Qorvo Inc Valuation – February 2019 $QRVO

Company Profile (excerpt from Reuters): Qorvo, Inc., incorporated on December 13, 2013, is a provider of technologies and radio frequency (RF) solutions for mobile, infrastructure and defense and aerospace applications. The Company designs, develops, manufactures and markets its products to the United States and international original equipment manufacturers (OEMs) and original design manufacturers (ODMs). Its segments include Mobile Products (MP) and Infrastructure and Defense Products (IDP). The Company operates design, sales and manufacturing facilities located throughout Asia, Europe and North America. Its primary manufacturing facilities are located in North Carolina, Oregon, Texas and Florida, and its primary assembly and test facilities are located in China, Costa Rica and Texas.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of QRVO – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,086,883,614 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.90 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 3733.33% Pass
6. Moderate PEmg Ratio PEmg < 20 122.87 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.83 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.59 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.54
MG Growth Estimate -3.57%
MG Value $3.05
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $7.77
MG Value based on 0% Growth $4.56
Market Implied Growth Rate 57.19%
Current Price $65.86
% of Intrinsic Value 2161.04%

Qorvo Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0.7 in 2015 to an estimated $0.54 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 57.19% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Qorvo Inc revealed the company was trading above its Graham Number of $36.89. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 122.87, which was above the industry average of 29.46. Finally, the company was trading above its Net Current Asset Value (NCAV) of $3.05.

Qorvo Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $3.05
Graham Number $36.89
PEmg 122.87
Current Ratio 3.90
PB Ratio 1.83
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,615,536,000
Total Current Liabilities $413,932,000
Long-Term Debt $714,402,000
Total Assets $5,806,291,000
Intangible Assets $2,637,248,000
Total Liabilities $1,228,971,000
Shares Outstanding (Diluted Average) 126,842,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.60
Mar2018 -$0.32
Mar2017 -$0.13
Mar2016 -$0.20
Mar2015 $2.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.54
Mar2018 $0.10
Mar2017 $0.33
Mar2016 $0.50
Mar2015 $0.70

Recommended Reading:

Other ModernGraham posts about the company

Qorvo Inc Valuation – April 2018 $QRVO
Qorvo Inc Valuation – December 2016 Update $QRVO
Qorvo Inc. Analysis – Initial Coverage $QRVO

Other ModernGraham posts about related companies

FLIR Systems Inc Valuation – February 2019 $FLIR
NetApp Inc Valuation – February 2019 $NTAP
Applied Materials Inc Valuation – February 2019 $AMAT
Microchip Technology Inc Valuation – February 2019 $MCHP
Broadcom Inc Valuation – February 2019 $AVGO
KLA-Tencor Corp Valuation – January 2019 $KLAC
TE Connectivity Ltd Valuation – January 2019 $TEL
NVIDIA Corp Valuation – January 2019 $NVDA
Seagate Technology PLC Valuation – January 2019 $STX
Corning Inc Valuation – January 2019 $GLW

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Qorvo Inc Valuation – April 2018 $QRVO

Company Profile (excerpt from Reuters): Qorvo, Inc., incorporated on December 13, 2013, is a provider of technologies and radio frequency (RF) solutions for mobile, infrastructure and defense and aerospace applications. The Company designs, develops, manufactures and markets its products to the United States and international original equipment manufacturers (OEMs) and original design manufacturers (ODMs). Its segments include Mobile Products (MP) and Infrastructure and Defense Products (IDP). The Company operates design, sales and manufacturing facilities located throughout Asia, Europe and North America. Its primary manufacturing facilities are located in North Carolina, Oregon, Texas and Florida, and its primary assembly and test facilities are located in China, Costa Rica and Texas.

QRVO Chart

QRVO data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of QRVO – April 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,687,580,693 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.72 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 1599900.00% Pass
6. Moderate PEmg Ratio PEmg < 20 144.08 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.81 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.72 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.76 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.48
MG Growth Estimate 15.00%
MG Value $18.35
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $6.91
MG Value based on 0% Growth $4.05
Market Implied Growth Rate 67.79%
Current Price $68.68
% of Intrinsic Value 374.24%

Qorvo Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0 in 2014 to an estimated $0.48 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 67.79% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Qorvo Inc revealed the company was trading above its Graham Number of $26.57. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 144.08, which was above the industry average of 51.31. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.85.

