Valuation Using Price-to-NOPAT Multiple

The following table provides summary data for Applied Materials Inc. and its competitors, KLA Tencor Corporation and Lam Research Corporation.

(in millions)			Applied Materials	KLA Tencor	Lam Research
Company assumed value			-	$20,513	$26,202
Equity assumed value			-	$18,829	$27,143
NOPAT			$3,477	$ 1,145	$ 2,342
Net income			$3,313	$ 1,176	$2,191
Net nonoperating obligations (assets)			$(289)	$ 1,684	$(941)
Common shares outstanding			923.8shares	159.3 shares	144.5 shares

a. Compute the price to NOPAT ratio for both KLA Tencor Corporation and Lam Research Corporation.

Round answers to two decimal places, when applicable.

	Price to NOPAT ratio
KLA Tencor
Lam Research

b. Use KLA Tencor Corporation and Lam Research Corporation as comparables, along with the price to NOPAT ratios from part a, and then estimate for Applied Materials its company intrinsic value, its equity intrinsic value, and its equity intrinsic value per share.

• Round company and equity intrinsic values to the nearest million.

• Round equity intrinsic value per share to two decimal places.

Applied Materials
Company intrinsic value			$ million
Equity intrinsic value			$ million
Equity intrinsic value per share			$