Intrinsic value of Abaxis - ABAX

Previous Close

$44.85

  Intrinsic Value

$24.44

stock screener

  Rating & Target

sell

-46%

  Value-price divergence*

-33%

Previous close

$44.85

 
Intrinsic value

$24.44

 
Up/down potential

-46%

 
Rating

sell

 
Value-price divergence*

-33%

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

We calculate the intrinsic value of ABAX 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 1.0

 

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, %
  3.65
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  227
  232
  237
  243
  250
  257
  266
  275
  285
  295
  306
  319
  331
  345
  360
  375
  392
  409
  428
  447
  468
  489
  512
  536
  562
  588
  617
  646
  677
  710
  745
Variable operating expenses, $m
 
  183
  187
  192
  197
  203
  210
  217
  224
  233
  242
  251
  261
  272
  284
  296
  309
  323
  337
  353
  369
  386
  404
  423
  443
  464
  486
  510
  534
  560
  588
Fixed operating expenses, $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
Total operating expenses, $m
  183
  183
  187
  192
  197
  203
  210
  217
  224
  233
  242
  251
  261
  272
  284
  296
  309
  323
  337
  353
  369
  386
  404
  423
  443
  464
  486
  510
  534
  560
  588
Operating income, $m
  44
  49
  50
  51
  53
  54
  56
  58
  60
  62
  65
  67
  70
  73
  76
  79
  83
  86
  90
  94
  99
  103
  108
  113
  119
  124
  130
  136
  143
  150
  157
EBITDA, $m
  51
  55
  57
  58
  60
  61
  63
  66
  68
  70
  73
  76
  79
  82
  86
  90
  94
  98
  102
  107
  112
  117
  122
  128
  134
  140
  147
  154
  162
  170
  178
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
Earnings before tax, $m
  51
  49
  50
  51
  53
  54
  56
  58
  60
  62
  64
  67
  69
  72
  75
  78
  82
  85
  89
  93
  97
  102
  106
  111
  117
  122
  128
  134
  140
  147
  154
Tax expense, $m
  18
  13
  13
  14
  14
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  35
  36
  38
  40
  42
Net income, $m
  33
  36
  36
  37
  38
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  113

