Intrinsic value of Pediapharm Inc - PDP

Previous Close

$0.29

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-99%

  Value-price divergence*

0%

Previous close

$0.29

 
Intrinsic value

$0.00

 
Up/down potential

-99%

 
Rating

str. sell

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of PDP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  50.00
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  6
  10
  15
  22
  32
  45
  62
  84
  110
  142
  179
  222
  271
  327
  389
  458
  533
  613
  700
  793
  892
  996
  1,106
  1,221
  1,341
  1,467
  1,599
  1,735
  1,878
  2,026
  2,179
Variable operating expenses, $m
 
  10
  15
  22
  32
  45
  62
  84
  110
  142
  179
  222
  271
  327
  389
  458
  533
  613
  700
  793
  892
  996
  1,106
  1,221
  1,341
  1,467
  1,599
  1,735
  1,878
  2,026
  2,179
Fixed operating expenses, $m
 
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
Total operating expenses, $m
  7
  11
  16
  23
  33
  46
  63
  85
  111
  143
  180
  223
  272
  328
  390
  459
  534
  615
  702
  795
  894
  998
  1,108
  1,223
  1,343
  1,469
  1,601
  1,737
  1,880
  2,028
  2,181
Operating income, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
EBITDA, $m
  -1
  -1
  -1
  0
  0
  0
  1
  2
  2
  3
  5
  6
  8
  10
  12
  14
  16
  19
  22
  25
  28
  31
  35
  39
  43
  47
  51
  56
  61
  65
  70
Interest expense (income), $m
  1
  1
  1
  2
  3
  5
  8
  11
  15
  20
  26
  33
  41
  50
  61
  72
  85
  99
  114
  131
  148
  166
  186
  207
  228
  251
  274
  299
  325
  351
  379
Earnings before tax, $m
  -2
  -2
  -2
  -3
  -5
  -6
  -9
  -12
  -16
  -21
  -27
  -34
  -42
  -52
  -62
  -74
  -87
  -101
  -116
  -132
  -150
  -168
  -188
  -208
  -230
  -253
  -276
  -301
  -327
  -353
  -381
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -2
  -2
  -2
  -3
  -5
  -6
  -9
  -12
  -16
  -21
  -27
  -34
  -42
  -52
  -62
  -74
  -87
  -101
  -116
  -132
  -150
  -168
  -188
  -208
  -230
  -253
  -276
  -301
  -327
  -353
  -381

