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STMicroelectronics N.V

NYSE:STM
Snowflake Description

Reasonable growth potential with adequate balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
STM
NYSE
€19B
Market Cap
  1. Semiconductors and Semiconductor Equipment
Company description

STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and markets semiconductor products, and subsystems and modules worldwide. More info.


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3 Month History
STM
Industry
5yr Volatility vs Market

Value

 Is STMicroelectronics N.V undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of STMicroelectronics N.V to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of STMicroelectronics N.V is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for STMicroelectronics N.V's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are STMicroelectronics N.V's earnings available for a low price, and how does this compare to other companies in the same industry?
  • STMicroelectronics N.V is overvalued based on earnings compared to the US Semiconductors and Semiconductor Equipment industry average.
  • STMicroelectronics N.V is overvalued based on earnings compared to the US market.
Price based on expected Growth
Does STMicroelectronics N.V's expected growth come at a high price?
  • STMicroelectronics N.V is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on STMicroelectronics N.V's assets?
  • STMicroelectronics N.V is overvalued based on assets compared to the US Semiconductors and Semiconductor Equipment industry average.
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Value checks
We assess STMicroelectronics N.V's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Semiconductors and Semiconductor Equipment industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Semiconductors and Semiconductor Equipment industry average (and greater than 0)? (1 check)
  5. STMicroelectronics N.V has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (56.87%).

    Full details on the Value part of the Simply Wall St company analysis model.
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Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for STMicroelectronics N.V is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$2,559

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $1,057 × (1 + 2.47%) ÷ (10.61% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$13,314

Present value of terminal value:
$8,043

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$10,602 = $2,559 + $8,043

Value = Total value / Shares Outstanding ($10,602 / 906)

Discount to Share Price

Value per share:
$11.7

Current discount (share price of $24.1): -105.93%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 10.61% = 2.47% + (1.08 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value (€18,512,515,550).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

1.08 = 1.01 (1 + (1- 30%) (9.96%))

Levered Beta used in calculation = 1.08



Equivalent number of shares

If the companies market cap is in a different currency to that of the listing the equivalent number of shares outstanding must be calculated.

Market Cap (EUR): €18,512,515,550

Exchange rate EUR/USD = 0.848

Market Cap (USD): $21,833,371,329

Equivalent shares outstanding: $21,833,371,329 / $24.100000 = $906



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is STMicroelectronics N.V expected to perform in the next 1 to 3 years based on estimates from 7 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
22.9%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is STMicroelectronics N.V expected to grow at an attractive rate?
  • STMicroelectronics N.V's earnings growth is expected to exceed the low risk savings rate of 3.6%.
Growth vs Market Checks
  • STMicroelectronics N.V's earnings growth is expected to exceed the US market average.
  • STMicroelectronics N.V's revenue growth is expected to exceed the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • STMicroelectronics N.V's earnings are expected to grow significantly at over 20% yearly.
  • STMicroelectronics N.V's revenue is expected to grow by 8.6% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • STMicroelectronics N.V is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US Semiconductors and Semiconductor Equipment industry average.
  • An improvement in STMicroelectronics N.V's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess STMicroelectronics N.V's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
STMicroelectronics N.V has a total score of 4/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has STMicroelectronics N.V performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare STMicroelectronics N.V's growth in the last year to its industry (Semiconductors and Semiconductor Equipment).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • STMicroelectronics N.V's year on year growth rate is negative over the past 5 years, however the most recent earnings are above average.
  • STMicroelectronics N.V's 1 year earnings growth exceeds its 5 year annual average (997.7% vs -1.6%)
  • STMicroelectronics N.V's earnings growth has exceeded the US Semiconductors and Semiconductor Equipment industry average in the past year (997.7% vs 35.1%).
Earnings and Revenue History
STMicroelectronics N.V's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Poor return on shareholders funds (ROE < 20%) last year.
  • STMicroelectronics N.V performed worse than the US Semiconductors and Semiconductor Equipment industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has improved significantly over 3 years.
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Past performance checks
We assess STMicroelectronics N.V's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Semiconductors and Semiconductor Equipment industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
STMicroelectronics N.V has a total score of 3/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is STMicroelectronics N.V's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up STMicroelectronics N.V's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • STMicroelectronics N.V is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • STMicroelectronics N.V's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of STMicroelectronics N.V's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Total debt is covered by total short term assets, assets are 2.5x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • STMicroelectronics N.V's level of debt (42.2% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (24.5% vs 42.2% today).
  • Total debt is well covered by annual operating cash flow (68.7%, greater than 20% of total debt).
  • Interest on debt is well covered by earnings (EBIT is 36.2x coverage).
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Financial health checks
We assess STMicroelectronics N.V's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. STMicroelectronics N.V has a total score of 4/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is STMicroelectronics N.V's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
1%
Current annual income from STMicroelectronics N.V dividends. Estimated to be 1.24% next year.
If you bought $2,000 of STMicroelectronics N.V shares you are expected to receive $0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying below low risk savings rate (2.25%).
  • Paying below markets top dividend payers (3.18%).
Upcoming dividend payment

