Insider Buying: Intevac
First Eagle Investment Management bought 45,508 shares of Intevac (NasdaqGS: IVAC) worth $0.3 million on Friday, February 02. First Eagle is considered an Intevac insider due to the fact that the investment firm currently owns more than 10% of the company’s outstanding shares.
In fact, First Eagle Investment Management has bought nearly $1 million worth of stock since the end of January according to recent Form 4 filings with the SEC. This is a fairly significant amount considering Intevac’s total market capitalization is only $142 million.
|Insider Trading||Relationship||Date||#Shares||Value ($)|
|First Eagle Investment Managem||10% Owner||Feb 02||45,508||$298,668|
|First Eagle Investment Managem||10% Owner||Feb 01||400||$2,590|
|First Eagle Investment Managem||10% Owner||Jan 31||61,485||$419,973|
|First Eagle Investment Managem||10% Owner||Jan 30||26,698||$180,662|
First Eagle now owns $26.8 million worth of stock or nearly 20% of the company’s equity.
Potential Reasons For Insider Activity
Intevac provides vacuum deposition equipment for various thin-film applications, and digital night-vision technologies and products to the defense industry in the United States, Asia, and Europe. The company sells its products through direct sales force and distributors. Intevac was founded in 1990 and is headquartered in Santa Clara, California.
Analysts covering the stock often compare the company to a peer group that includes MRV Communications (NasdaqCM: MRVC), NeoPhotonics (NYSE: NPTN), 3D Systems (NYSE: DDD) and Amtech Systems (NasdaqGS: ASYS). Analyzing Intevac’s valuation metrics and ratios relative to these peers provides further insight into why First Eagle is adding to its holdings.
A company’s projected 5-year revenue CAGR is the average annual growth rate of revenue over a five year period. It’s calculated as follows:
5yr CAGR = [ Revenue FY+5 / Revenue FY ] ^ (1/5 years) - 1.
The chart below plots the projected five-year revenue CAGR for Intevac and it’s peers.
The company’s expected sales growth of 16.2% is above all of its selected peers: MRVC (0.0%), NPTN (0.6%), DDD (4.8%) and ASYS (7.9%).
Intevac’s impressive investor return is another why First Eagle may be purchasing the stock. Return on Assets (ROA) represents the dollars in earnings or Net Income a company generates per dollar of assets. ROA is typically used to gauge the efficiency of the company and its management at deploying capital to generate income for shareholders. It is calculated as follows:
ROA = Adjusted Net Income / Average Total Assets.
In general, a higher return on assets suggests management is utilizing the asset base efficiently.
The company’s ROA of 6.3% is above all of its selected comparable public companies: MRVC (-14.4%), NPTN (-9.5%), DDD (-6.0%) and ASYS (5.9%).
Stock Price and Valuation
The company’s shares last traded at $6.35 as of Monday, down -32.0% over the last year. Although the stock has traded lower, could the recent insider transactions signal a promising road ahead for shareholders?
|Analysis||Model Fair Value||Upside (Downside)|
|10-yr DCF Revenue Exit||$10.09||58.8%|
|5-yr DCF Revenue Exit||$10.96||72.6%|
|Peer Revenue Multiples||$8.85||39.4%|
|10-yr DCF EBITDA Exit||$10.60||67.0%|
|5-yr DCF EBITDA Exit||$11.77||85.3%|
|Peer EBITDA Multiples||$9.33||47.0%|
|10-yr DCF Growth Exit||$8.78||38.3%|
|5-yr DCF Growth Exit||$8.92||40.5%|
|Peer P/E Multiples||$6.52||2.7%|
|Earnings Power Value||$6.65||4.7%|
Finbox.io applies pre-built valuation models to calculate a fair value for a given stock and uses consensus Wall Street estimates for the forecast when available. The company’s average fair value of $9.25 implies 45.6% upside and is calculated from 10 separate analyses as shown in the table above.
First Eagle Investment Management states that for its equity portfolios, it primarily invests in value stocks of small-cap companies. It employs fundamental analysis along with bottom-up stock picking approach to create its portfolios. It’s likely that the investment manager is applying the same valuation techniques as discussed above.
Author: Matt Hogan
Expertise: Valuation, financial statement analysis
Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.
Matt can be reached at firstname.lastname@example.org.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.