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  8
  8
  12
  18
  27
  38
  52
  70
  92
  118
  149
  185
  226
  273
  324
  381
  444
  511
  584
  661
  743
  830
  921
  1,017
  1,118
  1,223
  1,332
  1,446
  1,565
  1,688
  1,816
Adjusted assets (=assets-cash), $m
  5
  8
  12
  18
  27
  38
  52
  70
  92
  118
  149
  185
  226
  273
  324
  381
  444
  511
  584
  661
  743
  830
  921
  1,017
  1,118
  1,223
  1,332
  1,446
  1,565
  1,688
  1,816
Revenue / Adjusted assets
  1.200
  1.250
  1.250
  1.222
  1.185
  1.184
  1.192
  1.200
  1.196
  1.203
  1.201
  1.200
  1.199
  1.198
  1.201
  1.202
  1.200
  1.200
  1.199
  1.200
  1.201
  1.200
  1.201
  1.201
  1.199
  1.200
  1.200
  1.200
  1.200
  1.200
  1.200
Average production assets, $m
  2
  3
  5
  7
  11
  15
  21
  28
  37
  47
  60
  74
  90
  109
  130
  152
  177
  204
  233
  264
  297
  332
  368
  407
  447
  489
  532
  578
  625
  675
  726
Working capital, $m
  4
  2
  2
  4
  5
  8
  10
  14
  18
  24
  30
  37
  45
  55
  65
  76
  89
  102
  117
  132
  149
  166
  185
  204
  224
  245
  267
  290
  314
  338
  364
Total debt, $m
  4
  4
  8
  14
  21
  31
  44
  60
  80
  103
  131
  164
  201
  242
  289
  340
  396
  457
  522
  592
  666
  744
  826
  913
  1,003
  1,098
  1,196
  1,299
  1,405
  1,516
  1,632
Total liabilities, $m
  6
  7
  11
  17
  24
  34
  47
  63
  83
  106
  134
  167
  204
  245
  292
  343
  399
  460
  525
  595
  669
  747
  829
  916
  1,006
  1,101
  1,199
  1,302
  1,408
  1,519
  1,635
Total equity, $m
  1
  1
  1
  2
  3
  4
  5
  7
  9
  12
  15
  19
  23
  27
  32
  38
  44
  51
  58
  66
  74
  83
  92
  102
  112
  122
  133
  145
  156
  169
  182
Total liabilities and equity, $m
  7
  8
  12
  19
  27
  38
  52
  70
  92
  118
  149
  186
  227
  272
  324
  381
  443
  511
  583
  661
  743
  830
  921
  1,018
  1,118
  1,223
  1,332
  1,447
  1,564
  1,688
  1,817
Debt-to-equity ratio
  4.000
  5.250
  6.570
  7.380
  7.880
  8.210
  8.420
  8.570
  8.670
  8.750
  8.800
  8.840
  8.870
  8.890
  8.910
  8.920
  8.930
  8.940
  8.950
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
Adjusted equity ratio
  -0.400
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  -2
  -2
  -3
  -5
  -6
  -9
  -12
  -16
  -21
  -27
  -34
  -42
  -52
  -62
  -74
  -87
  -101
  -116
  -132
  -150
  -168
  -188
  -208
  -230
  -253
  -276
  -301
  -327
  -353
  -381
Depreciation, amort., depletion, $m
  0
  0
  0
  1
  1
  2
  2
  3
  4
  5
  6
  7
  9
  11
  13
  15
  18
  20
  23
  26
  30
  33
  37
  41
  45
  49
  53
  58
  63
  67
  73
Funds from operations, $m
  -2
  -2
  -2
  -2
  -3
  -5
  -7
  -9
  -13
  -16
  -21
  -27
  -33
  -41
  -49
  -58
  -69
  -80
  -93
  -106
  -120
  -135
  -151
  -168
  -185
  -204
  -223
  -243
  -264
  -286
  -309
Change in working capital, $m
  -1
  1
  1
  1
  2
  2
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
Cash from operations, $m
  -1
  -2
  -2
  -4
  -5
  -7
  -10
  -13
  -17
  -22
  -27
  -34
  -41
  -50
  -59
  -70
  -81
  -94
  -107
  -121
  -136
  -152
  -169
  -187
  -205
  -225
  -245
  -266
  -288
  -311
  -334
Maintenance CAPEX, $m
  0
  0
  0
  0
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -11
  -13
  -15
  -18
  -20
  -23
  -26
  -30
  -33
  -37
  -41
  -45
  -49
  -53
  -58
  -63
  -67
New CAPEX, $m
  0
  -1
  -2
  -2
  -3
  -4
  -6
  -7
  -9
  -11
  -12
  -14
  -16
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -47
  -49
  -51
Cash from investing activities, $m
  0
  -1
  -2
  -2
  -4
  -5
  -8
  -9
  -12
  -15
  -17
  -20
  -23
  -28
  -32
  -36
  -40
  -45
  -49
  -54
  -59
  -65
  -70
  -75
  -81
  -87
  -93
  -99
  -105
  -112
  -118
Free cash flow, $m
  -1
  -4
  -5
  -7
  -9
  -13
  -17
  -22
  -28
  -36
  -44
  -54
  -65
  -78
  -91
  -106
  -121
  -138
  -156
  -175
  -196
  -217
  -239
  -262
  -286
  -311
  -338
  -365
  -393
  -422
  -453
Issuance/(repayment) of debt, $m
  0
  0
  4
  6
  8
  10
  13
  16
  20
  24
  28
  32
  37
  42
  47
  51
  56
  61
  65
  70
  74
  78
  82
  86
  90
  94
  98
  103
  107
  111
  115
Issuance/(repurchase) of shares, $m
  0
  5
  3
  4
  5
  8
  10
  14
  18
  24
  30
  38
  46
  56
  67
  79
  93
  107
  123
  140
  158
  177
  197
  218
  240
  263
  287
  312
  338
  366
  394
Cash from financing (excl. dividends), $m  
  0
  5
  7
  10
  13
  18
  23
  30
  38
  48
  58
  70
  83
  98
  114
  130
  149
  168
  188
  210
  232
  255
  279
  304
  330
  357
  385
  415
  445
  477
  509
Total cash flow (excl. dividends), $m
  -2
  1
  2
  3
  4
  5
  6
  8
  10
  12
  14
  16
  18
  20
  23
  25
  27
  30
  32
  34
  36
  38
  40
  42
  44
  46
  48
  50
  52
  54
  56
Retained Cash Flow (-), $m
  2
  -5
  -3
  -4
  -5
  -8
  -10
  -14
  -18
  -24
  -30
  -38
  -46
  -56
  -67
  -79
  -93
  -107
  -123
  -140
  -158
  -177
  -197
  -218
  -240
  -263
  -287
  -312
  -338
  -366
  -394
Prev. year cash balance distribution, $m
 
