Richardson Electronics (Richardson Electronics) Intrinsic Value: DCF (Dividends Based) : $1.49 (As of May. 15, 2024)

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What is Richardson Electronics Intrinsic Value: DCF (Dividends Based)?

As of today (2024-05-15), Richardson Electronics's intrinsic value calculated from the Discounted Dividend model is $1.49.

Note: Discounted Dividend model is only suitable for companies who have a consistant distribution history. If the company's dividends does not remain steady over a long period, results may not be accurate due to the low consistency. The model is also only suitable for predictable companies (Business Predictability Rank higher than 1-Star) with dividend payments. If the company's Predictability Rank is 1-Star or Not Rated, or if the company does not pay dividend, the data will not be stored into our database.

Richardson Electronics's Predictability Rank is 1-Star. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety % (DCF Dividends Based) using Discounted Dividend Model for Richardson Electronics is -608.05%.

The historical rank and industry rank for Richardson Electronics's Intrinsic Value: DCF (Dividends Based) or its related term are showing as below:

RELL's Price-to-DCF (Dividends Based) is not ranked ^*
in the Hardware industry.
Industry Median: 1.01
* Ranked among companies with meaningful Price-to-DCF (Dividends Based) only.

Richardson Electronics Intrinsic Value: DCF (Dividends Based) Historical Data

The historical data trend for Richardson Electronics's Intrinsic Value: DCF (Dividends Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Richardson Electronics Intrinsic Value: DCF (Dividends Based) Chart

Richardson Electronics Annual Data

Trend

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Intrinsic Value: DCF (Dividends Based)

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Richardson Electronics Quarterly Data
	May19	Aug19	Nov19	Feb20	May20	Aug20	Nov20	Feb21	May21	Aug21	Nov21	Feb22	May22	Aug22	Nov22	Feb23	May23	Aug23	Nov23	Feb24
Intrinsic Value: DCF (Dividends Based)	Get a 7-Day Free Trial															-	-	-	-	-

Competitive Comparison of Richardson Electronics's Intrinsic Value: DCF (Dividends Based)

For the Electronic Components subindustry, Richardson Electronics's Price-to-DCF (Dividends Based), along with its competitors' market caps and Price-to-DCF (Dividends Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Richardson Electronics's Price-to-DCF (Dividends Based) Distribution in the Hardware Industry

For the Hardware industry and Technology sector, Richardson Electronics's Price-to-DCF (Dividends Based) distribution charts can be found below:

* The bar in red indicates where Richardson Electronics's Price-to-DCF (Dividends Based) falls into.

Richardson Electronics Intrinsic Value: DCF (Dividends Based) Calculation

This is the intrinsic value calculated from the Discounted Dividend Model with default parameters. The calculation method is the same as Discounted Cash Flow model except adjusted dividend are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DDM calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 11%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.43%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Dividend Growth Rate in the growth stage: g1 = 5%
The Growth Rate in the growth stage is initially set as the default 10-Year Dividend Growth Rate. In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year Dividend Growth Rate. If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year Dividend Growth Rate.
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> Richardson Electronics's average Dividend Growth Rate in the past 3 years was 0.00%, which is less than 5%. GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Dividends per Share: adjusted dividends per share = $0.1287.
GuruFocus uses adjusted dividends per share by default to ensure that the valuation reflects the total value of the company, as the actual dividend is only a portion of the total value.

All of the default settings can be changed in the DCF calculator and the results are calculated automatically.

