Semtech Corp is scored 27 for moat and 60 for management. The management score rests on a return on invested capital of 11.7% and a gross margin of 51.6% — figures that describe a business earning a respectable return on what it employs. Debt sits at 0.90x equity. A narrow moat alongside strong management is a combination worth understanding before the price matters at all.
Three independent anchors set the price worth paying. Growth is modelled at 12.0% a year, the rate measured from the filings. The exit multiple assumed is 24.1x. That produces an intrinsic value of $27.90, a 10-CAP price of $18.62 and a payback time price of $25.69, with the value zone set at the highest of the three, $25.69. Today's price of $186.59 is 626% above it.
The price is above the value zone and the business scores 27 for moat and 60 for management. Neither test argues for paying up here.
| Price | $186.59 |
| Market cap | $17.4B |
| P/E ratio | 123.8x |
| Return on invested capital | 11.7% |
| Gross margin | 51.6% |
| Debt to equity | 0.90x |
| Free cash flow yield | 2.2% |
| Growth rate used | 12.0% |
| Growth rate measured | 12.0% |
| Exit multiple assumed | 24.1x |
| Company | Moat | Buy price |
| Skyworks Solutions (SWKS) | 26 | $18.62 |
| Entegris Inc (ENTG) | 58 | $55.70 |
| Qnity Electronics, Inc. (Q) | 19 | $44.14 |
| ON Semiconductor (ON) | 41 | $39.61 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Semtech Corp rather than accepting ours.