NYSE:VSM

Stock Analysis Report

Executive Summary

Versum Materials, Inc. develops, manufactures, transports, and handles specialty materials for the semiconductor and display industries in the United States, Taiwan, South Korea, China, Europe, and rest of Asia.

Rewards

Trading at 5.6% below its fair value

Earnings are forecast to grow 56.91% per year

Risk Analysis

Debt is not well covered by operating cash flow

Large one-off items impacting financial results

Profit margins (5.9%) are lower than last year (14.3%)



Snowflake Analysis

Moderate growth potential with imperfect balance sheet.


Similar Companies

Share Price & News

How has Versum Materials's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: VSM has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.1%

VSM

4.8%

US Semiconductor

1.5%

US Market


1 Year Return

55.9%

VSM

41.1%

US Semiconductor

20.1%

US Market

Return vs Industry: VSM exceeded the US Semiconductor industry which returned 48.5% over the past year.

Return vs Market: VSM exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

VSMIndustryMarket
7 Day0.1%4.8%1.5%
30 Day1.6%4.3%1.4%
90 Day2.3%13.6%8.7%
1 Year57.0%55.9%43.8%41.1%22.7%20.1%
3 Year129.3%125.6%95.7%85.1%50.1%40.5%
5 Yearn/a158.6%133.8%73.1%54.1%

Price Volatility Vs. Market

How volatile is Versum Materials's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Versum Materials undervalued compared to its fair value and its price relative to the market?

5.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: VSM ($52.99) is trading below our estimate of fair value ($56.16)

Significantly Below Fair Value: VSM is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: VSM is poor value based on its PE Ratio (73.4x) compared to the Semiconductor industry average (34.5x).

PE vs Market: VSM is poor value based on its PE Ratio (73.4x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: VSM is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: VSM is overvalued based on its PB Ratio (33.6x) compared to the US Semiconductor industry average (3.3x).


Next Steps

Future Growth

How is Versum Materials forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

56.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: VSM's forecast earnings growth (56.9% per year) is above the savings rate (2.7%).

Earnings vs Market: VSM's earnings (56.9% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: VSM's revenue (1.9% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: VSM's revenue (1.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if VSM's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Versum Materials performed over the past 5 years?

0.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: VSM has a large one-off loss of $160.2M impacting its June 30 2019 financial results.

Growing Profit Margin: VSM's current net profit margins (5.9%) are lower than last year (14.3%).


Past Earnings Growth Analysis

Earnings Trend: VSM's earnings have grown by 0.2% per year over the past 5 years.

Accelerating Growth: VSM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: VSM had negative earnings growth (-58.2%) over the past year, making it difficult to compare to the Semiconductor industry average (-15.8%).


Return on Equity

High ROE: Whilst VSM's Return on Equity (42.04%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Versum Materials's financial position?


Financial Position Analysis

Short Term Liabilities: VSM's short term assets ($735.2M) exceed its short term liabilities ($169.6M).

Long Term Liabilities: VSM's short term assets ($735.2M) do not cover its long term liabilities ($1.1B).


Debt to Equity History and Analysis

Debt Level: VSM's debt to equity ratio (480.4%) is considered high.

Reducing Debt: Insufficient data to determine if VSM's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: VSM's debt is not well covered by operating cash flow (13.5%).

Interest Coverage: VSM's interest payments on its debt are well covered by EBIT (7.6x coverage).


Balance Sheet

Inventory Level: VSM has a high level of physical assets or inventory.

Debt Coverage by Assets: VSM's debt is not covered by short term assets (assets are 0.8x debt).


Next Steps

Dividend

What is Versum Materials's current dividend yield, its reliability and sustainability?

0.60%

Current Dividend Yield


Dividend Yield vs Market

company0.6%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years0.7%

Current dividend yield vs market & industry

Notable Dividend: VSM's dividend (0.6%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: VSM's dividend (0.6%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: VSM is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: VSM is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: VSM is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of VSM's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.8yrs

Average management tenure


CEO

Guillermo Novo (57yo)

US$4,809,960

Compensation

Mr. Guillermo Novo serves as Chief Executive Officer and President of Versum Materials, Inc. Mr. Novo was a Director of Bemis Company, Inc. since March 16, 2018 until June 11, 2019. He served as an Executi ...


