Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Lam Research Corp. (NASDAQ:LRCX)

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Dividend Discount Model (DDM)

Intermediate level


Intrinsic Stock Value (Valuation Summary)

Lam Research Corp., dividends per share (DPS) forecast

US$

Microsoft Excel LibreOffice Calc
Year Value DPSt or Terminal value (TVt) Calculation Present value at
0 DPS01
1 DPS1 = × (1 + )
2 DPS2 = × (1 + )
3 DPS3 = × (1 + )
4 DPS4 = × (1 + )
5 DPS5 = × (1 + )
5 Terminal value (TV5) = × (1 + ) ÷ ()
Intrinsic value of Lam Research Corp.’s common stock (per share)
Current share price

Based on: 10-K (filing date: 2020-08-18).

1 DPS0 = Sum of the last year dividends per share of Lam Research Corp.’s common stock. 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)

Microsoft Excel LibreOffice Calc
Assumptions
Rate of return on LT Treasury Composite1 RF
Expected rate of return on market portfolio2 E(RM)
Systematic risk of Lam Research Corp.’s common stock βLRCX
 
Required rate of return on Lam Research Corp.’s common stock3 rLRCX

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 rLRCX = RF + βLRCX [E(RM) – RF]
= + []
=


Dividend Growth Rate (g)

Dividend growth rate (g) implied by PRAT model

Lam Research Corp., PRAT model

Microsoft Excel LibreOffice Calc
Average Jun 28, 2020 Jun 30, 2019 Jun 24, 2018 Jun 25, 2017 Jun 26, 2016 Jun 28, 2015
Selected Financial Data (US$ in thousands)
Cash dividends declared
Net income
Revenue
Total assets
Stockholders’ equity
Financial Ratios
Retention rate1
Profit margin2
Asset turnover3
Financial leverage4
Averages
Retention rate
Profit margin
Asset turnover
Financial leverage
 
Dividend growth rate (g)5

Based on: 10-K (filing date: 2020-08-18), 10-K (filing date: 2019-08-20), 10-K (filing date: 2018-08-14), 10-K (filing date: 2017-08-15), 10-K (filing date: 2016-08-17), 10-K (filing date: 2015-08-13).

2020 Calculations

1 Retention rate = (Net income – Cash dividends declared) ÷ Net income
= () ÷ =

2 Profit margin = 100 × Net income ÷ Revenue
= 100 × ÷ =

3 Asset turnover = Revenue ÷ Total assets
= ÷ =

4 Financial leverage = Total assets ÷ Stockholders’ equity
= ÷ =

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= × × × =


Dividend growth rate (g) implied by Gordon growth model

g = 100 × (P0 × rD0) ÷ (P0 + D0)
= 100 × ( × ) ÷ ( + ) =

where:
P0 = current price of share of Lam Research Corp.’s common stock
D0 = the last year dividends per share of Lam Research Corp.’s common stock
r = required rate of return on Lam Research Corp.’s common stock


Dividend growth rate (g) forecast

Lam Research Corp., H-model

Microsoft Excel LibreOffice Calc
Year Value gt
1 g1
2 g2
3 g3
4 g4
5 and thereafter g5

where:
g1 is implied by PRAT model
g5 is implied by Gordon growth model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= + () × (2 – 1) ÷ (5 – 1) =

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= + () × (3 – 1) ÷ (5 – 1) =

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= + () × (4 – 1) ÷ (5 – 1) =