Loading...

Ambarella

Nasdaq:AMBA
Snowflake Description

Flawless balance sheet with concerning outlook.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
AMBA
Nasdaq
$2B
Market Cap
  1. Home
  2. US
  3. Semiconductors
2018/01/19
Company description

Ambarella, Inc. develops semiconductor processing solutions for video that enable high-definition (HD) video capture, sharing, and display worldwide. More info.


Add to Portfolio Compare Print Invest
SHARE PRICE
3 Month History
AMBA
Industry
5yr Volatility vs Market
Competitors

Value

 Is Ambarella 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 Ambarella 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 Ambarella 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 Ambarella's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Ambarella's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Ambarella is overvalued based on earnings compared to the Global Semiconductor industry average.
  • Ambarella is overvalued based on earnings compared to the US market.
Price based on expected Growth
Does Ambarella's expected growth come at a high price?
  • Ambarella earnings are not expected to grow next year, we can't assess if it's growth is good value.
Price based on value of assets
What value do investors place on Ambarella's assets?
  • Ambarella is overvalued based on assets compared to the Global Semiconductor industry average.
X
Value checks
We assess Ambarella'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 Semiconductor 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 Semiconductor industry average (and greater than 0)? (1 check)
  5. Ambarella 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 (-61.68%).

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

The calculations below outline how an intrinsic value for Ambarella 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:
$270

Terminal Value

Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $84 × (1 + 2.47%) ÷ (9.8% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$1,171

Present value of terminal value:
$734

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$1,004 = $270 + $734

Value = Total value / Shares Outstanding ($1,004 / 33)

Discount to Share Price

Value per share:
$30.15

Current discount (share price of $52.6): -74.47%



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 = 9.8% = 2.47% + (0.973 * 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 ($1,791,890,130).

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

0.973 = 0.973 (1 + (1- 35%) (0%))

Levered Beta used in calculation = 0.973



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 Ambarella expected to perform in the next 1 to 3 years based on estimates from 9 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
-62.7%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Ambarella expected to grow at an attractive rate?
  • Ambarella's earnings are expected to decrease over the next 1-3 years, this is below the low risk savings rate of 4.5%.
Growth vs Market Checks
  • Ambarella's earnings are expected to decrease over the next 1-3 years, this is below the US market average.
  • Ambarella'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
  • Ambarella's earnings are expected to decrease over the next 1-3 years, this is not considered high growth.
  • Ambarella's revenue is expected to grow by 6.8% 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.
  • Ambarella 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 Global Semiconductor industry average.
  • An improvement in Ambarella's performance (ROE) is expected over the next 3 years.
X
Future performance checks
We assess Ambarella'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 XX market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the XX 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.
Ambarella has a total score of 1/6, 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 Ambarella 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 Ambarella's growth in the last year to its industry (Semiconductor).
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.
  • Ambarella's year on year earnings growth rate has been positive over the past 5 years, however the most recent earnings are below average.
  • Ambarella's 1 year earnings growth is negative, it can't be compared to the 5 year average.
  • Ambarella's 1 year earnings growth is negative, it can't be compared to the Global Semiconductor industry average.
Earnings and Revenue History
Ambarella'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.
  • Ambarella performed worse than the Global Semiconductor industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has been diminishing over 3 years.
X
Past performance checks
We assess Ambarella'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 Semiconductor 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.
Ambarella has a total score of 1/6, 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 Ambarella'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 Ambarella's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Ambarella is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Ambarella's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Ambarella'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.
  • Low level of unsold assets.
  • Ambarella has no debt, it does not need to be covered by total short term assets.
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.
  • Ambarella has no debt.
X
Financial health checks
We assess Ambarella'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. Ambarella has a total score of 6/6, see the detailed checks below.


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

Dividends

 What is Ambarella'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
0%
Current annual income from Ambarella dividends.
If you bought $2,000 of Ambarella 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?
  • Not paying a dividend.
  • Not paying a dividend.
Annualized 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.
  • Not paying a notable dividend.
  • Not paying a notable dividend.
Current Payout to shareholders
What portion of Ambarella's earnings are paid to the shareholders as a dividend.
  • Not paying a notable dividend.
Future Payout to shareholders
  • Insufficient estimate data to determine if a dividend will be paid in 3 years.
X
Income/ dividend checks
We assess Ambarella'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 Ambarella afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Ambarella has a total score of 0/6, 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 Ambarella'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
Fermi Wang, image provided by Google.
Fermi Wang
COMPENSATION $1,751,880
AGE 53
TENURE AS CEO 14 years
CEO Bio

Dr. Feng-Ming Wang, also known as Fermi, PhD., Co-founded Ambarella, Inc in 2004 and serves as its Chief Executive Officer and President. Dr. Wang served as the Chief Executive Officer at Afara Websystems, which he co-founded. Dr. Wang held several senior management positions at C-Cube Microsystems. As Vice President and General Manager of the Home Media division of C-Cube, he had P&L responsibility for silicon solutions for the DVD, digital video recorder (DVR) and digital video distribution and production markets. As Vice President and General Manager of Codec division of C-Cube, he launched its MPEG codec business and served in both engineering and business management roles. During this time, Dr. Wang and his team were responsible for growing the business by 200 percent in two years and developing the world's first MPEG codec chip. Dr. Wang owns several digital video-related patents. Dr. Wang holds a B.S. degree in Electrical Engineering from National Taiwan University and an M.S. degree and Ph.D. in Electrical Engineering from Columbia University.

