II-VI (IIVI:NAS) Fundamental Valuation Report

Fundamental Valuation Report


Technology:Scientific & Technical Instruments

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

Close Price/Date
$32.79 (USD) 29/01/2019

Weighted Valuation
$45.79 (USD)

Overall Rating
Undervalued by 39.7%

Valuation Models Analyst Consensus: $54.67 (USD)
(in order of importance) Comparables: $38.86 (USD)
Adjusted Book Value: $33.05 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Fairly valued on an Asset Valuation

Company Overview (IIVI:NAS USD)

Price 32.79
Range 32.78 – 33.94
52 week 29.58 – 50.45
Open 33.60
Vol / Avg. 549530/692611
Mkt cap 2.08B
P/E 27.58
Div/yield 0.00/0.00
EPS 1.35
Shares 63.33M
Beta 0.81

Company Description

II-VI Inc manufactures engineered materials, optoelectronic components and products used in industrial, optical communications, military, semiconductor, consumer, and life science applications. The firm operates in three segments: laser solutions, photonics, and performance products. The photonics segment contributes the largest proportion of revenue and manufactures customized optics and optical components. The laser solutions segment manufactures high-power lasers, laser diodes, laser material processing tools, and infrared optics. The performance products segment manufactures optical systems, thermoelectric modules, and products for semiconductor, defense, and industrial companies. II-VI generates the majority of its revenue outside the United States.

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 IIVI:NAS

Using a discounted cash flow model we generated an intrinsic value of $55.42 (USD) for IIVI:NAS

Sensitivity Analysis

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

IIVI:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $55.42 1% 5% 1% 5%
WACC (or Ke) 7.25 $71.09 $45.04
Terminal Growth Rate 2.30 $45.92 $69.73
Tax Rate 0.28 $60.37 $50.47
Cash Flow 402,784,246 $51.17 $59.67
Capital Expenditures -86,331,600 $54.53 $56.31
Long Term Debt 248,206,000 $55.62 $55.22

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $38.86 (USD) for IIVI:NAS. We also generated a valuation of $60.79 (USD) using other metrics and comparables.
The comparable companies were Cognex (CGNX:NAS), Coherent (COHR:NAS), FLIR Systems (FLIR:NAS), MKS Instruments (MKSI:NAS) and Teledyne Technologies (TDY:NYS).

Company IIVI:NAS End Date Value
Earnings/Share $1.43 (USD)
Book Value/Share $16.48 (USD)
Sales/Share $18.54 (USD)
Cash Flow/Share $2.57 (USD)
EBITDA/Share $3.39 (USD)
Price Based on Comps Adjustment Factor (%)
$39.07 (USD) -41.2
$53.23 (USD) -22.6
$66.69 (USD) -1.9
$36.27 (USD) -36.2
$45.68 (USD) -4.3
22.70 PE Ratio 27.32 46.59 10.62 45.83 8.94 24.62
1.97 PB Ratio 3.23 5.79 1.96 3.10 1.93 3.37
1.75 PS Ratio 3.60 8.89 1.38 3.37 1.68 2.67
12.65 PCF Ratio 16.76 29.29 11.13 16.38 9.93 17.06
10.16 EV to EBITDA 13.49 25.75 5.37 15.34 5.35 15.64


Using a multiples approach we generated a valuation of  $35.48 (USD) for IIVI:NAS

Company IIVI:NAS End Date Value
Earnings/Share $1.43 (USD)
Book Value/Share $16.48 (USD)
Sales/Share $18.54 (USD)
Cash Flow/Share $2.57 (USD)
EBITDA/Share $3.39 (USD)
Price Based on Comps Adjustment Factor
$34.68 (USD) 0
$32.78 (USD) 0
$35.51 (USD) 0
$36.95 (USD) 0
$37.50 (USD) 0
Ratios Ratio Average
PE Ratio 24.25
PB Ratio 1.99
PS Ratio 1.92
PCF Ratio 14.40
EV to EBITDA 11.07

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  IIVI:NAS for the last 10 years was  2.00

We ran the Adjusted Book Value for  IIVI:NAS and generated a book value of  $16.49 (USD)
By multiplying these we get an adjusted valuation of  $33.05 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for IIVI:NAS. The 3 analysts have a concensus valuation for IIVI:NAS for 2019 of $54.67 (USD).


Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 0 0 5.0000 Buy 2019-1-28

Current Price: 32.79 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 2.29 3.12 4.05
# EPS Analysts 3 2 1
Mean Revenue 1,351.00 1,505.50
# Revenue Analysts 3 2
Mean Target Price 54.67
Mean Cash Flow
Mean EBITDA 257.80 207.70
Mean Net Income 151.00 216.10
Mean Debt Outstanding
Mean Tax Rate 19.03 19.05
Mean Growth Rate 12.00
Mean Capital Expenditure

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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