
  757
  781
  808
  836
  867
  900
  927
  965
  1,005
  1,048
  1,093
  1,141
  1,191
  1,245
  1,302
  1,361
  1,424
  1,491
  1,561
  1,635
  1,713
  1,795
  1,881
  1,972
  2,067
  2,168
Operating income, $m
  28
  29
  30
  31
  32
  33
  34
  36
  38
  39
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  90
  95
  99
  104
  109
  114
EBITDA, $m
  61
  63
  64
  66
  68
  70
  73
  75
  78
  81
  84
  88
  91
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  155
  163
  171
  179
  188
  197
Interest expense (income), $m
  1
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  23
  24
  26
  28
  30
  31
  34
  36
  38
  40
  43
  45
  48
Earnings before tax, $m
  20
  21
  21
  22
  22
  23
  24
  25
  25
  26
  35
  36
  37
  38
  39
  40
  42
  43
  44
  46
  48
  49
  51
  53
  55
  57
  59
  61
  64
  66
Tax expense, $m
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  9
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
Net income, $m
  15
  15
  16
  16
  16
  17
  17
  18
  18
  19
  25
  26
  27
  28
  29
  29
  30
  31
  32
  34
  35
  36
  37
  39
  40
  42
  43
  45
  47
  48

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
  620
  635
  651
  669
  690
  712
  736
  762
  791
  821
  853
  888
  925
  964
  1,006
  1,050
  1,096
  1,146
  1,198
  1,253
  1,311
  1,372
  1,437
  1,505
  1,576
  1,652
  1,731
  1,815
  1,903
  1,995
Adjusted assets (=assets-cash), $m
  620
  635
  651
  669
  690
  712
  736
  762
  791
  821
  853
  888
  925
  964
  1,006
  1,050
  1,096
  1,146
  1,198
  1,253
  1,311
  1,372
  1,437
  1,505
  1,576
  1,652
  1,731
  1,815
  1,903
  1,995
Revenue / Adjusted assets
  1.145
  1.143
  1.144
  1.145
  1.143
  1.143
  1.144
  1.144
  1.143
  1.144
  1.144
  1.144
  1.144
  1.144
  1.143
  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
  148
  152
  156
  160
  165
  170
  176
  182
  189
  196
  204
  212
  221
  231
  240
  251
  262
  274
  286
  300
  313
  328
  344
  360
  377
  395
  414
  434
  455
  477
Working capital, $m
  148
  151
  155
  159
  164
  169
  175
  181
  188
  195
  203
  211
  220
  229
  239
  250
  261
  273
  285
  298
  312
  327
  342
  358
  375
  393
  412
  432
  453
  475
Total debt, $m
  145
  153
  163
  173
  185
  198
  212
  228
  244
  262
  281
  301
  322
  345
  369
  395
  422
  451
  481
  514
  547
  583
  621
  660
  702
  746
  792
  841
  892
  946
Total liabilities, $m
  362
  370
  380
  390
  402
  415
  429
  444
  461
  479
  498
  518
  539
  562
  586
  612
  639
  668
  698
  730
  764
  800
  838
  877
  919
  963
  1,009
  1,058
  1,109
  1,163
Total equity, $m
  259
  265
  271
  279
  288
  297
  307
  318
  330
  342
  356
  370
  386
  402
  419
  438
  457
  478
  499
  522
  547
  572
  599
  627
  657
  689
  722
  757
  793
  832
Total liabilities and equity, $m
  621
  635
  651
  669
  690
  712
  736
  762
  791
  821
  854
  888
  925
  964
  1,005
  1,050
  1,096
  1,146
  1,197
  1,252
  1,311
  1,372
  1,437
  1,504
  1,576
  1,652
  1,731
  1,815
  1,902
  1,995
Debt-to-equity ratio
  0.560
  0.580
  0.600
  0.620
  0.640
  0.670
  0.690
  0.720
  0.740
  0.760
  0.790
  0.810
  0.840
  0.860
  0.880
  0.900
  0.920
  0.940
  0.960
  0.980
  1.000
  1.020
  1.040
  1.050
  1.070
  1.080
  1.100
  1.110
  1.120
  1.140
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
  15
  16
  16
  16
  17
  17
  18
  18
  19
  25
  26
  27
  28
  29
  29
  30
  31
  32
  34
  35
  36
  37
  39
  40
  42
  43
  45
  47
  48
Depreciation, amort., depletion, $m
  33
  34
  35
  35
  36
  37
  38
  39
  40
  42
  35
  37
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  71
  75
  78
  82
Funds from operations, $m
  48
  49
  50
  51
  53
  54
  55
  57
  59
  61
  61
  63
  65
  67
  70
  73
  76
  79
  82
  85
  89
  92
  96
  101
  105
  110
  114
  120
  125
  131
Change in working capital, $m
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
Cash from operations, $m
  45
  46
  46
  47
  48
  49
  50
  51
  52
  53
  53
  55
  56
  58
  60
  62
  64
  67
  69
  72
  75
  78
  81
  84
  88
  92
  96
  100
  104
  109
Maintenance CAPEX, $m
  -25
  -26
  -26
  -27
  -28
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -71
  -75
  -78
New CAPEX, $m
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
Cash from investing activities, $m
  -28
  -29
  -30
  -31
  -33
  -33
  -35
  -36
  -38
  -40
  -42
  -43
  -46
  -47
  -50
  -52
  -54
  -57
  -59
  -62
  -66
  -69
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -100
Free cash flow, $m
  17
  17
  16
  16
  15
  15
  15
  14
  14
  14
  11
  11
  11
  11
  10
  10
  10
  10
  10
  10
  9
  9
  9
  9
  9
  9
  9
  8
  8
  8
Issuance/(repayment) of debt, $m
  7
  8
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
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  
  7
  8
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
Total cash flow (excl. dividends), $m
  24
  25
  26
  26
  27
  28
  29
  30
  30
  31
  30
  31
  32
  33
  35
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  59
  62
Retained Cash Flow (-), $m
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
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
  19
  19
  19
  19
  19
  19
  19
  19
  19
  19
  17
  17
  17
  17
  17
  18
  18
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
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
  18
  17
  16
  15
  14
  12
  11
  10
  9
  8
  6
  6
  5
  4
  4
  3
  3
  2
  2
  1
  1
  1
  1
  0
  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
  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 (UEIC)