Qorvo Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $0.85
Graham Number $26.57
PEmg 144.08
Current Ratio 4.72
PB Ratio 1.81
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $1,814,166,000
Total Current Liabilities $384,518,000
Long-Term Debt $1,088,730,000
Total Assets $6,526,647,000
Intangible Assets $3,167,518,000
Total Liabilities $1,705,569,000
Shares Outstanding (Diluted Average) 127,034,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.81
Mar2017 -$0.13
Mar2016 -$0.20
Mar2015 $2.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.48
Mar2017 $0.33
Mar2016 $0.50
Mar2015 $0.70

Recommended Reading:

Other ModernGraham posts about the company

Qorvo Inc Valuation – December 2016 Update $QRVO
Qorvo Inc. Analysis – Initial Coverage $QRVO

Other ModernGraham posts about related companies

NetApp Inc Valuation – April 2018 $NTAP
Applied Materials Inc Valuation – April 2018 $AMAT
Broadcom Inc Valuation – April 2018 $AVGO
Microchip Technology Inc Valuation – April 2018 $MCHP
KLA-Tencor Corp Valuation – March 2018 $KLAC
TE Connectivity Ltd Valuation – March 2018 $TEL
Juniper Networks Inc Valuation – March 2018 $JNPR
NVIDIA Corp Valuation – March 2018 $NVDA
Seagate Technology PLC Valuation – March 2018 $STX
HP Inc Valuation – February 2018 $HPQ

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Qorvo Inc Valuation – December 2016 Update $QRVO

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Qorvo Inc (QRVO) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Qorvo, Inc. is a provider of technologies and radio frequency (RF) solutions for mobile, infrastructure and defense and aerospace applications. The Company designs, develops, manufactures and markets its products to the United States and international original equipment manufacturers (OEMs) and original design manufacturers (ODMs). Its segments include Mobile Products (MP) and Infrastructure and Defense Products (IDP). The MP segment is a supplier of radio frequency (RF) solutions that perform various functions in the cellular radio front end section of smartphones and other cellular devices. The IDP segment is a supplier of RF solutions that support various global applications, including ubiquitous high-speed network connectivity to the cloud, data center communications, Internet connectivity throughout the home and workplace, and upgraded military capabilities across the globe. It operates design, sales and manufacturing facilities located throughout Asia, Europe and North America.

QRVO Chart

QRVO data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

moderngraham-valuation-of-qrvo-december-2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,521,163,279 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.84 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 13633.33% Pass
6. Moderate PEmg Ratio PEmg < 20 45.72 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.34 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.84 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.96 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

qrvo-value-chart-december-2016

EPSmg $1.11
MG Growth Estimate 15.00%
MG Value $42.56
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $16.03
MG Value based on 0% Growth $9.40
Market Implied Growth Rate 18.61%
Current Price $50.54
% of Intrinsic Value 118.76%

Qorvo Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0 in 2013 to an estimated $1.11 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.61% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Qorvo Inc revealed the company was trading above its Graham Number of $44.14. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 45.72, which was above the industry average of 22.64. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-1.46.

Qorvo Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

qrvo-charts-december-2016

Net Current Asset Value (NCAV) -$1.46
Graham Number $44.14
PEmg 45.72
Current Ratio 2.84
PB Ratio 1.34
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/16/2016
Total Current Assets $1,582,536,000
Total Current Liabilities $557,445,000
Long-Term Debt $988,625,000
Total Assets $6,751,622,000
Intangible Assets $3,831,076,000
Total Liabilities $1,775,246,000
Shares Outstanding (Diluted Average) 132,329,000

Earnings Per Share History

Next Fiscal Year Estimate $2.21
Mar2016 -$0.20
Mar2015 $2.11

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.11
Mar2016 $0.50
Mar2015 $0.70

Recommended Reading:

