Stock Analysis on Net
Stock Analysis on Net

Amphenol Corp. (NYSE:APH)

This company has been moved to the archive! The financial data has not been updated since April 26, 2024.

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)

Amphenol Corp., free cash flow to equity (FCFE) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 16.80%
01 FCFE0 1,864,200
1 FCFE1 2,208,670 = 1,864,200 × (1 + 18.48%) 1,891,061
2 FCFE2 2,591,303 = 2,208,670 × (1 + 17.32%) 1,899,625
3 FCFE3 3,010,320 = 2,591,303 × (1 + 16.17%) 1,889,458
4 FCFE4 3,462,353 = 3,010,320 × (1 + 15.02%) 1,860,676
5 FCFE5 3,942,308 = 3,462,353 × (1 + 13.86%) 1,813,948
5 Terminal value (TV5) 153,037,260 = 3,942,308 × (1 + 13.86%) ÷ (16.80% – 13.86%) 70,416,016
Intrinsic value of Amphenol Corp. common stock 79,770,783
 
Intrinsic value of Amphenol Corp. common stock (per share) $132.82
Current share price $120.49

Based on: 10-K (reporting date: 2023-12-31).

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 4.07%
Expected rate of return on market portfolio2 E(RM) 13.86%
Systematic risk of Amphenol Corp. common stock βAPH 1.30
 
Required rate of return on Amphenol Corp. common stock3 rAPH 16.80%

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 rAPH = RF + βAPH [E(RM) – RF]
= 4.07% + 1.30 [13.86% – 4.07%]
= 16.80%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Amphenol Corp., PRAT model

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Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in thousands)
Dividends declared 507,400 482,600 379,700 310,000 285,300
Net income attributable to Amphenol Corporation 1,928,000 1,902,300 1,590,800 1,203,400 1,155,000
Net sales 12,554,700 12,623,000 10,876,300 8,598,900 8,225,400
Total assets 16,526,400 15,326,200 14,678,400 12,327,300 10,815,500
Stockholders’ equity attributable to Amphenol Corporation 8,346,500 7,015,600 6,302,000 5,384,900 4,530,300
Financial Ratios
Retention rate1 0.74 0.75 0.76 0.74 0.75
Profit margin2 15.36% 15.07% 14.63% 13.99% 14.04%
Asset turnover3 0.76 0.82 0.74 0.70 0.76
Financial leverage4 1.98 2.18 2.33 2.29 2.39
Averages
Retention rate 0.75
Profit margin 14.62%
Asset turnover 0.76
Financial leverage 2.23
 
FCFE growth rate (g)5 18.48%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Retention rate = (Net income attributable to Amphenol Corporation – Dividends declared) ÷ Net income attributable to Amphenol Corporation
= (1,928,000 – 507,400) ÷ 1,928,000
= 0.74

2 Profit margin = 100 × Net income attributable to Amphenol Corporation ÷ Net sales
= 100 × 1,928,000 ÷ 12,554,700
= 15.36%

3 Asset turnover = Net sales ÷ Total assets
= 12,554,700 ÷ 16,526,400
= 0.76

4 Financial leverage = Total assets ÷ Stockholders’ equity attributable to Amphenol Corporation
= 16,526,400 ÷ 8,346,500
= 1.98

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.75 × 14.62% × 0.76 × 2.23
= 18.48%

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

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (72,366,770 × 16.80% – 1,864,200) ÷ (72,366,770 + 1,864,200)
= 13.86%

where:
Equity market value0 = current market value of Amphenol Corp. common stock (US$ in thousands)
FCFE0 = the last year Amphenol Corp. free cash flow to equity (US$ in thousands)
r = required rate of return on Amphenol Corp. common stock

FCFE growth rate (g) forecast

Amphenol Corp., H-model

Microsoft Excel
Year Value gt
1 g1 18.48%
2 g2 17.32%
3 g3 16.17%
4 g4 15.02%
5 and thereafter g5 13.86%

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)
= 18.48% + (13.86% – 18.48%) × (2 – 1) ÷ (5 – 1)
= 17.32%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 18.48% + (13.86% – 18.48%) × (3 – 1) ÷ (5 – 1)
= 16.17%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 18.48% + (13.86% – 18.48%) × (4 – 1) ÷ (5 – 1)
= 15.02%