Valuation Ratios
P/E Ratio 22.5
Price to Sales 0.7
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 9
Price to Free Cash Flow 64.2
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 $695.79 million for the last fiscal year's total revenue generated by Universal Electronics. The default revenue input number comes from 0001 income statement of Universal Electronics. 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 2% 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, 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.
    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.

Corporate tax rate of 27% is the nominal tax rate for Universal Electronics. 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 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 - 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 13.831 million for Universal Electronics 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 at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ Universal Electronics: 3Q Earnings Snapshot   [05:11PM  Associated Press]
▶ Universal Electronics: 2Q Earnings Snapshot   [06:51PM  Associated Press]
▶ Universal Electronics to Present in Two June Conferences   [May-22-18 07:00AM  Business Wire]
▶ Universal Electronics: 1Q Earnings Snapshot   [May-04-18 05:11AM  Associated Press]
▶ Universal Electronics reports 4Q loss   [Feb-22-18 08:01PM  Associated Press]
▶ Universal Electronics Shifts To Smart Home From TV Remotes   [Jan-14-18 04:40PM  Investor's Business Daily]
▶ Universal Electronics misses 3Q profit forecasts   [Nov-02-17 05:57PM  Associated Press]
▶ Universal Electronics beats 1Q profit forecasts   [May-04-17 06:53PM  Associated Press]
▶ Universal Electronics meets 4Q profit forecasts   [Feb-16-17 05:28PM  Associated Press]

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