Other ModernGraham posts about the company

Qorvo Inc. Analysis – Initial Coverage $QRVO

Other ModernGraham posts about related companies

NetApp Inc Valuation – August 2016 $NTAP
Applied Materials Inc Valuation – August 2016 $AMAT
Skyworks Solutions Inc Valuation – August 2016 $SWKS
Garmin Limited Valuation – August 2016 $GRMN
Analog Devices Inc Valuation – August 2016 $ADI
Amphenol Corporation Valuation – August 2016 $APH
Agilent Technologies Inc Valuation – August 2016 $A
Texas Instruments Inc Valuation – August 2016 $TXN
Xilinx Inc Valuation – August 2016 $XLNX
Western Digital Corporation Valuation – August 2016 $WDC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Qorvo Inc. Analysis – Initial Coverage $QRVO

220px-Qorvo_logo_blackBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – July 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Qorvo Inc. (QRVO) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Qorvo, Inc. (QRVO), formerly Rocky Holding, Inc., is a provider of core technologies and radio frequency (RF) solutions for mobile, infrastructure, and aerospace and defense applications. The Company is engaged in two businesses: mobile products, and infrastructure and defense products. The Company operates through two subsidiaries: RF Micro Devices, Inc. (RFMD) and TriQuint Semiconductor, Inc. (TriQuint). RFMD designs and manufactures radio frequency solutions. TriQuint designs, develops and manufactures active and passive technologies, including power amplifier, switch and filter modules for the mobile device, network infrastructure, and defense and aerospace markets. TriQuint offers services based on the following technologies: gallium arsenide (GaAs), gallium nitride (GaN), surface acoustic wave (SAW) and bulk acoustic wave (BAW). The Company’s partners for infrastructure and defense applications include Arris, Ericsson, Raytheon, ZTE, Hughes, IAI ELTA, Huawei and Broadcom.

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Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – FAIL
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $57.84
MG Value $37.33
MG Opinion Overvalued
Value Based on 3% Growth $14.06
Value Based on 0% Growth $8.24
Market Implied Growth Rate 25.57%
Net Current Asset Value (NCAV) $5.19
PEmg 59.65
Current Ratio 4.62
PB Ratio 1.41

Balance Sheet – March 2015

Current Assets $1,500,000,000
Current Liabilities $325,000,000
Total Debt $0
Total Assets $6,892,000,000
Intangible Assets $4,448,000,000
Total Liabilities $719,000,000
Outstanding Shares 150,600,000

Earnings Per Share

2015 $1.22
2014 $2.11

Earnings Per Share – ModernGraham

2015 $0.97
2014 $0.70

Dividend History
Qorvo Inc. does not pay a dividend.

Conclusion:

Qorvo Inc. does not qualify for either the Defensive Investor and the Enterprising Investor.  Both investor types are concerned with the short operating history as a stand-alone company, as there is not enough data yet to accurately provide information for a full valuation.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities or proceed with a speculative attitude.  As for a valuation based on the limited data available, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.70 in 2014 to $0.97 for 2015.  This level of earnings growth does not support the market’s implied estimate of 25.57% annual earnings decrease over the next 7-10 years, and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Qorvo Inc. (QRVO)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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Analog Devices Inc Valuation – March 2019 #ADI

Company Profile (excerpt from Reuters): Analog Devices, Inc. (Analog Devices), incorporated on January 18, 1965, designs, manufactures and markets a portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing(DSP) technology, including integrated circuits (ICs), algorithms, software and subsystems. The Company provides Analog Products, such as Converters, Amplifiers/Radio Frequency, Other Analog, and Power Management and Reference. It also offers Digital Signal Processing Products (DSPs). The Company operates in the United States, Rest of North/South America, Europe, Japan and China.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADI – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $40,551,370,837 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.34 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 55.98% Pass
6. Moderate PEmg Ratio PEmg < 20 29.32 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.54 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.34 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.49 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.75
MG Growth Estimate 11.06%
MG Value $114.96
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $54.43
MG Value based on 0% Growth $31.91
Market Implied Growth Rate 10.41%
Current Price $110.06
% of Intrinsic Value 95.74%

Analog Devices, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.16 in 2015 to an estimated $3.75 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 10.41% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Analog Devices, Inc. revealed the company was trading above its Graham Number of $59.5. The company pays a dividend of $1.89 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 29.32, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.17.

