Intrinsic value of Abaxis - ABAX

Previous Close

$49.47

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$49.47

 
Intrinsic value

$25.94

 
Up/down potential

-48%

 
Rating

sell

 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

*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 1.1

 

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
  223
  229
  234
  241
  248
  256
  265
  274
  285
  296
  307
  320
  333
  347
  362
  378
  395
  413
  431
  451
  472
  494
  517
  542
  568
  595
  623
  653
  685
  718
Variable operating expenses, $m
 
  69
  71
  73
  75
  77
  80
  82
  85
  89
  92
  96
  99
  104
  108
  113
  118
  123
  128
  134
  140
  147
  154
  161
  169
  177
  185
  194
  203
  213
  223
Fixed operating expenses, $m
 
  111
  113
  116
  119
  122
  125
  128
  132
  135
  138
  142
  145
  149
  153
  156
  160
  164
  168
  173
  177
  181
  186
  191
  195
  200
  205
  210
  216
  221
  227
Total operating expenses, $m
  183
  180
  184
  189
  194
  199
  205
  210
  217
  224
  230
  238
  244
  253
  261
  269
  278
  287
  296
  307
  317
  328
  340
  352
  364
  377
  390
  404
  419
  434
  450
Operating income, $m
  44
  43
  44
  45
  47
  49
  51
  54
  58
  61
  65
  70
  75
  81
  87
  93
  100
  108
  116
  125
  134
  144
  154
  166
  178
  191
  205
  219
  235
  251
  268
EBITDA, $m
  51
  49
  50
  51
  53
  55
  58
  61
  64
  68
  73
  78
  83
  89
  95
  102
  110
  118
  126
  135
  145
  156
  167
  179
  192
  205
  220
  235
  251
  268
  287
Interest expense (income), $m
  0
  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
  2
  3
Earnings before tax, $m
  51
  43
  44
  45
  47
  49
  51
  54
  57
  61
  65
  70
  75
  80
  86
  92
  99
  107
  115
  123
  133
  143
  153
  164
  176
  189
  203
  217
  232
  249
  266
Tax expense, $m
  18
  12
  12
  12
  13
  13
  14
  15
  15
  16
  18
  19
  20
  22
  23
  25
  27
  29
  31
  33
  36
  38
  41
  44
  48
  51
  55
  59
  63
  67
  72
Net income, $m
  33
  32
  32
  33
  34
  36
  37
  39
  42
  44
  47
  51
  54
  58
  63
  67
  72
  78
  84
  90
  97
  104
  112
  120
  129
  138
  148
  158
  170
  181
  194

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
  144
  147
  151
  155
  160
  165
  171
  177
  183
  190
  198
  206
  214
  224
  233
  243
  254
  266
  278
  290
  304
  318
  333
  349
  366
  383
  401
  421
  441
  463
Adjusted assets (=assets-cash), $m
  163
  144
  147
  151
  155
  160
  165
  171
  177
  183
  190
  198
  206
  214
  224
  233
  243
  254
  266
  278
  290
  304
  318
  333
  349
  366
  383
  401
  421
  441
  463
Revenue / Adjusted assets
  1.393
  1.549
  1.558
  1.550
  1.555
  1.550
  1.552
  1.550
  1.548
  1.557
  1.558
  1.551
  1.553
  1.556
  1.549
  1.554
  1.556
  1.555
  1.553
  1.550
  1.555
  1.553
  1.553
  1.553
  1.553
  1.552
  1.554
  1.554
  1.551
  1.553
  1.551
Average production assets, $m
  14
  28
  29
  30
  30
  31
  32
  33
  35
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  68
  72
  75
  79
  82
  86
  91
Working capital, $m
  200
  54
  55
  57
  58
  60
  62
  64
  66
  69
  72
  74
  77
  81
  84
  88
  91
  96
  100
  104
  109
  114
  120
  125
  131
  137
  144
  151
  158
  166
  174
Total debt, $m
  0
  1
  1
  2
  3
  5
  6
  7
  9
  10
  12
  14
  16
  18
  20
  23
  25
  28
  31
  34
  37
  40
  44
  48
  52
  56
  60
  65
  69
  74
  80
Total liabilities, $m
  39
  36
  36
  37
  38
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  79
  83
  87
  91
  95
  100
  104
  109
  115
Total equity, $m
  266
  108
  111
  113
  117
  120
  124
  128
  133
  138
  143
  149
  155
  161
  168
  175
  183
  191
  200
  209
  218
  229
  239
  251
  262
  275
  288
  302
  316
  332
  348
Total liabilities and equity, $m
  305
  144
  147
  150
  155
  160
  165
  170
  177
  183
  190
  198
  206
  214
  223
  233
  243
  254
  266
  278
  290
  304
  318
  334
  349
  366
  383
  402
  420
  441
  463
Debt-to-equity ratio
  0.000
  0.010
  0.010
  0.020
  0.030
  0.040
  0.050
  0.060
  0.070
  0.080
  0.090
  0.090
  0.100
  0.110
  0.120
  0.130
  0.140
  0.150
  0.150
  0.160
  0.170
  0.180
  0.180
  0.190
  0.200
  0.200
  0.210
  0.210
  0.220
  0.220
  0.230
Adjusted equity ratio
  0.755
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  33
  32
  32
  33
  34
  36
  37
  39
  42
  44
  47
  51
  54
  58
  63
  67
  72
  78
  84
  90
  97
  104
  112
  120
  129
  138
  148
  158
  170
  181
  194
Depreciation, amort., depletion, $m
  7
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
Funds from operations, $m
  6
  37
  38
  39
  40
  42
  44
  46
  49
  52
  55
  59
  62
  67
  71
  77
  82
  88
  94
  101
  108
  116
  124
  133
  142
  152
  163
  174
  186
  199
  212
Change in working capital, $m
  -22
  1
  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
Cash from operations, $m
  28
  36
  37
  37
  39
  40
  42
  44
  46
  49
  52
  56
  59
  64
  68
  73
  78
  84
  90
  96
  103
  111
  119
  127
  136
  146
  156
  167
  179
  191
  204
Maintenance CAPEX, $m
  0
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
New CAPEX, $m
  -5
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
Cash from investing activities, $m
  -20
  -7
  -7
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -19
  -20
  -20
  -21
Free cash flow, $m
  8
  29
  30
  31
  32
  33
  35
  36
  39
  41
  44
  47
  50
  54
  58
  62
  67
  72
  78
  84
  90
  97
  104
  112
  120
  129
  139
  149
  159
  171
  183
Issuance/(repayment) of debt, $m
  0
  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
  5
  5
Issuance/(repurchase) of shares, $m
  -13
  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  
  -17
  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
  5
  5
Total cash flow (excl. dividends), $m
  -9
  30
  31
  32
  33
  34
  36
  38
  40
  43
  45
  49
  52
  56
  60
  65
  70
  75
  81
  87
  93
  100
  108
  116
  124
  133
  143
  153
  164
  176
  188
Retained Cash Flow (-), $m
  -30
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
Prev. year cash balance distribution, $m
 
