Analog Devices, Inc. (ADI) Discounted Future Market Cap

Analog Devices, Inc.

ADI (NASDAQ)

(%)

Valuation
Analog Devices, Inc. Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	345 USD
Estimated net income	3.93 Bil. USD
Estimated market capitalization	258.5 Bil. USD
Market capitalization discounted to present	169.4 Bil. USD
Shares Outstanding	490.8 Mil.
Earnings Per Share (EPS)	4.59 USD
Market Price	304 USD
Price to Earnings (PE) Ratio	65.81

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2017", "x": "2017-10-31", "y": 5246354000}, {"l": "2018", "x": "2018-10-31", "y": 6224689000}, {"l": "2019", "x": "2019-11-02", "y": 5991065000}, {"l": "2020", "x": "2020-10-31", "y": 5603056000}, {"l": "2021", "x": "2021-10-30", "y": 7318286000}, {"l": "2022", "x": "2022-10-28", "y": 12013953000}, {"l": "2023", "x": "2023-10-31", "y": 12305539000}, {"l": "2024", "x": "2024-11-02", "y": 9427157000}, {"l": "2025", "x": "2025-11-01", "y": 11019707000}, {"l": "2026", "x": "2026-11-01", "y": 12232976740, "oy": 12232976740, "e": true, "d": 2026, "g": 11.01, "og": 11.01}, {"l": "2027", "x": "2027-11-01", "y": 13579827479, "oy": 13579827479, "e": true, "d": 2027, "g": 11.01, "og": 11.01}, {"l": "2028", "x": "2028-11-01", "y": 15074966485, "oy": 15074966485, "e": true, "d": 2028, "g": 11.01, "og": 11.01}, {"l": "2029", "x": "2029-11-01", "y": 16734720295, "oy": 16734720295, "e": true, "d": 2029, "g": 11.01, "og": 11.01}, {"l": "2030", "x": "2030-11-01", "y": 18577212999, "oy": 18577212999, "e": true, "d": 2030, "g": 11.01, "og": 11.01}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2017", "x": "2017-10-31", "y": 805379000}, {"l": "2018", "x": "2018-10-31", "y": 1506980000}, {"l": "2019", "x": "2019-11-02", "y": 1363011000}, {"l": "2020", "x": "2020-10-31", "y": 1220761000}, {"l": "2021", "x": "2021-10-30", "y": 1390422000}, {"l": "2022", "x": "2022-10-28", "y": 2748561000}, {"l": "2023", "x": "2023-10-31", "y": 3314579000}, {"l": "2024", "x": "2024-11-02", "y": 1635273000}, {"l": "2025", "x": "2025-11-01", "y": 2267342000}, {"l": "2026", "x": "2026-11-01", "y": 2586051282, "oy": 2586051282, "e": true, "d": 2026, "g": 14.06, "og": 14.06}, {"l": "2027", "x": "2027-11-01", "y": 2870775529, "oy": 2870775529, "e": true, "d": 2027, "g": 11.01, "og": 11.01}, {"l": "2028", "x": "2028-11-01", "y": 3186847915, "oy": 3186847915, "e": true, "d": 2028, "g": 11.01, "og": 11.01}, {"l": "2029", "x": "2029-11-01", "y": 3537719870, "oy": 3537719870, "e": true, "d": 2029, "g": 11.01, "og": 11.01}, {"l": "2030", "x": "2030-11-01", "y": 3927222828, "oy": 3927222828, "e": true, "d": 2030, "g": 11.01, "og": 11.01}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-11-01": 42, "2027-11-01": 43, "2028-11-01": 44, "2029-11-01": 45, "2030-11-01": 46}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-11-01	2027-11-01	2028-11-01	2029-11-01	2030-11-01