Analog Devices, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.17
Graham Number $59.50
PEmg 29.32
Current Ratio 2.34
PB Ratio 3.54
Current Dividend $1.89
Dividend Yield 1.72%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2019
Total Current Assets $1,985,180,000
Total Current Liabilities $849,955,000
Long-Term Debt $6,234,517,000
Total Assets $21,828,278,000
Intangible Assets $16,885,588,000
Total Liabilities $10,242,841,000
Shares Outstanding (Diluted Average) 372,506,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.30
Oct2018 $3.97
Oct2017 $2.07
Oct2016 $2.76
Oct2015 $2.20
Oct2014 $1.98
Oct2013 $2.14
Oct2012 $2.13
Oct2011 $2.81
Oct2010 $2.33
Oct2009 $0.85
Oct2008 $2.67
Oct2007 $1.50
Oct2006 $1.48
Oct2005 $1.08
Oct2004 $1.45
Oct2003 $0.78
Oct2002 $0.28
Oct2001 $0.93
Oct2000 $1.59
Oct1999 $0.55

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.75
Oct2018 $2.85
Oct2017 $2.27
Oct2016 $2.33
Oct2015 $2.16
Oct2014 $2.19
Oct2013 $2.21
Oct2012 $2.22
Oct2011 $2.18
Oct2010 $1.84
Oct2009 $1.56
Oct2008 $1.83
Oct2007 $1.36
Oct2006 $1.19
Oct2005 $1.00
Oct2004 $0.98
Oct2003 $0.77

Recommended Reading:

Other ModernGraham posts about the company

Analog Devices Inc Valuation – June 2018 $ADI
Analog Devices Inc Valuation – February 2017 $ADI
Analog Devices Inc Valuation – August 2016 $ADI
Analog Devices Inc Stock Valuation – February 2016 $ADI
Analog Devices Inc. Analysis – September 2015 Update $ADI

Other ModernGraham posts about related companies

IPG Photonics Corp Valuation – March 2019 #IPGP
Micron Technology Inc Valuation – March 2019 #MU
Amphenol Corp Valuation – March 2019 #APH
Xilinx Inc Valuation – March 2019 #XLNX
Western Digital Corp Valuation – March 2019 #WDC
Texas Instruments Inc Valuation – March 2019 #TXN
Qualcomm Inc Valuation – March 2019 #QCOM
Ametek Inc Valuation – March 2019 #AME
Advanced Micro Devices Inc Valuation – February 2019 $AMD
Qorvo Inc Valuation – February 2019 $QRVO

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

IPG Photonics Corp Valuation – March 2019 #IPGP

Company Profile (excerpt from Reuters): IPG Photonics Corporation, incorporated on December 2, 1998, is a developer and manufacturer of a line of fiber lasers, fiber amplifiers, diode lasers, laser systems and optical accessories that are used for various applications. The Company offers a line of lasers and amplifiers, which are used in materials processing, communications and medical applications. The Company sells its products globally to original equipment manufacturers (OEMs), system integrators and end users. The Company’s manufacturing facilities are located in the United States, Germany and Russia. The Company offers laser-based systems for certain markets and applications. The Company also makes packaged diodes, direct diode lasers, laser systems and communications components and systems. Its products are designed to be used as general-purpose energy or light sources.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IPGP – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,167,270,375 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.35 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 192.91% Pass
6. Moderate PEmg Ratio PEmg < 20 26.55 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.77 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 7.35 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.03 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.81
MG Growth Estimate 8.87%
MG Value $152.43
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $84.23
MG Value based on 0% Growth $49.37
Market Implied Growth Rate 9.02%
Current Price $154.21
% of Intrinsic Value 101.17%

IPG Photonics Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.65 in 2015 to an estimated $5.81 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 9.02% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into IPG Photonics Corporation revealed the company was trading above its Graham Number of $67.5. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 26.55, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $26.65.