Purchase STMicroelectronics N.V on or before the 'Buy Limit' to receive their next dividend payment.

Dividends are usually paid every 3 or 6 months, you can time your share purchase to take advantage of upcoming dividend payments.
Dividend payment calendar
Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Dividends per share have been volatile in the past 10 years (annual drop of over 20%).
  • Dividends per share have fallen over the past 10 years.
Current Payout to shareholders
What portion of STMicroelectronics N.V's earnings are paid to the shareholders as a dividend.
  • Dividends paid are well covered by net profit (2.9x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be well covered by net profit (3.4x coverage).
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Income/ dividend checks
We assess STMicroelectronics N.V's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can STMicroelectronics N.V afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. STMicroelectronics N.V has a total score of 2/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of STMicroelectronics N.V's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Carlo Bozotti, image provided by Google.
Carlo Bozotti
COMPENSATION $1,630,680
AGE 65
TENURE AS CEO 12.7 years
CEO Bio

Mr. Carlo Bozotti has been the Chairman of Management Board, Chief Executive Officer and President at STMicroelectronics N.V., since March 18, 2005 and its Member of the Managing Board since February 2005. Mr. Bozotti served as a Corporate Vice President of Memory Products at STMicroelectronics N.V. since August, 1998 after served as Corporate Vice President of Europe and Headquarters Region from 1994 to 1998. He served as a Product Manager for the Industrial, Computer Peripheral and Telecom divisions and as Product Manager of the Monolithic Microsystems' Telecom business unit from 1986 to 1987. Mr. Bozotti served as a Director of Corporate Strategic Marketing and Key Accounts for the Headquarters Region in 1988 and became Vice President, Marketing and Sales, Americas Division at STMicroelectronics N.V. in 1991. He served as Vice Chairman and Director at ST-Ericsson NV. He joined SGS Microelettronica in 1977 after graduating in Electronic Engineering from the University of Pavia.

CEO Compensation
  • Carlo's compensation has been consistent with company performance over the past year.
  • Carlo's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the STMicroelectronics N.V management team in years:

4
Average Tenure
58.4
Average Age
  • The tenure for the STMicroelectronics N.V management team is about average.
Management Team

Carlo Bozotti

TITLE
President
COMPENSATION
$2M
AGE
65
TENURE
12.7 yrs

Carlo Ferro

TITLE
CFO and President of Finance
AGE
56
TENURE
4.3 yrs

Orio Bellezza

TITLE
President of Global Technology & Manufacturing
AGE
58
TENURE
0.3 yrs

Tait Sorensen

TITLE
Group Vice President of Investor Relations
AGE
49

Philippe Dereeper

TITLE
Chief Compliance Officer and Executive Secretary

Georges Penalver

TITLE
Chief Strategy Officer and President of Strategy
AGE
61
TENURE
0.3 yrs

Marco Cassis

TITLE
President of Global Sales & Marketing
AGE
54
TENURE
0.3 yrs

Andrea Cuomo

TITLE
Executive Vice President of Advanced Systems Technology & Special Projects
AGE
63
TENURE
5.8 yrs

Bob Krysiak

TITLE
Executive Vice President
AGE
63
TENURE
7.8 yrs

Jean-Marc Chery

TITLE
Deputy Chief Executive Officer
AGE
57
TENURE
0.3 yrs
Board of Directors Tenure

