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

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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

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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.

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