Richardson Electronics's Intrinsic Value: DCF (Dividends Based) for today is calculated as:

Intrinsic Value: DCF (Dividends Based)	=	Dividends per Share	*	{[(1+g1)/(1+d)	+	(1+g1)^2/(1+d)^2	+	...	+	(1+g1)^10/(1+d)^10]
	+	(1+g1)^10/(1+d)^10	*	[(1+g2)/(1+d)	+	(1+g2)^2/(1+d)^2	+	...	+	(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.11) = 0.94594594594595
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694

Intrinsic Value: DCF (Dividends Based)

Dividends per Share

{[x

x^2

...

x^10]

x^10

y^2

...

y^10]}

Dividends per Share

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

0.1287

11.5406

1.49

Margin of Safety % (DCF Dividends Based)	=	(Intrinsic Value: DCF (Dividends Based)	-	Current Price)	/	Intrinsic Value: DCF (Dividends Based)
	=	(1.49	-	10.55)	/	1.49
	=	-608.05 %

Richardson Electronics (NAS:RELL) Intrinsic Value: DCF (Dividends Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Dividends model evaluates the companies based on their power of future dividend distribution instead of their assets.

Be Aware

What you need to know about Discounted Dividends model:

1. The Discounted Dividends model evaluates a company based on its future dividends distribution power
2. Dividend growth is taken into account; therefore a company with a higher dividend growth rate is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies with consistently steady dividends distributed.
4. The Discounted Dividends model works poorly for inconsistent dividends distributor like high growth companies.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less dividends distributed.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) and Intrinsic Value: DCF (Dividends Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

Richardson Electronics Intrinsic Value: DCF (Dividends Based) Related Terms

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Richardson Electronics (Richardson Electronics) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » Richardson Electronics Ltd (NAS:RELL) » Definitions » Intrinsic Value: DCF (Dividends Based)

Comparable Companies

Traded in Other Exchanges

RE3:Germany

Address

40W267 Keslinger Road, P.O. Box 393, LaFox, IL, USA, 60147-0393

Website

https://www.rell.com

Richardson Electronics Ltd provides engineered solutions, power grid, and microwave tubes and related consumables, power conversion, RF and microwave components, high-value flat panel detector solutions, replacement parts, tubes, and service training for diagnostic imaging equipment and customized display solutions. Its products have applications in alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. The company segments include PMT (Power and Microwave Technologies Group), Canvys, (Green Energy Solutions) GES, and Healthcare reportable segments. The company derives the majority of its revenues from the PMT segment.

Executives

Robert H Kluge	director	C/O RICHARDSON ELECTRONICS, LTD., 40W267 KESLINGER ROAD P.O. BOX 393, LAFOX IL 60147
Kathleen Mcnally	officer: Sr. VP Global Supply Chain	C/O RICHARDSON ELECTRONICS, LTD., PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147-0393
Wendy Diddell	officer: EVP Corporate Development	C/O RICHARDSON ELECTRONICS, LTD., PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147
Gregory J Peloquin	officer: EVP, EDG	40W267 KESLINGER RD, P O BOX 393, LAFOX IL 60147-0393
Paul J Plante	director	C/O RICHARDSON ELECTRONICS, LTD., PO BOX 393, 40W267 KESLINGER RD., LAFOX IL 60147
Jacques Belin	director	40W267 KESLINGER RD., LAFOX IL 60147
James Benham	director	40W267 KESLINGER RD., LAFOX IL 60147
Kenneth Halverson	director	40W267 KESLINGER RD., LAFOX IL 60147
Jens Frank Ruppert	officer: EVP Canvys	40W267 KESLINGER ROAD, P.O. BOX 393, LAFOX IL 60147
Robert J Ben	officer: CFO, CAO, Corporate Secretary	40W267 KESLINGER ROAD PO BOX 393, LAFOX IL 60147
Fitzgerald Patrick Thomas Iii	officer: EVP Healthcare	40W267 KESLINGER ROAD, P.O. BOX 393, LAFOX IL 60147
James Dudek	officer: Controller & Chief Accounting	C/O RICHARDSON ELECTRONICS, LTD, PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147
Kathleen S Dvorak	officer: EVP & CFO	C/O RICHARDSON ELECTRONICS, LTD, PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147
Edward J Richardson	director, 10 percent owner, officer: Chairman & CEO	C/O RICHARDSON ELECTRONICS, LTD, PO BOX 393, 40W267 KESLINGER ROAD, LAFOX IL 60147
Sandeep Beotra	officer: EVP Mergers & Acquisitions	40W267 KESLINGER RD., LAFOX IL 60147