Stock Analysis on Net
Stock Analysis on Net

NXP Semiconductors N.V. (NASDAQ:NXPI)

This company has been moved to the archive! The financial data has not been updated since July 26, 2022.

Present Value of Free Cash Flow to Equity (FCFE) 

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

NXP Semiconductors N.V., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 17.21%
01 FCFE0 5,088
1 FCFE1 4,435 = 5,088 × (1 + -12.83%) 3,784
2 FCFE2 4,069 = 4,435 × (1 + -8.25%) 2,962
3 FCFE3 3,920 = 4,069 × (1 + -3.67%) 2,434
4 FCFE4 3,956 = 3,920 × (1 + 0.91%) 2,096
5 FCFE5 4,173 = 3,956 × (1 + 5.49%) 1,886
5 Terminal value (TV5) 37,574 = 4,173 × (1 + 5.49%) ÷ (17.21% – 5.49%) 16,985
Intrinsic value of NXP Semiconductors N.V. common stock 30,147
 
Intrinsic value of NXP Semiconductors N.V. common stock (per share) $114.80
Current share price $174.46

Based on: 10-K (reporting date: 2021-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.79%
Expected rate of return on market portfolio2 E(RM) 13.79%
Systematic risk of NXP Semiconductors N.V. common stock βNXPI 1.38
 
Required rate of return on NXP Semiconductors N.V. common stock3 rNXPI 17.21%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rNXPI = RF + βNXPI [E(RM) – RF]
= 4.79% + 1.38 [13.79% – 4.79%]
= 17.21%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

NXP Semiconductors N.V., PRAT model

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Average Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in millions)
Dividends common stock 606 420 351 147 —
Net income attributable to stockholders 1,871 52 243 2,208 2,215
Revenue 11,063 8,612 8,877 9,407 9,256
Total assets 20,864 19,847 20,016 21,530 24,049
Stockholders’ equity 6,528 8,944 9,441 10,505 13,527
Financial Ratios
Retention rate1 0.68 -7.08 -0.44 0.93 1.00
Profit margin2 16.91% 0.60% 2.74% 23.47% 23.93%
Asset turnover3 0.53 0.43 0.44 0.44 0.38
Financial leverage4 3.20 2.22 2.12 2.05 1.78
Averages
Retention rate -0.98
Profit margin 13.53%
Asset turnover 0.42
Financial leverage 2.27
 
FCFE growth rate (g)5 -12.83%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).

2021 Calculations

1 Retention rate = (Net income attributable to stockholders – Dividends common stock) ÷ Net income attributable to stockholders
= (1,871 – 606) ÷ 1,871
= 0.68

2 Profit margin = 100 × Net income attributable to stockholders ÷ Revenue
= 100 × 1,871 ÷ 11,063
= 16.91%

3 Asset turnover = Revenue ÷ Total assets
= 11,063 ÷ 20,864
= 0.53

4 Financial leverage = Total assets ÷ Stockholders’ equity
= 20,864 ÷ 6,528
= 3.20

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= -0.98 × 13.53% × 0.42 × 2.27
= -12.83%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (45,813 × 17.21% – 5,088) ÷ (45,813 + 5,088)
= 5.49%

where:
Equity market value0 = current market value of NXP Semiconductors N.V. common stock (US$ in millions)
FCFE0 = the last year NXP Semiconductors N.V. free cash flow to equity (US$ in millions)
r = required rate of return on NXP Semiconductors N.V. common stock

FCFE growth rate (g) forecast

NXP Semiconductors N.V., H-model

Microsoft Excel
Year Value gt
1 g1 -12.83%
2 g2 -8.25%
3 g3 -3.67%
4 g4 0.91%
5 and thereafter g5 5.49%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= -12.83% + (5.49% – -12.83%) × (2 – 1) ÷ (5 – 1)
= -8.25%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= -12.83% + (5.49% – -12.83%) × (3 – 1) ÷ (5 – 1)
= -3.67%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= -12.83% + (5.49% – -12.83%) × (4 – 1) ÷ (5 – 1)
= 0.91%