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.
The historical rank and industry rank for Altera's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:
FRA:ALR'
s Price-to-DCF (Earnings Based) Range Over the Past 10 Years
Min: 0 Med: 0 Max: 3.22
Current: 3.22
During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Earnings Based) Ratio of Altera was 3.22. The lowest was 0.00. And the median was 0.00.
FRA:ALR's Price-to-DCF (Earnings Based) is not ranked
in the Semiconductors industry.
Industry Median: 1.1
vs FRA:ALR: 3.22
Altera Intrinsic Value: DCF (Earnings Based) Historical Data
The historical data trend for Altera'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.
Altera Intrinsic Value: DCF (Earnings Based) Chart
Competitive Comparison of Altera's Intrinsic Value: DCF (Earnings Based)
For the Semiconductors subindustry, Altera'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.
Altera's Price-to-DCF (Earnings Based) Distribution in the Semiconductors Industry
For the Semiconductors industry and Technology sector, Altera's Price-to-DCF (Earnings Based) distribution charts can be found below:
* The bar in red indicates where Altera's Price-to-DCF (Earnings Based) falls into.
Altera 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 4.59%. 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 = 10.50%
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.
=>
Altera's average EPS without NRI Growth Rate in the past
10 years was 10.50%,
which is between 5% and 20%. => GuruFocus defaults => Growth Rate: 10.50%
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 = €0.961. 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.
Altera's Intrinsic Value: DCF (Earnings Based) for today is calculated as:
* 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.
Altera (FRA:ALR) 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.
Altera Intrinsic Value: DCF (Earnings Based) Related Terms
Thank you for viewing the detailed overview of Altera's Intrinsic Value: DCF (Earnings Based) provided by GuruFocus.com. Please click on the following links to see related term pages.
Altera Corp was founded in 1983 and reincorporated in the State of Delaware in 1997. It designs and sells programmable logic devices, HardCopy application-specific integrated circuit devices, power system-on-chip devices, pre-defined design building blocks known as intellectual property cores, and associated development tools. Its PLDs, which consist of field-programmable gate arrays, including those referred to as systems-on-chip FPGAs which incorporate hard embedded processor cores, and complex programmable logic devices. FPGAs and CPLDs are standard semiconductor integrated circuits that are manufactured as standard chips that its customers program to perform desired logic and processing functions within their electronic systems. With its HardCopy devices it offers its customers a migration path from a PLD to a low-cost, high-volume, non-programmable implementation of their designs. Its customers can license IP cores for implementation of standard functions in their PLD designs. Customers develop, compile, and verify their PLD designs, and then program their designs into its PLDs using its proprietary development software, which operates on personal computers and engineering workstations. Its products serve a range of customers within the Telecom and Wireless, Industrial Automation, Military and Automotive, Networking, Computer and Storage and Other vertical markets. Its geographical segments include US, Japan, China, Europe and Other. Its customers design electronic systems that typically use three types of digital integrated circuits: Processors, which include microprocessors, microcontrollers, graphics processors, and digital signal processors, control central computing tasks and signal processing; Memory stores programming instructions and data; and Logic manages the interchange and manipulation of digital signals within a system. It classifies its products into three categories: New, Mainstream, and Mature and Other Products. New Products include the Stratix V, Stratix IV, Arria 10, Arria V, Arria II, Cyclone V, Cyclone IV, MAX 10 FPGAs, MAX V CPLDs, HardCopy IV devices and Enpirion PowerSoCs. Mainstream Products include the Stratix III, Cyclone III, MAX II and HardCopy III devices. Mature and Other Products include the Stratix II, Stratix, Arria GX, Cyclone II, Cyclone, Classic, MAX 3000A, MAX 7000, MAX 7000A, MAX 7000B, MAX 7000S, MAX 9000, HardCopy II, HardCopy, FLEXseries, APEX series, Mercury, Excalibur devices, configuration and other devices, intellectual property cores, and software and other tools. The Company competes with PLD vendors such as Lattice Semiconductor Corporation, Microsemi Corporation, and Xilinx Inc. Other semiconductor companies with whom it may compete includes Analog Devices Inc., Atmel Corporation, Avago Technologies, Broadcom Corporation, Cavium, Inc., Freescale Semiconductor Inc., GlobalFoundries Inc., HiSilicon Technologies Company, Intel Corporation ("Intel"), Linear Technology Corporation
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