Valuation of Silicom Ltd

Company name: Silicom Ltd (Nasdaq: SILC, TASE: SILC)
Estimated value: $29,51
Market value (21/05/07): $20,40
Expected growth: 45%

According to valuation (as of 13/05/07) fair value of the company (estimated by discounting cashflows) is $153,85 mln while market capitalization (as of 21/05/07) $106,365 mln. Thus estimated fair value is 44,64% greater than market value.

The following data (expectations) was used for valuation:
Beta: 2,35 (industry average)
Revenue growth: decreasing from 41% in 2007 to 20% in 2011, 17% for subsequent years(average of industry expected and historical growth)
Cost of equity: 20%

About the company
Silicom Ltd was founded in 1987 in Israel. The company is engaged in the design, manufacture, marketing and support of connectivity solutions for a broad range of servers and server based systems. In the early 1990s, the company began focusing its strategy on designing, manufacturing, marketing and supporting a range of connectivity solutions for mobile and personal computers, or PC, users. In subsequent years the company developed several Broadband Internet related products.
In 2002 the company started to to develop a line of high-end multi-port server networking cards. At this moment networking solutions for servers are the primary products of the company, which have contributed to the company's recent sales growth and which are expected to continue being the principal engine of the company's sales growth in the coming years.