CEO Compensation Analysis

Compensation vs Market: Guillermo's total compensation ($USD4.81M) is about average for companies of similar size in the US market ($USD6.46M).

Compensation vs Earnings: Guillermo's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Guillermo Novo
President0yrsUS$4.81m0.092% $5.3m
George Bitto
Executive VP & CFO3yrsUS$2.36m0.055% $3.2m
Michael Valente
Senior VP of Law0yrsUS$1.61m0.026% $1.5m
Edward Shober
Senior Vice President of Materials2.7yrsUS$2.01m0.010% $606.8k
Jessica Feather-Bowman
VP, Controller & Principal Accounting Officer3.1yrsno data0.0060% $345.1k
John Langan
Senior VP & CTO2.8yrsno data0.019% $1.1m
Soohwan Kim
Head of Investor Relations0yrsno datano data
Meili Chen
Vice President of Human Resources1yrsno datano data
John White
Senior Vice President of Delivery Systems & Services1.9yrsno data0.0087% $504.9k

2.8yrs

Average Tenure

57yo

Average Age

Experienced Management: VSM's management team is considered experienced (2.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Guillermo Novo
President0yrsUS$4.81m0.092% $5.3m
Seifollah Ghasemi
Non-Executive Chairman3.1yrsUS$283.00k0.19% $10.8m
Yi Paik
Independent Director3yrsUS$233.00k0.0063% $363.0k
Jacques Croisetière
Independent Director3yrsUS$253.00k0.015% $880.1k
Susan Schnabel
Independent Director3yrsUS$233.00k0.031% $1.8m
Thomas Riordan
Independent Director3yrsUS$248.00k0.019% $1.1m
Alejandro Wolff
Lead Director2.4yrsUS$243.00k0.0063% $364.2k

3.0yrs

Average Tenure

63yo

Average Age

Experienced Board: VSM's board of directors are considered experienced (3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Versum Materials, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Versum Materials, Inc.
  • Ticker: VSM
  • Exchange: NYSE
  • Founded: 2015
  • Industry: Semiconductor Equipment
  • Sector: Semiconductors
  • Market Cap: US$5.790b
  • Shares outstanding: 109.27m
  • Website: https://www.versummaterials.com

Number of Employees


Location

  • Versum Materials, Inc.
  • 8555 South River Parkway
  • Tempe
  • Arizona
  • 85284
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
2V1DB (Deutsche Boerse AG)YesCommon StockDEEURSep 2016
VSMNYSE (New York Stock Exchange)YesCommon StockUSUSDSep 2016

Biography

Versum Materials, Inc. develops, manufactures, transports, and handles specialty materials for the semiconductor and display industries in the United States, Taiwan, South Korea, China, Europe, and rest of Asia. The company operates through two segments, Materials, and Delivery Systems and Services (DS&S). The Materials segment provides specialty chemicals and materials used in semiconductors, as well as specialty gases used in the semiconductor manufacturing process, including high purity process materials for deposition, metallization, chamber cleaning, and etching; chemicals mechanical planarization slurries; organosilanes; organometallics and liquid dopants for thin film deposition; and formulated chemical products for post-etch cleaning primarily for the manufacture of silicon and compound semiconductors, and thin film transistor liquid crystal displays. The DS&S segment develops, designs, manufactures, and sells bulk gas, specialty gas, and specialty chemical cabinets and systems, which are used to manage the delivery of key materials into the semiconductor manufacturing process; and flow and temperature control systems and analytical systems to capture data. It is also involved in the project management for installation and startup of the gas and chemical delivery systems, and inventory management; and provision of spare parts, equipment upgrades, equipment maintenance, and training services. In addition, this segment offers on-site services to assist customers in managing the inventory of gases and chemicals comprising ordering, product changes and monitoring, quality assurance, operation of delivery systems, and managing the bulk gas and specialty gas operations. Versum Materials, Inc. was founded in 2015 and is headquartered in Tempe, Arizona. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/07 02:39
End of Day Share Price2019/10/04 00:00
Earnings2019/06/30
Annual Earnings2018/09/30


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.