Average tenure and age of the STMicroelectronics N.V board of directors in years:

4.2
Average Tenure
57.2
Average Age
  • The tenure for the STMicroelectronics N.V board of directors is about average.
Board of Directors

Nicolas Dufourcq

TITLE
Chairman of Supervisory Board
AGE
54
TENURE
0.4 yrs

Maurizio Tamagnini

TITLE
Vice Chairman of Supervisory Board
COMPENSATION
$176K
AGE
51
TENURE
0.4 yrs

Pasquale Pistorio

TITLE
Honorary Chairman
COMPENSATION
$6M
AGE
81
TENURE
12.7 yrs

Martine Verluyten

TITLE
Member of Supervisory Board
COMPENSATION
$152K
AGE
66
TENURE
5.5 yrs

Heleen Kersten

TITLE
Member of Supervisory Board
COMPENSATION
$124K
AGE
52
TENURE
3.4 yrs

Jean-Georges Malcor

TITLE
Member of Supervisory Board
COMPENSATION
$101K
AGE
61
TENURE
6.5 yrs

Alessandro Rivera

TITLE
Member of Supervisory Board
COMPENSATION
$112K
AGE
46
TENURE
6.5 yrs

Janet Davidson

TITLE
Member of Supervisory Board
COMPENSATION
$110K
AGE
59
TENURE
4.4 yrs

Salvatore Manzi

TITLE
Member of Supervisory Board
COMPENSATION
$88K
AGE
45
TENURE
1.5 yrs

Frederic Sanchez

TITLE
Member of Supervisory Board
AGE
57
TENURE
0.4 yrs
Recent Insider Trading
  • No 3 month insider trading information.
Who owns this company?
X
Management checks
We assess STMicroelectronics N.V's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. STMicroelectronics N.V has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and markets semiconductor products, and subsystems and modules worldwide. The company offers a range of products, including discrete and standard commodity components, application-specific integrated circuits, full-custom devices and semi-custom devices, and application-specific standard products for analog, digital, and mixed-signal applications, as well as silicon chips and smartcards. It also provides subsystems and modules, including mobile phone accessories, battery chargers, and ISDN power supplies for the telecommunications, automotive, and industrial markets; and in-vehicle equipment for electronic toll payment. The company sells its products through its distributors and retailers, as well as through sales representatives. STMicroelectronics N.V. was founded in 1987 and is headquartered in Geneva, Switzerland.

Details
Name: STMicroelectronics N.V.
Ticker: STM
Exchange: NYSE
Founded: 1987
Market Cap: €21,833,371,329
Shares outstanding: 882,809,516
Website: http://www.st.com
Address: STMicroelectronics N.V.
39, Chemin du Champ des Filles,
Plan-Les-Ouates,
Geneva,
Geneva, 1228,
Switzerland
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
ENXTPA STM Common Stock Euronext Paris FR EUR 08. Dec 1994
OTCPK STME.F Common Stock Pink Sheets LLC US USD 08. Dec 1994
DB SGM Common Stock Deutsche Boerse AG DE EUR 08. Dec 1994
LSE 0INB Common Stock London Stock Exchange GB EUR 08. Dec 1994
BIT STM Common Stock Borsa Italiana IT EUR 08. Dec 1994
WBAG STMI Common Stock Wiener Boerse AG AT EUR 08. Dec 1994
BATS-CHIXE STMP Common Stock BATS 'Chi-X Europe' GB EUR 08. Dec 1994
BATS-CHIXE STMM Common Stock BATS 'Chi-X Europe' GB EUR 08. Dec 1994
NYSE STM NY REGISTRY New York Stock Exchange US USD 08. Dec 1994
DB SGMR NY REGISTRY Deutsche Boerse AG DE EUR 08. Dec 1994
DUSE SGMR NY REGISTRY Dusseldorf Stock Exchange DE EUR 08. Dec 1994
Number of employees
Current staff
Staff numbers
43,480
STMicroelectronics N.V employees.
Industry
Industry: Semiconductors
Sector: Semiconductors and Semiconductor Equipment