IPG Photonics Corporation receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $26.65
Graham Number $67.50
PEmg 26.55
Current Ratio 7.35
PB Ratio 3.77
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,805,424,000
Total Current Liabilities $245,774,000
Long-Term Debt $41,707,000
Total Assets $2,574,450,000
Intangible Assets $187,861,000
Total Liabilities $368,215,000
Shares Outstanding (Diluted Average) 53,919,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.86
Dec2018 $7.38
Dec2017 $6.36
Dec2016 $4.85
Dec2015 $4.53
Dec2014 $3.79
Dec2013 $2.97
Dec2012 $2.81
Dec2011 $2.41
Dec2010 $1.13
Dec2009 $0.12
Dec2008 $0.79
Dec2007 $0.65
Dec2006 $0.26
Dec2005 $0.16
Dec2004 $0.01
Dec2003 -$0.93
Dec2002 -$2.13
Dec2001 -$2.17

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.81
Dec2018 $5.98
Dec2017 $5.02
Dec2016 $4.17
Dec2015 $3.65
Dec2014 $3.01
Dec2013 $2.38
Dec2012 $1.87
Dec2011 $1.28
Dec2010 $0.67
Dec2009 $0.43
Dec2008 $0.51
Dec2007 $0.26
Dec2006 -$0.13
Dec2005 -$0.56
Dec2004 -$0.96
Dec2003 -$1.31

Recommended Reading:

Other ModernGraham posts about the company

IPG Photonics Corp Valuation – June 2018 $IPGP
5 Undervalued Stocks for Value Investors with a High Beta – January 2017
IPG Photonics Corp Valuation – Initial Coverage $IPGP

Other ModernGraham posts about related companies

Amphenol Corp Valuation – March 2019 #APH
Xilinx Inc Valuation – March 2019 #XLNX
Western Digital Corp Valuation – March 2019 #WDC
Texas Instruments Inc Valuation – March 2019 #TXN
Qualcomm Inc Valuation – March 2019 #QCOM
Ametek Inc Valuation – March 2019 #AME
Advanced Micro Devices Inc Valuation – February 2019 $AMD
Qorvo Inc Valuation – February 2019 $QRVO
FLIR Systems Inc Valuation – February 2019 $FLIR
NetApp Inc Valuation – February 2019 $NTAP

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Micron Technology Inc Valuation – March 2019 #MU

Company Profile (excerpt from Reuters): Micron Technology, Inc., incorporated on April 6, 1984, is engaged in semiconductor systems. The Company’s portfolio of memory technologies, including dynamic random-access memory (DRAM), negative-AND (NAND) Flash and NOR Flash are the basis for solid-state drives, modules, multi-chip packages and other system solutions. Its business segments include Compute and Networking Business Unit (CNBU), which includes memory products sold into compute, networking, graphics and cloud server markets; Mobile Business Unit (MBU), which includes memory products sold into smartphone, tablet and other mobile-device markets; Storage Business Unit (SBU), which includes memory products sold into enterprise, client, cloud and removable storage markets, and SBU also includes products sold to Intel through its Intel/Micron Flash Technology (IMFT) joint venture, and Embedded Business Unit (EBU), which includes memory products sold into automotive, industrial, connected home and consumer electronics markets. The Company’s memory solutions enable computing, consumer, enterprise storage, networking, mobile, embedded and automotive applications. The Company markets its products through internal sales force, independent sales representatives and distributors primarily to original equipment manufacturers (OEMs) and retailers located around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MU – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $43,788,097,359 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.90 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 2068.37% Pass
6. Moderate PEmg Ratio PEmg < 20 6.67 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.32 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.33 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.86
MG Growth Estimate 15.00%
MG Value $225.48
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $84.92
MG Value based on 0% Growth $49.78
Market Implied Growth Rate -0.91%
Current Price $39.07
% of Intrinsic Value 17.33%

Micron Technology, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.6 in 2015 to an estimated $5.86 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.91% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Micron Technology, Inc. revealed the company was trading below its Graham Number of $57.76. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 6.67, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $4.41.