  130
  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
 
  158
  29
  29
  30
  31
  32
  34
  36
  38
  40
  43
  46
  50
  53
  57
  62
  67
  72
  78
  84
  90
  97
  104
  112
  121
  130
  139
  150
  160
  172
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
 
  151
  26
  25
  24
  24
  23
  23
  22
  22
  21
  20
  20
  19
  18
  17
  16
  15
  13
  12
  11
  9
  8
  7
  6
  5
  4
  3
  2
  2
  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
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Abaxis, Inc. develops, manufactures, markets, and sells portable blood analysis systems for use in human or veterinary patient care settings to provide rapid blood constituent measurements for clinicians worldwide. It operates in two segments, Medical Market and Veterinary Market. The company offers Piccolo Xpress chemistry analyzers with blood constituent measurements for use in human patient care; and Piccolo profiles that are single-use medical reagents. It also provides VetScan VS2, a chemistry, electrolyte, immunoassay, and blood gas analyzer delivering results from a sample of whole blood, serum, or plasma; VetScan profiles, which are packaged as single-use plastic veterinary reagent discs; VetScan HM5; and VetScan HM2, VetScan HMII, and VetScan HMT hematology instruments, as well as reagent kits for veterinary applications. In addition, the company offers VetScan VSpro that assists the diagnosis and evaluation of suspected bleeding disorders, toxicity/poisoning, disseminated intravascular coagulation evaluation, hepatic disease, monitoring therapy, and disease progression states; VetScan VSpro coagulation test to evaluate prothrombin and the activated partial thromboplastin times; VetScan VSpro fibrinogen test for in-vitro determination of fibrinogen levels in equine platelet poor plasma from a citrated stabilized whole blood sample; and i-STAT that delivers blood gas, electrolyte, chemistry, and hematology results. Further, it provides VetScan rapid tests for the detection of various diseases. The company sells its products through direct sales force and independent distributors. Abaxis, Inc. was founded in 1989 and is headquartered in Union City, California.

FINANCIAL RATIOS  of  Abaxis (ABAX)

Valuation Ratios
P/E Ratio 33.8
Price to Sales 4.9
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 39.8
Price to Free Cash Flow 48.5
Growth Rates
Sales Growth Rate 3.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -16.7%
Cap. Spend. - 3 Yr. Gr. Rate -3.6%
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 30.3%

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 $219 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 31.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $108 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 12.6%.

Life of production assets of 3.9 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 24.2%. 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 - $236 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 22.033 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 $1.1 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
IDXX IDEXX Laborato 147.08 prem.  prem.
WOOF VCA 91.04 prem.  prem.
ABT Abbott Laborat 45.13 prem.  prem.
ALR Alere 38.03 prem.  prem.
HSIC Henry Schein 170.90 prem.  prem.
HSKA Heska 90.21 prem.  prem.
TMO Thermo Fisher 157.71 prem.  prem.
PRCP Perceptron 7.69 prem.  prem.

COMPANY NEWS

▶ 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]
Stock chart of ABAX Financial statements of ABAX Annual reports 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.

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.