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Freescale Semiconductor, Ltd. Message Board

  • thinkb4trade thinkb4trade Jun 11, 2013 4:42 PM Flag

    Valuation metrics

    When comparing Texas Instruments to Freescale, the following metrics stand out :
    Enterprise Value/Revenue: 3.33 (TXN) vs. 2.42 (FSL)
    Enterprise Value/EBITDA : 10.80 ( TXN) vs. 13.65 (FSL)

    Simply put, FSL is highly leveraged but not delivering commensurate sales growth while having a built-in impediment for EPS due to the need to service its debt.

    Even if EBITDA margin grows to catch-up with TXN's ( a very unlikely IF..)at the moment FSL is about 25% overvalued. Any comments ?

    Sentiment: Sell

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    • You are right but be careful. You call was right at 16-17. Now the stock is going to 13-14 which is more acceptable. The best price would be around 10 to buy. It is hard to loose at that level as the Blackstone owners would do anything in the medium term 1-2 years to influence some stock analysts to upgrade it.