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ADI (Analog Devices) Intrinsic Value: DCF (Earnings Based) : $79.99 (As of Oct. 31, 2024)


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What is Analog Devices Intrinsic Value: DCF (Earnings Based)?

As of today (2024-10-31), Analog Devices's intrinsic value calculated from the Discounted Earnings model is $79.99.

Note: Discounted Earnings model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Analog Devices's Predictability Rank is 4-Stars.

Margin of Safety (Earnings Based) using Discounted Earnings model for Analog Devices is -178.91%.

The historical rank and industry rank for Analog Devices's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:

ADI' s Price-to-DCF (Earnings Based) Range Over the Past 10 Years
Min: 1.04   Med: 1.63   Max: 2.89
Current: 2.79

During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Earnings Based) Ratio of Analog Devices was 2.89. The lowest was 1.04. And the median was 1.63.

ADI's Price-to-DCF (Earnings Based) is ranked worse than
85.42% of 144 companies
in the Semiconductors industry
Industry Median: 1.04 vs ADI: 2.79

Analog Devices Intrinsic Value: DCF (Earnings Based) Historical Data

The historical data trend for Analog Devices's Intrinsic Value: DCF (Earnings Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Analog Devices Intrinsic Value: DCF (Earnings Based) Chart

Analog Devices Annual Data
Trend Oct14 Oct15 Oct16 Oct17 Oct18 Oct19 Oct20 Oct21 Oct22 Oct23
Intrinsic Value: DCF (Earnings Based)
Get a 7-Day Free Trial Premium Member Only Premium Member Only 78.91 - 85.22 104.32 151.53

Analog Devices Quarterly Data
Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22 Jan23 Apr23 Jul23 Oct23 Jan24 Apr24 Jul24
Intrinsic Value: DCF (Earnings Based) Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 155.92 151.53 147.15 110.46 79.99

Competitive Comparison of Analog Devices's Intrinsic Value: DCF (Earnings Based)

For the Semiconductors subindustry, Analog Devices's Price-to-DCF (Earnings Based), along with its competitors' market caps and Price-to-DCF (Earnings Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Analog Devices's Price-to-DCF (Earnings Based) Distribution in the Semiconductors Industry

For the Semiconductors industry and Technology sector, Analog Devices's Price-to-DCF (Earnings Based) distribution charts can be found below:

* The bar in red indicates where Analog Devices's Price-to-DCF (Earnings Based) falls into.



Analog Devices Intrinsic Value: DCF (Earnings Based) Calculation

This is the intrinsic value calculated from the Discounted Earnings model with default parameters. The calculation method is the same as Discounted Cash Flow model except earnings are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 11%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.28%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 11.90%
The Growth Rate in the growth stage is initially set as the default 10-Year EPS without NRI Growth Rate. In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year EPS without NRI Growth Rate. If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year EPS without NRI Growth Rate.
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> Analog Devices's average EPS without NRI Growth Rate in the past 10 years was 11.90%, which is between 5% and 20%. => GuruFocus defaults => Growth Rate: 11.90%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. EPS without NRI: eps without nri = $4.403.
GuruFocus DCF calculator is actually a Discounted Earnings calculator, EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Analog Devices's Intrinsic Value: DCF (Earnings Based) for today is calculated as:

Intrinsic Value: DCF (Earnings Based)=EPS without NRI*{[(1+g1)/(1+d)+(1+g1)^2/(1+d)^2+...+(1+g1)^10/(1+d)^10]
+(1+g1)^10/(1+d)^10*[(1+g2)/(1+d)+(1+g2)^2/(1+d)^2+...+(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.119)/(1+0.11) = 1.0081081081081
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694

Intrinsic Value: DCF (Earnings Based)=EPS without NRI*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=EPS without NRI*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=4.403*18.1669
=79.99

Margin of Safety % (DCF Earnings Based)=(Intrinsic Value: DCF (Earnings Based)-Current Price)/Intrinsic Value: DCF (Earnings Based)
=(79.99-223.10)/79.99
=-178.91 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Analog Devices  (NAS:ADI) Intrinsic Value: DCF (Earnings Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book Value per Share, Graham Number, Median Ratio etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.


Be Aware

What you need to know about Discounted Earnings model:

1. The Discounted Earnings model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that are relatively consistent performers.
4. The Discounted Earnings model works poorly for inconsistent performers like cyclicals.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.


Analog Devices Intrinsic Value: DCF (Earnings Based) Related Terms

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Analog Devices Business Description

Industry
Address
One Analog Way, Wilmington, MA, USA, 01887
Analog Devices is a leading analog, mixed signal, and digital signal processing chipmaker. The firm has a significant market share lead in converter chips, which are used to translate analog signals to digital and vice versa. The company serves tens of thousands of customers, and more than half of its chip sales are made to industrial and automotive end markets. Analog Devices' chips are also incorporated into wireless infrastructure equipment.
Executives
Vincent Roche officer: V.P., WORLDWIDE SALES
Edward H. Frank director C/O FUSION-IO, INC., 2855 E. COTTONWOOD PARKWAY, SUITE 100, SALT LAKE CITY UT 84121
Gregory M Bryant officer: Executive Vice President 2200 MISSION COLLEGE BLVD, SANTA CLARA CA 95054
James Champy director C/O PEROT SYSTEMS CORP, 2300 WEST PLANO PKWY, PLANO TX 75075
Michael Sondel officer: CAO (principal acct. officer) ONE TECHNOLOGY WAY, NORWOOD MA 02062
Vivek Jain officer: SVP, Global Operations 120 SAN GABRIEL DRIVE, SUNNYVALE CA 94086
James Michael Mollica officer: Interim CFO C/O ANALOG DEVICES, INC., ONE ANALOG WAY, WILMINGTON MA 01887
Prashanth Mahendra-rajah officer: SVP, Finance & CFO C/O WABCO HOLDINGS INC., ONE CENTENNIAL AVENUE, PISCATAWAY NJ 08855
Kenton J Sicchitano director ONE TECHNOLOGY WAY, C/O ANALOG DEVICES, INC., NORWOOD MA 02062
Stephen M Jennings director LTX CORPORATION, UNIVERSITY AVE, WESTWOOD MA 02090
Tunc Doluca director
Ray Stata director, officer: CHAIRMAN
Andre' Andonian director ONE ANALOG WAY, WILMINGTON MA 01887
Bruce R Evans director C/O SUMMIT PARTNERS, 222 BERKELEY STREET, 18TH FLOOR, BOSTON MA 02116
Mercedes Johnson director MICRON TECHNOLOGY, INC, 8000 S FEDERAL WAY, MS 1-557, BOISE ID 83716