Micron Technology, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $4.41
Graham Number $57.76
PEmg 6.67
Current Ratio 2.90
PB Ratio 1.32
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 11/1/2018
Total Current Assets $15,039,000,000
Total Current Liabilities $5,189,000,000
Long-Term Debt $3,227,000,000
Total Assets $44,595,000,000
Intangible Assets $1,584,000,000
Total Liabilities $9,856,000,000
Shares Outstanding (Diluted Average) 1,174,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.33
Aug2018 $11.51
Aug2017 $4.41
Aug2016 -$0.27
Aug2015 $2.47
Aug2014 $2.54
Aug2013 $1.13
Aug2012 -$1.04
Aug2011 $0.17
Aug2010 $1.85
Aug2009 -$2.35
Aug2008 -$2.10
Aug2007 -$0.42
Aug2006 $0.57
Aug2005 $0.29
Aug2004 $0.24
Aug2003 -$2.11
Aug2002 -$1.51
Aug2001 -$1.05
Aug2000 $2.56
Aug1999 -$0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.86
Aug2018 $5.46
Aug2017 $2.31
Aug2016 $1.16
Aug2015 $1.60
Aug2014 $1.09
Aug2013 $0.22
Aug2012 -$0.38
Aug2011 -$0.23
Aug2010 -$0.45
Aug2009 -$1.33
Aug2008 -$0.64
Aug2007 -$0.04
Aug2006 -$0.07
Aug2005 -$0.53
Aug2004 -$0.75
Aug2003 -$0.98

Recommended Reading:

Other ModernGraham posts about the company

Micron Technology Inc Valuation – May 2018 $MU
Micron Technology Inc Valuation – February 2017 $MU
Micron Technology Inc. Valuation – November 2015 Update $MU
30 Companies in the Spotlight This Week – 11/15/14
Micron Technology Inc. Annual Valuation – 2014 $MU

Other ModernGraham posts about related companies

Amphenol Corp Valuation – March 2019 #APH
Xilinx Inc Valuation – March 2019 #XLNX
Western Digital Corp Valuation – March 2019 #WDC
Texas Instruments Inc Valuation – March 2019 #TXN
Qualcomm Inc Valuation – March 2019 #QCOM
Ametek Inc Valuation – March 2019 #AME
Advanced Micro Devices Inc Valuation – February 2019 $AMD
Qorvo Inc Valuation – February 2019 $QRVO
FLIR Systems Inc Valuation – February 2019 $FLIR
NetApp Inc Valuation – February 2019 $NTAP

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amphenol Corp Valuation – March 2019 #APH

Company Profile (excerpt from Reuters): Amphenol Corporation (Amphenol), incorporated on December 19, 1986, is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor- based products, and coaxial and specialty cable. The Company operates through two segments, which include Interconnect Products and Assemblies, and Cable Products and Solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $28,058,928,491 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.86 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 112.11% Pass
6. Moderate PEmg Ratio PEmg < 20 29.03 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.18 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.32 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.25
MG Growth Estimate 8.07%
MG Value $80.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $47.09
MG Value based on 0% Growth $27.60
Market Implied Growth Rate 10.26%
Current Price $94.26
% of Intrinsic Value 117.83%

Amphenol Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.11 in 2015 to an estimated $3.25 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.26% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Amphenol Corporation revealed the company was trading above its Graham Number of $34.36. The company pays a dividend of $0.88 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 29.03, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.55.

Amphenol Corporation receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.55
Graham Number $34.36
PEmg 29.03
Current Ratio 1.86
PB Ratio 7.18
Current Dividend $0.88
Dividend Yield 0.93%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $4,571,600,000
Total Current Liabilities $2,451,300,000
Long-Term Debt $2,806,400,000
Total Assets $10,044,900,000
Intangible Assets $4,501,100,000
Total Liabilities $5,980,700,000
Shares Outstanding (Diluted Average) 309,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.90
Dec2018 $3.85
Dec2017 $2.06
Dec2016 $2.61
Dec2015 $2.41
Dec2014 $2.21
Dec2013 $1.96
Dec2012 $1.69
Dec2011 $1.53
Dec2010 $1.41
Dec2009 $0.92
Dec2008 $1.17
Dec2007 $0.97
Dec2006 $0.70
Dec2005 $0.57
Dec2004 $0.46
Dec2003 $0.30
Dec2002 $0.23
Dec2001 $0.24
Dec2000 $0.32
Dec1999 $0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.25
Dec2018 $2.82
Dec2017 $2.29
Dec2016 $2.33
Dec2015 $2.11
Dec2014 $1.89
Dec2013 $1.66
Dec2012 $1.45
Dec2011 $1.29
Dec2010 $1.12
Dec2009 $0.94
Dec2008 $0.89
Dec2007 $0.70
Dec2006 $0.53
Dec2005 $0.42
Dec2004 $0.33
Dec2003 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Amphenol Corp Valuation – May 2018 $APH
5 Best Stocks for Value Investors This Week – 2/25/17
Amphenol Corp Valuation – February 2017 $APH
21 Best Undervalued Stocks of the Week – 8/27/16
Amphenol Corporation Valuation – August 2016 $APH

