Intrinsic value of Vicor Corporation - VICR

Previous Close

$30.98

  Intrinsic Value

$88.40

stock screener

  Rating & Target

str. buy

+185%

Previous close

$30.98

 
Intrinsic value

$88.40

 
Up/down potential

+185%

 
Rating

str. buy

We calculate the intrinsic value of VICR 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 1.2

 

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, %
  25.40
  23.36
  21.52
  19.87
  18.38
  17.05
  15.84
  14.76
  13.78
  12.90
  12.11
  11.40
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
Revenue, $m
  365
  450
  547
  656
  776
  909
  1,053
  1,208
  1,374
  1,552
  1,740
  1,938
  2,147
  2,365
  2,594
  2,833
  3,081
  3,340
  3,609
  3,889
  4,180
  4,483
  4,797
  5,123
  5,463
  5,816
  6,184
  6,566
  6,964
  7,380
Variable operating expenses, $m
  173
  213
  259
  311
  368
  431
  499
  573
  651
  736
  825
  919
  1,017
  1,121
  1,230
  1,343
  1,461
  1,583
  1,711
  1,844
  1,981
  2,125
  2,274
  2,428
  2,589
  2,757
  2,931
  3,112
  3,301
  3,498
Fixed operating expenses, $m
  127
  130
  132
  135
  138
  141
  144
  148
  151
  154
  158
  161
  165
  168
  172
  176
  180
  183
  187
  192
  196
  200
  205
  209
  214
  218
  223
  228
  233
  238
Total operating expenses, $m
  300
  343
  391
  446
  506
  572
  643
  721
  802
  890
  983
  1,080
  1,182
  1,289
  1,402
  1,519
  1,641
  1,766
  1,898
  2,036
  2,177
  2,325
  2,479
  2,637
  2,803
  2,975
  3,154
  3,340
  3,534
  3,736
Operating income, $m
  65
  107
  155
  210
  270
  337
  409
  488
  572
  662
  758
  858
  965
  1,076
  1,193
  1,314
  1,441
  1,573
  1,711
  1,854
  2,003
  2,158
  2,319
  2,486
  2,660
  2,841
  3,029
  3,226
  3,430
  3,643
EBITDA, $m
  77
  121
  173
  230
  295
  365
  443
  526
  616
  711
  813
  920
  1,032
  1,151
  1,274
  1,404
  1,539
  1,679
  1,825
  1,977
  2,135
  2,299
  2,470
  2,648
  2,832
  3,025
  3,225
  3,433
  3,650
  3,877
Interest expense (income), $m
  0
  0
  1
  1
  2
  3
  3
  4
  5
  6
  8
  9
  10
  11
  13
  14
  16
  18
  19
  21
  23
  25
  27
  29
  31
  34
  36
  38
  41
  44
  46
Earnings before tax, $m
  65
  107
  154
  208
  268
  333
  405
  482
  566
  655
  749
  848
  953
  1,063
  1,178
  1,298
  1,424
  1,554
  1,690
  1,831
  1,978
  2,131
  2,289
  2,454
  2,626
  2,805
  2,991
  3,185
  3,387
  3,597
Tax expense, $m
  18
  29
  42
  56
  72
  90
  109
  130
  153
  177
  202
  229
  257
  287
  318
  351
  384
  420
  456
  494
  534
  575
  618
  663
  709
  757
  808
  860
  914
  971
Net income, $m
  48
  78
  113
  152
  195
  243
  296
  352
  413
  478
  547
  619
  696
  776
  860
  948
  1,039
  1,134
  1,234
  1,337
  1,444
  1,555
  1,671
  1,792
  1,917
  2,048
  2,183
  2,325
  2,472
  2,626