CEO Compensation
  • Fermi's compensation has been consistent with company performance over the past year.
  • Fermi's compensation is higher than average for a company of this size and profit level.
Management Team Tenure

Average tenure and age of the Ambarella management team in years:

10.4
Average Tenure
57.7
Average Age
  • The average tenure for the Ambarella management team is over 5 years, this suggests they are a seasoned and experienced team.
Management Team

Fermi Wang

TITLE
Co-Founder
COMPENSATION
$2M
AGE
53
TENURE
14 yrs

Les Kohn

TITLE
Co-Founder
COMPENSATION
$622K
AGE
60
TENURE
14 yrs

George Laplante

TITLE
CFO & Secretary
COMPENSATION
$584K
AGE
65
TENURE
6.8 yrs

Chris Day

TITLE
Vice President of Marketing and Business Development
COMPENSATION
$384K
AGE
54
TENURE
7.8 yrs

Michael Chen

TITLE
Vice President of Business Development
COMPENSATION
$350K
AGE
52
TENURE
6.6 yrs

Didier LeGall

TITLE
Co-Founder and Executive Vice President
AGE
62
TENURE
14 yrs

Yang Zemo

TITLE
Vice President of Operations
TENURE
8.2 yrs

Michael Morehead

TITLE
General Counsel
TENURE
8 yrs

John Ju

TITLE
Vice President of Systems and General Manager of Asia Design Centers

Lee Chan

TITLE
Vice President of VLSI
TENURE
13.9 yrs
Board of Directors Tenure

Average tenure and age of the Ambarella board of directors in years:

8.4
Average Tenure
59.1
Average Age
  • The tenure for the Ambarella board of directors is about average.
Board of Directors

Fermi Wang

TITLE
Co-Founder
COMPENSATION
$2M
AGE
53
TENURE
14 yrs

Les Kohn

TITLE
Co-Founder
COMPENSATION
$622K
AGE
60
TENURE
14 yrs

Andy Verhalen

TITLE
Director
COMPENSATION
$249K
AGE
61
TENURE
14 yrs

Chris Paisley

TITLE
Director
COMPENSATION
$250K
AGE
65
TENURE
5.4 yrs

Calvin Hu

TITLE
Director
COMPENSATION
$251K
AGE
69
TENURE
7 yrs

Jeff Richardson

TITLE
Independent Director
COMPENSATION
$251K
AGE
52
TENURE
3.8 yrs

Hsiao-Wuen Hon

TITLE
Independent Director
AGE
54
TENURE
0.4 yrs
Recent Insider Trading
  • Ambarella insiders have only sold shares in the past 3 months.
Who owns this company?
X
Management checks
We assess Ambarella'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. Ambarella 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

External News
Loading...
Simply Wall St News

Does Ambarella Inc's (AMBA) PE Ratio Warrant A Sell?

Formula Price-Earnings Ratio = Price per share ÷ Earnings per share P/E Calculation for AMBA Price per share = $54.46 Earnings per share = $1.612 ∴ Price-Earnings Ratio = $54.46 ÷ $1.612 = 33.8x The P/E ratio isn’t a metric you view in isolation and only becomes useful when you compare it against other similar companies. … For example, if you inadvertently compared riskier firms with AMBA, then investors would naturally value AMBA at a higher price since it is a less risky investment. … Similarly, if you accidentally compared lower growth firms with AMBA, investors would also value AMBA at a higher price since it is a higher growth investment.

Simply Wall St -

Have Investors Already Priced In Ambarella Inc's (AMBA) Growth?

NasdaqGS:AMBA Future Profit Nov 23rd 17 Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. … Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at AMBA future expectations. … If you believe AMBA is currently trading above its peers, selling high and buying it back up again when its price falls towards its real value can be profitable.

Simply Wall St -

Company Info

Map
Description

Ambarella, Inc. develops semiconductor processing solutions for video that enable high-definition (HD) video capture, sharing, and display worldwide. The company’s system-on-a-chip designs integrated HD video processing, image processing, audio processing, and system functions onto a single chip for delivering video and image quality, differentiated functionality, and low power consumption. Its solutions enable the creation of video content for wearable sports cameras, automotive aftermarket cameras, and professional and consumer Internet Protocol (IP) security cameras, as well as cameras incorporated into unmanned aerial vehicles in the camera market; and manage IP video traffic, broadcast encoding and transcoding, and IP video delivery applications in the infrastructure market. The company sells its solutions to original design manufacturers and original equipment manufacturers through its direct sales force and logistics providers. Ambarella, Inc. was founded in 2004 and is headquartered in Santa Clara, California.

Details
Name: Ambarella, Inc.
AMBA
Exchange: NasdaqGS
Founded: 2004
$1,791,890,130
33,306,508
Website: http://www.ambarella.com
Address: Ambarella, Inc.
3101 Jay Street,
Santa Clara,
California, 95054,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqGS AMBA Ordinary Shares Nasdaq Global Select US USD 10. Oct 2012
DB A8B Ordinary Shares Deutsche Boerse AG DE EUR 10. Oct 2012
Number of employees
Current staff
Staff numbers
669
Ambarella employees.
Industry
Semiconductors
Semiconductors
Company Analysis and Financial Data Status
Area Date
Company Analysis updated: 2018/01/19
Last estimates confirmation: 2018/01/03
Last earnings update: 2017/10/31
Last annual earnings update: 2017/01/31


All dates in UTC. All financial data provided by Standard & Poor’s Capital IQ.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.