A Short Intro for NXP Semiconductors Investors

We've been asking ourselves recently if the market has placed a fair valuation on NXP Semiconductors. Let's dive into some of the fundamental values of this large-cap Technology company to determine if there might be an opportunity here for value-minded investors.

A Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:

NXP Semiconductors N.V. offers various semiconductor products. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, NXP Semiconductors has a trailing 12 month P/E ratio of 19.3 and a P/B ratio of 6.72.

NXP Semiconductors's PEG ratio is 1.99, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Growing Revenues With Increasing Reinvestment in the Business:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $8,877 $8,612 $11,063 $13,205
Gross Margins 52.0% 49.2% 54.8% 56.9%
Operating Margins 6.9% 3.5% 23.4% 28.7%
Net Margins 2.74% 0.6% 16.91% 21.11%
Net Income (MM) $243 $52 $1,871 $2,787
Net Interest Expense (MM) -339 -357 -381 -416
Net Interest Expense (MM) -$339 -$357 -$381 -$416
Depreciation & Amort. (MM) -$2,047 -$1,988 -$1,262 -$1,250
Earnings Per Share $0.85 $0.18 $6.79 $10.67
EPS Growth n/a -78.82% 3672.22% 57.14%
Diluted Shares (MM) 286 284 276 260
Free Cash Flow (MM) $1,745 $1,960 $2,145 $2,668
Capital Expenditures (MM) -$628 -$522 -$932 -$1,227
Net Current Assets (MM) -$7,094 -$6,372 -$8,866 -$8,561
Current Ratio 1.82 2.14 2.13 2.12
Long Term Debt (MM) $7,365 $7,609 $10,572 $11,165
Net Debt / EBITDA 2.48 2.31 2.04 1.47

NXP Semiconductors benefits from growing revenues and increasing reinvestment in the business, exceptional EPS growth, and a steady stream of strong cash flows. The company's financial statements show an excellent current ratio and healthy leverage. However, the firm suffers from slimmer gross margins than its peers and weak operating margins with a positive growth rate.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.