What is COHU's Intrinsic value?

Cohu Inc (COHU) Intrinsic Value Analysis

Executive Summary

As of December 15, 2025, Cohu Inc's estimated intrinsic value ranges from $22.83 to $22.83 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $22.83 -4.4%

Is Cohu Inc (COHU) undervalued or overvalued?

With the current market price at $23.88, the stock appears to be fairly valued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Cohu Inc's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.12 1.32
Cost of equity 9.0% 12.3%
Cost of debt 7.0% 8.2%
Tax rate 10.8% 17.2%
Debt/Equity ratio 0.02 0.02
After-tax WACC 9.0% 12.2%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $97M
Discount Rate (WACC) 12.2% - 9.0%
Enterprise Value $792M - $1,075M
Net Debt $(132)M
Equity Value $924M - $1,207M
Outstanding Shares 47M
Fair Value $20 - $26
Selected Fair Value $22.83

Key Financial Metrics

Metric Value
Market Capitalization $1115M
Enterprise Value $983M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 13.90
Current Dividend Yield 68.84%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 0.02

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Earnings Power Value 100% $2.28
Weighted Average 100% $22.83

Investment Conclusion

Based on our comprehensive valuation analysis, Cohu Inc's intrinsic value is $22.83, which is approximately 4.4% below the current market price of $23.88.

Key investment considerations:

  • Strong projected earnings growth (-17% to -1% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.02)

Given these factors, we believe Cohu Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.