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  143
  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
  306
  166
  170
  174
  179
  185
  191
  197
  204
  212
  220
  229
  238
  248
  258
  269
  281
  294
  307
  321
  336
  351
  368
  385
  403
  422
  443
  464
  486
  510
  535
Adjusted assets (=assets-cash), $m
  163
  166
  170
  174
  179
  185
  191
  197
  204
  212
  220
  229
  238
  248
  258
  269
  281
  294
  307
  321
  336
  351
  368
  385
  403
  422
  443
  464
  486
  510
  535
Revenue / Adjusted assets
  1.393
  1.398
  1.394
  1.397
  1.397
  1.389
  1.393
  1.396
  1.397
  1.392
  1.391
  1.393
  1.391
  1.391
  1.395
  1.394
  1.395
  1.391
  1.394
  1.393
  1.393
  1.393
  1.391
  1.392
  1.395
  1.393
  1.393
  1.392
  1.393
  1.392
  1.393
Average production assets, $m
  32
  32
  33
  34
  35
  36
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  68
  71
  75
  78
  82
  86
  90
  94
  99
  104
Working capital, $m
  200
  58
  59
  61
  63
  65
  67
  69
  71
  74
  77
  80
  83
  87
  90
  94
  98
  103
  107
  112
  117
  123
  129
  135
  141
  148
  155
  162
  170
  178
  187
Total debt, $m
  0
  1
  2
  3
  4
  5
  7
  8
  10
  12
  14
  16
  18
  21
  23
  26
  29
  32
  35
  39
  42
  46
  50
  54
  59
  63
  68
  74
  79
  85
  91
Total liabilities, $m
  39
  41
  42
  43
  44
  45
  47
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  99
  103
  108
  114
  119
  125
  131
Total equity, $m
  266
  125
  128
  132
  135
  139
  144
  149
  154
  160
  166
  173
  180
  187
  195
  203
  212
  222
  232
  242
  253
  265
  278
  291
  304
  319
  334
  350
  367
  385
  404
Total liabilities and equity, $m
  305
  166
  170
  175
  179
  184
  191
  197
  204
  212
  220
  229
  238
  248
  258
  269
  281
  294
  307
  321
  335
  351
  368
  385
  403
  422
  442
  464
  486
  510
  535
Debt-to-equity ratio
  0.000
  0.010
  0.010
  0.020
  0.030
  0.040
  0.050
  0.060
  0.070
  0.070
  0.080
  0.090
  0.100
  0.110
  0.120
  0.130
  0.140
  0.140
  0.150
  0.160
  0.170
  0.170
  0.180
  0.190
  0.190
  0.200
  0.200
  0.210
  0.220
  0.220
  0.230
Adjusted equity ratio
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  33
  36
  36
  37
  38
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  113
Depreciation, amort., depletion, $m
  7
  6
  7
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
Funds from operations, $m
  21
  42
  43
  44
  45
  47
  48
  50
  52
  53
  55
  58
  60
  62
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  101
  105
  110
  116
  121
  127
  133
Change in working capital, $m
  -12
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
Cash from operations, $m
  33
  41
  42
  43
  44
  45
  46
  48
  49
  51
  53
  55
  57
  59
  61
  64
  66
  69
  72
  76
  79
  82
  86
  90
  94
  99
  103
  108
  113
  119
  125
Maintenance CAPEX, $m
  0
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
New CAPEX, $m
  -10
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
Cash from investing activities, $m
  -16
  -7
  -7
  -8
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -11
  -12
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -19
  -20
  -20
  -21
  -22
  -24
  -25
Free cash flow, $m
  17
  34
  35
  35
  36
  37
  38
  39
  40
  41
  43
  44
  46
  48
  50
  52
  54
  56
  58
  61
  64
  66
  69
  73
  76
  79
  83
  87
  91
  95
  100
Issuance/(repayment) of debt, $m
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  -2
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
Total cash flow (excl. dividends), $m
  15
  35
  35
  36
  37
  38
  39
  40
  42
  43
  45
  46
  48
  50
  52
  54
  57
  59
  62
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  101
  106
Retained Cash Flow (-), $m
  -30
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
Prev. year cash balance distribution, $m
 
  143
  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
 
  175
  33
  33
  33
  34
  35
  36
  36
  38
  39
  40
  41
  43
  44
  46
  48
  50
  52
  54
  56
  58
  61
  64
  67
  70
  73
  76
  80
  83
  87
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  168
  30
  29
  28
  26
  25
  24
  23
  22
  20
  19
  18
  16
  15
  13
  12
  11
  10
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
Current shareholders' claim on cash, %
  100
  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
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Abaxis, Inc. is a developer, manufacturer and marketer of portable blood analysis systems that are used in medical specialties in human or veterinary patient care to provide clinicians with blood constituent measurements. The Company markets and sells its products around the world through independent distributors and direct sales force. The Company's segments are the medical market and the veterinary market. The Company's medical market products include Piccolo chemistry analyzers and consumable products. The Company develops, manufactures and sells the Piccolo Xpress chemistry analyzer for use in human patient care to provide clinicians with blood constituent measurements. The Company's veterinary market product offerings include VetScan chemistry analyzers and veterinary reagent discs, VetScan hematology instruments and related reagent kits, VetScan VSpro specialty analyzers and related consumables, VetScan i-STAT analyzers and related consumables and VetScan rapid tests.

