The intrinsic value of
a company is how much cash it can generate over its lifespan. If a business
lasts for ten years and produces a million dollars of free cash profit every
year, its intrinsic value is ten million dollars.
The present value of an
investment is the price you must pay right now to earn that intrinsic value in
however many years you want to wait. This of course depends on the rate of
return you want for your investment.
You can't predict what a company will make in the future with perfect
accuracy, but a company with a history of increasing its free cash flow every
year is likely to do so over time. By projecting free cash flow into the
future, you can calculate a fair price for the stock right now.
While most stocks are priced fairly, sometimes they go on sale. This
calculation will help you decide that. You still have to figure out if it's a
good investment, but bargains exist.
Why? Because the discounted free cash flow analysis relies on estimates,
discounting the fair price by a further safety margin gives you some wiggle
room to be wrong about those estimates. Established companies with stable free
cash flow growth need a small safety margin. Smaller and newer and riskier
companies need a larger safety margin. A company with a lot of debt needs a
larger safety margin and a company with a lot of equity needs less.
By investing in multiple companies and keeping a sensible safety margin, you
can be pleasantly surprised by great companies outperforming your expectations
and minimize the possibility of stagnation (or even loss) by companies which
underperform.
The PE ratio measures the
reported earnings of a company to its current stock price. While earnings are
easy to manipulate on the balance sheet, this ratio gives you a sense of what
buyers are willing to pay for the stock—what they believe it will do in
the future.
Comparing a stock's PE to the average PE of companies in its industry gives
you a sense of market sentiment about the stock and how well it fares
financially. It's not the only number, nor the most important, but comparing
similar companies is valuable. A ratio far above or below that of its peers is
significant.
Industries are more specific than sectors, so companies within most
industries are more similar than are companies within an industry. Be aware
that the size and customers of companies are important to their prospects.
The PE ratio measures the
reported earnings of a company to its current stock price. While earnings are
easy to manipulate on the balance sheet, this ratio gives you a sense of what
buyers are willing to pay for the stock—what they believe it will do in
the future.
Comparing a stock's PE to the average PE of companies in its sector gives
you a sense of market sentiment about the stock and how well it fares
financially. It's not the only number, nor the most important, but comparing
similar companies is valuable. A ratio far above or below that of its peers is
significant.
Be aware that sectors are very broad, with many types of companies in the
same sector.
The cash yield of a stock is
the ratio of free cash per share—real dollars available after bringing in
revenue and paying bills—to the current price of the stock. It's similar
to the PE ratio, but it's less prone to manipulation through accounting
practices.
In general, the less you have to pay to make more money, the better.
The free cash flow
jitter of a stock measures how much the company's free cash flow varies
from its historical trend, on average. While it's always nice to make more
money than you expected, a company with predictable free cash flow is stable
and good. A company with wild swings in its free cash flow warrants further
research.
Open-market buys and sells reported by Illumina's
officers, directors, and 10% owners on SEC Form 4. Routine transactions
(tax withholding, option exercises, and stock grants) are excluded --
these are discretionary trades only.
Date
Insider
Type
Shares
Price
2026-09-04T00:00:00
Meister Keith A.
Sell
100,650
$218.39
2026-09-04T00:00:00
Meister Keith A.
Sell
7,500
$217.28
2026-09-04T00:00:00
Meister Keith A.
Sell
11,351
$219.18
2026-09-03T00:00:00
Meister Keith A.
Sell
8,439
$215.20
2026-09-03T00:00:00
Meister Keith A.
Sell
13,717
$219.41
2026-09-03T00:00:00
Meister Keith A.
Sell
9,961
$221.55
2026-09-03T00:00:00
Meister Keith A.
Sell
13,261
$216.38
2026-09-03T00:00:00
Meister Keith A.
Sell
14,196
$217.29
2026-09-03T00:00:00
Meister Keith A.
Sell
9,721
$218.33
2026-09-03T00:00:00
Meister Keith A.
Sell
6,656
$220.17
This stock has short interest! This means that people have shorted it.
Why does that matter? They've made a bet that price will decrease from where
they bought it. Maybe there are financial problems, or maybe there's a value
play.
As of the latest analysis, there are 9,720,715 shares shorted. With 149,776,900 shares available for purchase and an average trading
volume over the past 10 trading days of 2,295,260, it would take at least 4.235 days for all of the short holders to cover their
shorts.
We believe that Illumina may be worth examining further. It's
making money, which is a very positive sign. Is it on sale?
Illumina looks overpriced right now. If you're looking for a bargain
in the stock market, you should probably look elsewhere for a great deal. This
might still be a great stock to own—but it's not on sale right now.
Does Illumina have a coherent story? Does it have a plan to
continue to make money? Is it worth your time? Only you can decide where to go
from here. Our investment guide helps you ask the
right questions, including how to buy stocks.
Use these research links for more information.
We don't yet have enough
financial history for Illumina to produce a full worked example.
Check back as more data becomes available, or see the current price and
research links below.