Other ModernGraham posts about related companies

Xilinx Inc Valuation – March 2019 #XLNX
Western Digital Corp Valuation – March 2019 #WDC
Texas Instruments Inc Valuation – March 2019 #TXN
Qualcomm Inc Valuation – March 2019 #QCOM
Ametek Inc Valuation – March 2019 #AME
Advanced Micro Devices Inc Valuation – February 2019 $AMD
Qorvo Inc Valuation – February 2019 $QRVO
FLIR Systems Inc Valuation – February 2019 $FLIR
NetApp Inc Valuation – February 2019 $NTAP
Applied Materials Inc Valuation – February 2019 $AMAT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Xilinx Inc Valuation – March 2019 #XLNX

Company Profile (excerpt from Reuters): Xilinx, Inc. (Xilinx), incorporated on February 5, 1990, is engaged in designing and developing programmable devices and associated technologies. The Company’s programmable devices and associated technologies include integrated circuits (ICs) in the form of programmable logic devices (PLDs), including programmable System on Chips (SoCs) and three-dimensional ICs (3D ICs); software design tools to program the PLDs; targeted reference designs; printed circuit boards, and intellectual property (IP), which consists of Xilinx, and various third-party verification and IP cores. In addition to its programmable platforms, Xilinx provides design services, customer training, field engineering and technical support.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XLNX – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $30,836,641,097 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.38 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 35.70% Pass
6. Moderate PEmg Ratio PEmg < 20 48.05 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.84 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.38 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.38 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.53
MG Growth Estimate 2.73%
MG Value $35.37
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $36.75
MG Value based on 0% Growth $21.54
Market Implied Growth Rate 19.78%
Current Price $121.80
% of Intrinsic Value 344.34%

Xilinx, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.14 in 2015 to an estimated $2.53 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 19.78% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Xilinx, Inc. revealed the company was trading above its Graham Number of $26.25. The company pays a dividend of $1.4 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 48.05, which was above the industry average of 35.5. Finally, the company was trading above its Net Current Asset Value (NCAV) of $5.67.

Xilinx, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $5.67
Graham Number $26.25
PEmg 48.05
Current Ratio 4.38
PB Ratio 11.84
Current Dividend $1.40
Dividend Yield 1.15%
Number of Consecutive Years of Dividend Growth 14

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $4,172,352,000
Total Current Liabilities $952,869,000
Long-Term Debt $1,221,438,000
Total Assets $5,354,764,000
Intangible Assets $423,251,000
Total Liabilities $2,717,569,000
Shares Outstanding (Diluted Average) 256,374,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.33
Mar2018 $1.99
Mar2017 $2.32
Mar2016 $2.05
Mar2015 $2.35
Mar2014 $2.19
Mar2013 $1.79
Mar2012 $1.95
Mar2011 $2.39
Mar2010 $1.29
Mar2009 $1.31
Mar2008 $1.25
Mar2007 $1.02
Mar2006 $1.00
Mar2005 $0.87
Mar2004 $0.85
Mar2003 $0.36
Mar2002 -$0.34
Mar2001 $0.10
Mar2000 $1.90
Mar1999 $0.33

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.53
Mar2018 $2.15
Mar2017 $2.20
Mar2016 $2.12
Mar2015 $2.14
Mar2014 $2.00
Mar2013 $1.85
Mar2012 $1.80
Mar2011 $1.64
Mar2010 $1.23
Mar2009 $1.17
Mar2008 $1.06
Mar2007 $0.92
Mar2006 $0.76
Mar2005 $0.55
Mar2004 $0.45
Mar2003 $0.32

Recommended Reading:

