Maxim Integrated Products (MXIM:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Maxim Integrated Products(MXIM:NAS)

Technology:Semiconductors

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$53.22 (USD) 08/11/2018

Weighted Valuation
$54.49 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 2.4%

Valuation Models Analyst Consensus: $62.50 (USD)
(in order of importance) Comparables: $44.69 (USD)
Multiples: $50.03 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (MXIM:NAS USD)

Price 53.22
Range 52.02 – 53.51
52 week 46.90 – 66.27
Open 52.18
Vol / Avg. 2.96M/3.44M
Mkt cap 14.58B
P/E 29.57
Div/yield 1.56/0.03
EPS 1.64
Shares 277.06M
Beta 1.29

Company Description

Maxim Integrated Products Inc makes high-performance analog and mixed-signal integrated circuits. The company offers a wide range of products serving a host of analog-intensive applications, including power management, audio conversion, and sensors. Maxim supplies its diverse product portfolio to a broad base of customers in the communications, computing, industrial, automotive, and consumer-related end markets.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for MXIM:NAS

Using a discounted cash flow model we generated an intrinsic value of $41.13 (USD) for MXIM:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

MXIM:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $41.13 1% 5% 1% 5%
WACC (or Ke) 9.44 $49.56 $34.97
Terminal Growth Rate 3.00 $35.69 $48.57
Tax Rate 0.22 $43.87 $38.39
Cash Flow 1,107,971,319 $38.92 $43.35
Capital Expenditures -51,765,200 $41.04 $41.23
Long Term Debt 1,240,473,000 $41.35 $40.91

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $44.69 (USD) for MXIM:NAS. We also generated a valuation of $55.25 (USD) using other metrics and comparables.
The comparable companies were Analog Devices (ADI:NAS), Cypress Semiconductor (CY:NAS), ON Semiconductor (ON:NAS), Skyworks Solutions (SWKS:NAS) and Xilinx (XLNX:NAS).

Company MXIM:NAS End Date Value
Earnings/Share $1.80 (USD)
Book Value/Share $6.97 (USD)
Sales/Share $8.68 (USD)
Cash Flow/Share $2.87 (USD)
EBITDA/Share $3.58 (USD)
Price Based on Comps Adjustment Factor (%)
$66.03 (USD) 37.7
$28.21 (USD) 23.4
$35.43 (USD) 15.3
$31.33 (USD) -21.7
$43.45 (USD) -26.1
MXIM:NAS Ratios Used Average Values ADI:NAS CY:NAS ON:NAS SWKS:NAS XLNX:NAS
30.50 PE Ratio 36.68 22.09 99.54 7.46 17.53 36.80
7.18 PB Ratio 4.05 2.87 2.48 2.25 3.80 8.84
5.76 PS Ratio 4.08 5.10 1.91 1.30 4.17 7.93
17.44 PCF Ratio 12.75 13.39 8.92 6.93 10.78 23.72
12.47 EV to EBITDA 12.13 14.15 10.96 6.80 8.70 20.02

Multiples

Using a multiples approach we generated a valuation of  $50.03 (USD) for MXIM:NAS

Company MXIM:NAS End Date Value
Earnings/Share $1.80 (USD)
Book Value/Share $6.97 (USD)
Sales/Share $8.68 (USD)
Cash Flow/Share $2.87 (USD)
EBITDA/Share $3.58 (USD)
Price Based on Comps Adjustment Factor
$65.03 (USD) 0
$36.96 (USD) 0
$44.91 (USD) 0
$45.78 (USD) 0
$57.47 (USD) 0
Ratios Ratio Average
PE Ratio 36.13
PB Ratio 5.30
PS Ratio 5.17
PCF Ratio 15.96
EV to EBITDA 16.04

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  MXIM:NAS for the last 10 years was  5.22

We ran the Adjusted Book Value for  MXIM:NAS and generated a book value of  $6.86 (USD)
By multiplying these we get an adjusted valuation of  $35.83 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for MXIM:NAS. The 4 analysts have a concensus valuation for MXIM:NAS for 2019 of $62.50 (USD).

MXIM:NAS Maxim Integrated Products

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 5 0 3.3333 Hold 2018-11-7

Current Price: 53.22 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 2.82 3.13 3.30
# EPS Analysts 4 4 1
Mean Revenue 2,455.20 2,581.00 2,675.00
# Revenue Analysts 4 4 1
Mean Target Price 62.50
Mean Cash Flow 3.31 3.55
Mean EBITDA 961.60 1,037.90
Mean Net Income 802.40 860.00 925.70
Mean Debt Outstanding -914.60 -910.90
Mean Tax Rate 13.00 13.00 13.00
Mean Growth Rate 8.32
Mean Capital Expenditure 72.80 52.30

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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