FINANCIAL RATIOS  of  Abaxis (ABAX)

Valuation Ratios
P/E Ratio 30.6
Price to Sales 4.5
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 30.6
Price to Free Cash Flow 44
Growth Rates
Sales Growth Rate 3.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.4%
Ret/ On Assets - 3 Yr. Avg. 11.5%
Return On Total Capital 13.1%
Ret/ On T. Cap. - 3 Yr. Avg. 13.4%
Return On Equity 13.1%
Return On Equity - 3 Yr. Avg. 13.4%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 55.5%
Gross Margin - 3 Yr. Avg. 55.1%
EBITDA Margin 25.6%
EBITDA Margin - 3 Yr. Avg. 23.5%
Operating Margin 19.4%
Oper. Margin - 3 Yr. Avg. 19.2%
Pre-Tax Margin 22.5%
Pre-Tax Margin - 3 Yr. Avg. 20.1%
Net Profit Margin 14.5%
Net Profit Margin - 3 Yr. Avg. 14.1%
Effective Tax Rate 35.3%
Eff/ Tax Rate - 3 Yr. Avg. 35.2%
Payout Ratio 36.4%

ABAX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ABAX stock intrinsic value calculation we used $227 million for the last fiscal year's total revenue generated by Abaxis. The default revenue input number comes from 2017 income statement of Abaxis. 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 ABAX stock valuation model: a) initial revenue growth rate of 2% 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 4.3%, whose default value for ABAX is calculated based on our internal credit rating of Abaxis, 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 Abaxis.
    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 ABAX stock the variable cost ratio is equal to 78.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ABAX 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 3.5% for Abaxis.

Corporate tax rate of 27% is the nominal tax rate for Abaxis. 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 ABAX 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 ABAX are equal to 13.9%.

Life of production assets of 4.5 years is the average useful life of capital assets used in Abaxis 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 ABAX is equal to 25.1%. 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 - $266 million for Abaxis - 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 22.604 million for Abaxis 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 Abaxis at the current share price and the inputted number of shares is $1.0 billion.

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COMPANY NEWS

▶ New Strong Sell Stocks for September 11th   [Sep-11-17 10:22AM  Zacks]
▶ ETFs with exposure to ABAXIS, Inc. : September 7, 2017   [Sep-07-17 11:51AM  Capital Cube]
▶ New Strong Sell Stocks for August 21st   [Aug-21-17 10:06AM  Zacks]
▶ ETFs with exposure to ABAXIS, Inc. : August 1, 2017   [Aug-01-17 04:04PM  Capital Cube]
▶ Abaxis misses Street 1Q forecasts   [Jul-27-17 09:54PM  Associated Press]
▶ ETFs with exposure to ABAXIS, Inc. : July 11, 2017   [Jul-11-17 01:55PM  Capital Cube]
▶ ETFs with exposure to ABAXIS, Inc. : June 29, 2017   [Jun-29-17 02:48PM  Capital Cube]
▶ ETFs with exposure to ABAXIS, Inc. : June 6, 2017   [Jun-06-17 11:35AM  Capital Cube]
▶ New Strong Sell Stocks for May 2nd   [May-02-17 10:35AM  Zacks]
▶ Abaxis tops 4Q profit forecasts   [Apr-27-17 05:56PM  Associated Press]
▶ New Strong Sell Stocks for March 1st   [Mar-01-17 09:34AM  Zacks]
▶ New Strong Sell Stocks for February 17th   [Feb-17-17 09:33AM  Zacks]
▶ ETFs with exposure to ABAXIS, Inc. : February 2, 2017   [Feb-02-17 12:11PM  Capital Cube]
▶ Abaxis meets 3Q profit forecasts   [04:44PM  Associated Press]
▶ Is Abaxis Inc (ABAX) Worthy of Your Portfolio?   [Dec-13-16 01:39AM  at Insider Monkey]
▶ Abaxis Declares Quarterly Cash Dividend   [Oct-28-16 09:15AM  PR Newswire]
Financial statements of ABAX
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.

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