Other ModernGraham posts about the company

Xilinx Inc Valuation – May 2018 $XLNX
Xilinx Inc Valuation – February 2017 $XLNX
Xilinx Inc Valuation – August 2016 $XLNX
Xilinx Inc Valuation – February 2016 $XLNX
Xilinx Inc. Valuation – November 2015 Update $XLNX

Other ModernGraham posts about related companies

Qualcomm Inc Valuation – March 2019 #QCOM
Ametek Inc Valuation – March 2019 #AME
Advanced Micro Devices Inc Valuation – February 2019 $AMD
Qorvo Inc Valuation – February 2019 $QRVO
FLIR Systems Inc Valuation – February 2019 $FLIR
NetApp Inc Valuation – February 2019 $NTAP
Applied Materials Inc Valuation – February 2019 $AMAT
Microchip Technology Inc Valuation – February 2019 $MCHP
Broadcom Inc Valuation – February 2019 $AVGO
KLA-Tencor Corp Valuation – January 2019 $KLAC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Western Digital Corp Valuation – March 2019 #WDC

Company Profile (excerpt from Reuters): Western Digital Corporation (Western Digital), incorporated on October 26, 2000, is a developer, manufacturer and provider of data storage devices and solutions that address the needs of the information technology (IT) industry and the infrastructure that enables the proliferation of data in virtually every industry. The Company’s portfolio of offerings addresses three categories: Datacenter Devices and Solutions (capacity and performance enterprise hard disk drives (HDDs), enterprise solid state drives (SSDs), datacenter software and system solutions); Client Devices (mobile, desktop, gaming and digital video hard drives, client SSDs, embedded products and wafers), and Client Solutions (removable products, hard drive content solutions and flash content solutions). The Company also generates license and royalty revenue related to its intellectual property which is included in each of the three categories.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WDC – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,501,831,037 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.24 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -73.33% Fail
6. Moderate PEmg Ratio PEmg < 20 31.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.32 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.24 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.92 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.61
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $23.30
MG Value based on 0% Growth $13.66
Market Implied Growth Rate 11.26%
Current Price $49.84
% of Intrinsic Value N/A

Western Digital Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.72 in 2015 to an estimated $1.61 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.26% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Western Digital Corp revealed the company was trading above its Graham Number of $23.31. The company pays a dividend of $2 per share, for a yield of 4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 31.02, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-25.12.

Western Digital Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$25.12
Graham Number $23.31
PEmg 31.02
Current Ratio 2.24
PB Ratio 1.32
Current Dividend $2.00
Dividend Yield 4.01%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $9,742,000,000
Total Current Liabilities $4,350,000,000
Long-Term Debt $10,370,000,000
Total Assets $27,939,000,000
Intangible Assets $12,222,000,000
Total Liabilities $17,027,000,000
Shares Outstanding (Diluted Average) 290,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.62
Jun2018 $2.20
Jun2017 $1.34
Jun2016 $1.00
Jun2015 $6.18
Jun2014 $6.68
Jun2013 $3.98
Jun2012 $6.58
Jun2011 $3.09
Jun2010 $5.93
Jun2009 $2.08
Jun2008 $3.84
Jun2007 $2.50
Jun2006 $1.76
Jun2005 $0.90
Jun2004 $0.69
Jun2003 $0.87
Jun2002 $0.34
Jun2001 -$0.31
Jun2000 -$2.69
Jun1999 -$5.51

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.61
Jun2018 $2.56
Jun2017 $3.11
Jun2016 $4.29
Jun2015 $5.72
Jun2014 $5.41
Jun2013 $4.63
Jun2012 $4.74
Jun2011 $3.71
Jun2010 $3.75
Jun2009 $2.51
Jun2008 $2.46
Jun2007 $1.63
Jun2006 $1.10
Jun2005 $0.68
Jun2004 $0.31
Jun2003 -$0.41

Recommended Reading:

Other ModernGraham posts about the company

Western Digital Corp Valuation – May 2018 $WDC
Western Digital Corporation Valuation – February 2017 $WDC
Best Stocks Below Their Graham Number – August 2016
Western Digital Corporation Valuation – August 2016 $WDC
10 Low PE Stock Picks for the Defensive Investor – August 2016

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Disclaimer:

The author held a long position in WDC but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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