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2025 Nov 01	LTM Jan 27	2026 Nov 01	2027 Nov 01	2028 Nov 01	2029 Nov 01	2030 Nov 01
Revenue	11,020	11,020	12,233	13,580	15,075	16,735	18,577
Revenue Growth Rate	16.89%	0%	11.01%	11.01%	11.01%	11.01%	11.01%
Net Income	2,267	2,267	2,586	2,871	3,187	3,538	3,927

Monetary values in USD

amounts except #

2025
Nov 01

LTM
Jan 27

2026
Nov 01

2027
Nov 01

2028
Nov 01

2029
Nov 01

2030
Nov 01

Revenue

11,020

12,233

13,580

15,075

16,735

18,577

Revenue Growth Rate

16.89%

11.01%

Net Income

2,267

2,586

2,871

3,187

3,538

3,927

Historical Values

Monetary values in USD amounts except #	Average	LTM Jan 27	2025 Nov 01	2024 Nov 02	2023 Oct 31	2022 Oct 28	2021 Oct 30	2020 Oct 31	2019 Nov 02	2018 Oct 31	2017 Oct 31
Revenue	8,617	11,020	11,020	9,427	12,306	12,014	7,318	5,603	5,991	6,225	5,246
Cost of Revenue	3,216	4,434	4,996	4,046	4,428	4,210	2,462	1,913	1,977	1,974	1,719
Gross Profit	5,401	6,586	6,024	5,381	7,877	7,804	4,856	3,690	4,014	4,250	3,527
Gross Margin	63.52%	59.77%	54.66%	57.08%	64.01%	64.96%	66.36%	65.87%	67%	68.28%	67.23%
Operating Income	2,303	2,932	3,002	2,033	3,823	3,279	1,692	1,498	1,711	1,900	1,163
Operating Margin	26.49%	26.61%	27.25%	21.56%	31.07%	27.29%	23.12%	26.74%	28.55%	30.52%	22.16%
Net Income	1,852	2,267	2,267	1,635	3,315	2,749	1,390	1,221	1,363	1,507	805.4
Net Margin	21.14%	20.58%	20.58%	17.35%	26.94%	22.88%	19%	21.79%	22.75%	24.21%	15.35%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Jan 27	2025 Nov 01	2024 Nov 02	2023 Oct 31	2022 Oct 28	2021 Oct 30	2020 Oct 31	2019 Nov 02	2018 Oct 31	2017 Oct 31	2016 Nov 01
Revenue	8,617	11,020	11,020	9,427	12,306	12,014	7,318	5,603	5,991	6,225	5,246
Revenue Growth Rate	11.01%	0%	16.89%	-23.39%	2.43%	64.16%	30.61%	-6.48%	-3.75%	18.65%
Net Income	1,852	2,267	2,267	1,635	3,315	2,749	1,390	1,221	1,363	1,507	805.4
Net Margin	21.14%	20.58%	20.58%	17.35%	26.94%	22.88%	19%	21.79%	22.75%	24.21%	15.35%
Net Income Growth Rate	20.81%	0%	38.65%	-50.66%	20.59%	97.68%	13.9%	-10.44%	-9.55%	87.11%
Stockholders Equity	23,921	33,816	33,816	35,176	35,565	36,465	37,993	11,998	11,709	11,268	10,162	5,166
Equity Growth Rate	29.19%	0%	-3.87%	-1.09%	-2.47%	-4.02%	216.7%	2.47%	3.91%	10.89%	96.71%	1.83%
Return on Invested Capital (ROIC)	6.41%	5.8%	5.94%	4.32%	7.87%	6.27%	3.72%	7.32%	8.16%	9.31%	5.42%
After-tax Operating Income	2,072	2,452	2,510	1,870	3,512	2,908	1,771	1,394	1,569	1,729	1,002
Income Tax Rate	9.36%	16.4%	16.4%	7.99%	8.13%	11.3%	-4.64%	6.93%	8.26%	8.96%	13.84%
Invested Capital	31,634	42,248	42,248	43,249	44,635	46,389	47,574	19,048	19,236	18,581	18,497	6,266