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
  234
  289
  351
  420
  498
  582
  675
  774
  881
  995
  1,115
  1,242
  1,376
  1,516
  1,663
  1,816
  1,975
  2,141
  2,314
  2,493
  2,680
  2,873
  3,075
  3,284
  3,502
  3,728
  3,964
  4,209
  4,464
  4,731
Adjusted assets (=assets-cash), $m
  234
  289
  351
  420
  498
  582
  675
  774
  881
  995
  1,115
  1,242
  1,376
  1,516
  1,663
  1,816
  1,975
  2,141
  2,314
  2,493
  2,680
  2,873
  3,075
  3,284
  3,502
  3,728
  3,964
  4,209
  4,464
  4,731
Revenue / Adjusted assets
  1.560
  1.557
  1.558
  1.562
  1.558
  1.562
  1.560
  1.561
  1.560
  1.560
  1.561
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
Average production assets, $m
  58
  71
  86
  104
  123
  144
  166
  191
  217
  245
  275
  306
  339
  374
  410
  448
  487
  528
  570
  615
  660
  708
  758
  809
  863
  919
  977
  1,037
  1,100
  1,166
Working capital, $m
  73
  90
  110
  132
  156
  183
  212
  243
  276
  312
  350
  390
  431
  475
  521
  569
  619
  671
  725
  782
  840
  901
  964
  1,030
  1,098
  1,169
  1,243
  1,320
  1,400
  1,483
Total debt, $m
  10
  21
  33
  47
  63
  80
  98
  118
  140
  163
  187
  212
  239
  267
  297
  328
  360
  393
  428
  464
  501
  540
  581
  623
  666
  712
  759
  809
  860
  913
Total liabilities, $m
  47
  58
  70
  84
  100
  117
  136
  156
  177
  200
  224
  250
  277
  305
  334
  365
  397
  430
  465
  501
  539
  578
  618
  660
  704
  749
  797
  846
  897
  951
Total equity, $m
  187
  231
  280
  336
  398
  465
  539
  619
  704
  795
  891
  993
  1,099
  1,211
  1,329
  1,451
  1,578
  1,711
  1,849
  1,992
  2,141
  2,296
  2,457
  2,624
  2,798
  2,979
  3,167
  3,363
  3,567
  3,780
Total liabilities and equity, $m
  234
  289
  350
  420
  498
  582
  675
  775
  881
  995
  1,115
  1,243
  1,376
  1,516
  1,663
  1,816
  1,975
  2,141
  2,314
  2,493
  2,680
  2,874
  3,075
  3,284
  3,502
  3,728
  3,964
  4,209
  4,464
  4,731
Debt-to-equity ratio
  0.050
  0.090
  0.120
  0.140
  0.160
  0.170
  0.180
  0.190
  0.200
  0.200
  0.210
  0.210
  0.220
  0.220
  0.220
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
Adjusted equity ratio
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799
  0.799

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  48
  78
  113
  152
  195
  243
  296
  352
  413
  478
  547
  619
  696
  776
  860
  948
  1,039
  1,134
  1,234
  1,337
  1,444
  1,555
  1,671
  1,792
  1,917
  2,048
  2,183
  2,325
  2,472
  2,626
Depreciation, amort., depletion, $m
  12
  14
  17
  21
  25
  29
  33
  38
  43
  49
  55
  61
  68
  75
  82
  90
  97
  106
  114
  123
  132
  142
  152
  162
  173
  184
  195
  207
  220
  233
Funds from operations, $m
  59
  92
  130
  172
  220
  272
  329
  390
  456
  527
  602
  681
  764
  851
  942
  1,037
  1,137
  1,240
  1,348
  1,460
  1,576
  1,697
  1,823
  1,954
  2,090
  2,231
  2,379
  2,532
  2,692
  2,859
Change in working capital, $m
  15
  17
  19
  22
  24
  27
  29
  31
  33
  36
  38
  40
  42
  44
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  68
  71
  74
  77
  80
  83
Cash from operations, $m
  44
  75
  110
  151
  196
  245
  300
  359
  423
  491
  564
  641
  722
  807
  896
  989
  1,087
  1,188
  1,294
  1,403
  1,518
  1,636
  1,760
  1,888
  2,022
  2,160
  2,305
  2,455
  2,612
  2,776
Maintenance CAPEX, $m
  -9
  -12
  -14
  -17
  -21
  -25
  -29
  -33
  -38
  -43
  -49
  -55
  -61
  -68
  -75
  -82
  -90
  -97
  -106
  -114
  -123
  -132
  -142
  -152
  -162
  -173
  -184
  -195
  -207
  -220
New CAPEX, $m
  -12
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -66
Cash from investing activities, $m
  -21
  -25
  -29
  -34
  -40
  -46
  -52
  -58
  -64
  -71
  -79
  -86
  -94
  -103
  -111
  -120
  -129
  -138
  -149
  -158
  -169
  -180
  -192
  -204
  -216
  -229
  -242
  -255
  -270
  -286
Free cash flow, $m
  23
  50
  81
  116
  156
  200
  248
  301
  358
  420
  485
  554
  627
  704
  785
  870
  958
  1,050
  1,145
  1,245
  1,349
  1,456
  1,568
  1,685
  1,806
  1,932
  2,063
  2,200
  2,342
  2,490
Issuance/(repayment) of debt, $m
  10
  11
  12
  14
  16
  17
  19
  20
  21
  23
  24
  26
  27
  28
  29
  31
  32
  33
  35
  36
  37
  39
  40
  42
  44
  46
  47
  49
  51
  53
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  
  10
  11
  12
  14
  16
  17
  19
  20
  21
  23
  24
  26
  27
  28
  29
  31
  32
  33
  35
  36
  37
  39
  40
  42
  44
  46
  47
  49
  51
  53
Total cash flow (excl. dividends), $m
  33
  61
  93
  130
  171
  217
  267
  321
  380
  443
  509
  580
  654
  733
  815
  900
  990
  1,083
  1,180
  1,281
  1,386
  1,495
  1,609
  1,727
  1,850
  1,977
  2,110
  2,249
  2,393
  2,543
Retained Cash Flow (-), $m
  -38
  -44
  -50
  -56
  -62
  -68
  -74
  -80
  -85
  -91
  -96
  -102
  -107
  -112
  -117
  -122
  -127
  -133
  -138
  -143
  -149
  -155
  -161
  -167
  -174
  -181
  -188
  -196
  -204
  -213
Prev. year cash balance distribution, $m
  35
  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
  30
  17
  44
  74
  110
  149
  193
  242
  295
  352
  413
  478
  548
  621
  698
  778
  862
  950
  1,042
  1,138
  1,237
  1,340
  1,448
  1,560
  1,676
  1,797
  1,922
  2,053
  2,189
  2,331
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  28
  16
  38
  61
  85
  108
  131
  151
  169
  184
  196
  204
  208
  208
  205
  198
  188
  175
  160
  145
  128
  111
  95
  79
  65
  52
  41
  32
  24
  18
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
  100.0
  100.0
  100.0
  100.0
  100.0