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -1
  -1
  -1
  -2
  -3
  -4
  -6
  -9
  -12
  -17
  -22
  -28
  -36
  -44
  -54
  -65
  -78
  -91
  -106
  -122
  -139
  -157
  -176
  -196
  -217
  -239
  -262
  -286
  -311
  -338
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -6
  -6
  -5
  -4
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  38.0
  29.2
  22.6
  17.7
  13.9
  11.0
  8.7
  6.9
  5.5
  4.4
  3.5
  2.8
  2.2
  1.8
  1.5
  1.2
  0.9
  0.8
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1

Pediapharm Inc. (Pediapharm) is a specialty pharmaceutical company. The Company distributes prescription medicines used to treat pathological conditions that mainly affect children from infancy to 18 years of age. The Company sells products and offers marketing services to the pharmaceutical industry, particularly related to pediatric care. It offers NYDA, a treatment indicated for eradication of head lice and its eggs. The products that the Company distributes originate from transactions whereby Pediapharm acquires intellectual property rights through a licensing agreement that enables Pediapharm to register the drug products with Health Canada in order to commercialize them. Pediapharm does not produce, manufacture or develop products, but rather licenses finished products and sells them. Pediapharm also commercializes non-prescription products (non-prescription drugs, medical devices, diagnostic products). The Company's subsidiary is Pediapharm Licensing Inc.

FINANCIAL RATIOS  of  Pediapharm Inc (PDP)

Valuation Ratios
P/E Ratio -10.5
Price to Sales 3.5
Price to Book 21.1
Price to Tangible Book
Price to Cash Flow -21.1
Price to Free Cash Flow -21.1
Growth Rates
Sales Growth Rate 50%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 400%
Total Debt to Equity 400%
Interest Coverage -1
Management Effectiveness
Return On Assets -12.5%
Ret/ On Assets - 3 Yr. Avg. -26.6%
Return On Total Capital -33.3%
Ret/ On T. Cap. - 3 Yr. Avg. -42.2%
Return On Equity -100%
Return On Equity - 3 Yr. Avg. -82.7%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 55.6%
EBITDA Margin -16.7%
EBITDA Margin - 3 Yr. Avg. -69.4%
Operating Margin -16.7%
Oper. Margin - 3 Yr. Avg. -69.4%
Pre-Tax Margin -33.3%
Pre-Tax Margin - 3 Yr. Avg. -83.3%
Net Profit Margin -33.3%
Net Profit Margin - 3 Yr. Avg. -83.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PDP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PDP stock intrinsic value calculation we used $6 million for the last fiscal year's total revenue generated by Pediapharm Inc. The default revenue input number comes from 2017 income statement of Pediapharm Inc. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PDP stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.2%, whose default value for PDP is calculated based on our internal credit rating of Pediapharm Inc, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Pediapharm Inc.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PDP stock the variable cost ratio is equal to 100%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1 million in the base year in the intrinsic value calculation for PDP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 25% for Pediapharm Inc.

Corporate tax rate of 27% is the nominal tax rate for Pediapharm Inc. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PDP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PDP are equal to 33.3%.

Life of production assets of 10 years is the average useful life of capital assets used in Pediapharm Inc operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PDP is equal to 16.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1 million for Pediapharm Inc - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 87.419 million for Pediapharm Inc is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Pediapharm Inc at the current share price and the inputted number of shares is $0.0 billion.

RELATED COMPANIES Price Int.Val. Rating
VRX Valeant Pharma 15.33 21.18  buy
Financial statements of PDP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.