ASML Market Research & Analysis Report
Updated Apr 23, 2014

Growth and Balance Sheet

ASML Holding NV (ASML) reported first quarter earnings of 249 million euros ($344 million), down 49 percent from 481 million euros in the fourth quarter of 2013. Sales fell 24 percent to 1.40 billion euros for the same period. New orders declined to 1.07 billion euros from 1.45 billion euros. Without specifying which companies or products, ASML said chipmakers are "encountering timing uncertainties in next-generation device designs.

ASML forecast sales of 3 billion euros for the second and third quarters combined.

Valuation

ASML PE stands at 20.70 below the industry average of 21.90, and above the S&P 500 average of 17.83.  The company is currently trading above the preferable P/E ratio of 15x. ASML current Price/Sales of 4.83 is above the average of its industry, of 3.36. The beta of 1.38 implies higher volatility of the stock with respect to the S&P 500. ASML has shown negative earnings consistency over the last five years. ASML’s earnings per share over the last five years have increased by 19.43%. The current quarter earnings in comparison to the same quarter last year have decreased by 33.05% which is above the required level of 15%.  ASML’s head to head comparison to its main competitor shows that the company has a gross margin below the average of its main peers, and one that is below the industry average. The operating margin is above the average of the selected peers and the industry. ASML’s twelve trailing months EBITDA is $2.18 billion, above the industry average. The company has a total debt to equity ratio of 15.52. ASML’s current price levels are below the preferable level is 19% below the 52 week high of $101.85, and the technical indicators are neutral. ASML has a dividend yield of 0.90% and payout ratio of 19%.  

About ASML

ASML Holding N.V. designs, manufactures, markets, and services semiconductor processing equipment used in the fabrication of intercircuits worldwide. It provides PAS 5500 family products that comprise wafer steppers, and step and scan systems with i-line, krypton fluoride, and argon fluoride light sources for processing wafers. The company also offers TWINSCAN systems for manufacturing environments for which imaging at a resolution down to 38 nanometers are required; TWINSCAN NXT system to support ultraviolet lithography imaging in various system critical areas; and NXE system, an optical technology that utilizes reflective mirrors.

Competitor Comparison

ASML Holding NV (NasdaqGS: ASML) N.V.

Highlights

As of December 31, 2010, ASML had operating subsidiaries in the Netherlands, the United States, Italy, France, Germany, the United Kingdom, Ireland, Belgium, Korea, Taiwan, Singapore, China (including Hong Kong), Japan, Malaysia and Israel. The stock closed yesterday’s trading session at $82.06. In the past year, the stock has hit a 52-week low of $71.75 and 52-week high of $101.85. ASML has a market cap of $35.93 billion and is part of the technology sector.

• Focused research and development  
• Unique product portfolio
• Strategic initiatives   

• Dependence on particular suppliers     
• Limited number of customers       
• Highly competitive market   

ASML Intrinsic Value

Stock Valuation Model & Intrinsic Value Definitions

Investors should keep an eye open for stocks that are trading within 10% of their 52-week highs, as it is likely to continue in its upward trend. ASML's 52 week high is $101.85 current price is $82.06, is 19% below the 52 week high.

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which in this model states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. The company has a P/E ratio of 20.80 below the average industry P/E ratio of 21.90 and above the S&P 500 P/E ratio of 17.83.

When there is strong insider ownership which we define as 8% or more, management is more likely to act in the best interest of the company, as their interests are right in line with that of the shareholders. Insiders ownership is not available for ASML stock.

The model is using several technical indicators (MACD, RSI, MFI, OBV, position Indicators) to forecast the trend of the stock for 6 and 12 months, and assign a value.

ASML is trading in the range of $79.94 - $93.83 in the past 30 days. The stock has been showing support at $80.0 and resistance in the $94.00 range. The stock is trading below the 50-Day Moving Average and below the 200-Day Moving Average. The RSI(14) is 27.56. Our indicators give a neutral view on ASML.

The financial health of the company the higher the better, we evaluate all the financial ratios of the company.

Investor’s sentiment for the stock.

The model assigns a value according to analyst’s recommendation for the stock. Analyst rating on Reuters.com is 3 Buy, 2 Outperform, 3 Hold, 3 Underperform and 0 Sell.

We are searching for EPS numbers that are better than the previous year's. One dip is allowed, but the following year's earnings should be higher than the previous year. ASML’s annual EPS for the last 5 years were -0.63, 4.18, 6.14, 4.82, 3.24 this type of earnings action is negative.

The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry. ASML’s have total debt/equity ratio of 15.52% which is positive.

The EPS growth for this quarter relative to the same quarter a year earlier is above the minimum 15% that this model likes to see for a "good" growth company. Stocks with improving earnings are worthy of your extra attention. ASML’s EPS growth for this quarter relative to the same quarter a year earlier is 33.05%, above our target.

This stock valuation model looks for annual earnings growth above 12%, but prefers higher than 20%. ASML’s annual earnings growth rate over the past five years is 19.43%, above the target growth rate.

¹Tradespoon Score and Outlook: This score conveys Tradespoon’s long-term outlook of 1 to 5 years for a particular stock. Tradespoon uses proprietary methods to rate its trading picks on a scale from 1 to 10, with a 10 being the most favorable expected risk and return outlook. To determine a stock’s rating, Tradespoon uses an advanced algorithm that factors in fundamental and technical analysis to determine a stock's expected risk and return.