Vicor Corporation designs, develops, manufactures and markets modular power components and power systems for converting, regulating and controlling electric current. The Company's segments include Brick Business Unit (BBU), VI Chip and Picor. The BBU segment designs, develops, manufactures and markets modular direct current-direct current converters and configurable products, and also includes the entities comprising Vicor Custom Power, and the BBU operations of Vicor Japan Company, Ltd. (VJCL). The VI Chip segment includes VI Chip Corporation, which designs, develops, manufactures and markets advanced power component products. The VI Chip segment also includes the VI Chip business conducted through VJCL. The Picor segment includes Picor Corporation (Picor), which designs, develops, manufactures and markets integrated circuits and related products for use in a range of power management and power system applications.

FINANCIAL RATIOS  of  Vicor Corporation (VICR)

Valuation Ratios
P/E Ratio -201.4
Price to Sales 6
Price to Book 9.2
Price to Tangible Book
Price to Cash Flow 1208.5
Price to Free Cash Flow -172.6
Growth Rates
Sales Growth Rate -9.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.1%
Cap. Spend. - 3 Yr. Gr. Rate 5.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -3.8%
Ret/ On Assets - 3 Yr. Avg. -3.1%
Return On Total Capital -4.5%
Ret/ On T. Cap. - 3 Yr. Avg. -3.7%
Return On Equity -4.5%
Return On Equity - 3 Yr. Avg. -3.7%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 45.5%
Gross Margin - 3 Yr. Avg. 44.6%
EBITDA Margin 1%
EBITDA Margin - 3 Yr. Avg. 1.1%
Operating Margin -3.5%
Oper. Margin - 3 Yr. Avg. -3.2%
Pre-Tax Margin -3%
Pre-Tax Margin - 3 Yr. Avg. -3.1%
Net Profit Margin -3%
Net Profit Margin - 3 Yr. Avg. -2.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

VICR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VICR stock intrinsic value calculation we used $291 million for the last fiscal year's total revenue generated by Vicor Corporation. The default revenue input number comes from 0001 income statement of Vicor 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 VICR stock valuation model: a) initial revenue growth rate of 25.4% 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 4.3%, whose default value for VICR is calculated based on our internal credit rating of Vicor 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 Vicor 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 VICR stock the variable cost ratio is equal to 47.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $124 million in the base year in the intrinsic value calculation for VICR 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 Vicor Corporation.

Corporate tax rate of 27% is the nominal tax rate for Vicor 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 VICR 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 VICR are equal to 15.8%.

Life of production assets of 5 years is the average useful life of capital assets used in Vicor 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 VICR is equal to 20.1%. 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 - $183.656 million for Vicor 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 40.075 million for Vicor 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 Vicor Corporation at the current share price and the inputted number of shares is $1.2 billion.

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