Intrinsic value of Alimera Sciences - ALIM

Previous Close

$1.40

  Intrinsic Value

$0.10

stock screener

  Rating & Target

str. sell

-93%

  Value-price divergence*

-80%

Previous close

$1.40

 
Intrinsic value

$0.10

 
Up/down potential

-93%

 
Rating

str. sell

 
Value-price divergence*

-80%

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

We calculate the intrinsic value of ALIM 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 2016), $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 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  54.55
  16.70
  15.53
  14.48
  13.53
  12.68
  11.91
  11.22
  10.60
  10.04
  9.53
  9.08
  8.67
  8.30
  7.97
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
Revenue, $m
  34
  40
  46
  52
  60
  67
  75
  84
  92
  102
  111
  121
  132
  143
  154
  166
  179
  191
  205
  218
  233
  248
  263
  280
  296
  314
  332
  352
  371
  392
  414
Variable operating expenses, $m
 
  22
  26
  29
  33
  38
  42
  47
  52
  57
  62
  68
  74
  80
  86
  93
  100
  107
  114
  122
  130
  139
  147
  156
  166
  176
  186
  196
  208
  219
  231
Fixed operating expenses, $m
 
  51
  53
  54
  55
  57
  58
  59
  61
  62
  64
  66
  67
  69
  71
  72
  74
  76
  78
  80
  82
  84
  86
  88
  90
  93
  95
  97
  100
  102
  105
Total operating expenses, $m
  65
  73
  79
  83
  88
  95
  100
  106
  113
  119
  126
  134
  141
  149
  157
  165
  174
  183
  192
  202
  212
  223
  233
  244
  256
  269
  281
  293
  308
  321
  336
Operating income, $m
  -30
  -34
  -32
  -31
  -29
  -27
  -25
  -23
  -20
  -18
  -15
  -12
  -9
  -6
  -3
  1
  5
  8
  12
  16
  21
  25
  30
  35
  40
  46
  52
  58
  64
  71
  78
EBITDA, $m
  -27
  -31
  -29
  -27
  -25
  -22
  -20
  -17
  -14
  -10
  -7
  -3
  0
  4
  8
  13
  17
  22
  27
  32
  37
  43
  49
  55
  61
  68
  75
  82
  90
  98
  107
Interest expense (income), $m
  4
  4
  5
  6
  7
  8
  9
  10
  12
  13
  14
  16
  18
  19
  21
  23
  24
  26
  28
  30
  32
  35
  37
  39
  42
  44
  47
  50
  53
  56
  59
Earnings before tax, $m
  -33
  -38
  -37
  -37
  -36
  -35
  -34
  -33
  -32
  -31
  -29
  -28
  -27
  -25
  -23
  -22
  -20
  -18
  -16
  -14
  -12
  -9
  -7
  -4
  -2
  1
  4
  8
  11
  15
  19
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
  1
  2
  3
  4
  5
Net income, $m
  -33
  -38
  -37
  -37
  -36
  -35
  -34
  -33
  -32
  -31
  -29
  -28
  -27
  -25
  -23
  -22
  -20
  -18
  -16
  -14
  -12
  -9
  -7
  -4
  -2
  1
  3
  6
  8
  11
  14

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  31
  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
  70
  61
  71
  81
  92
  104
  116
  129
  143
  157
  172
  187
  204
  221
  238
  257
  276
  295
  316
  337
  359
  382
  406
  431
  457
  485
  513
  542
  573
  605
  639
Adjusted assets (=assets-cash), $m
  39
  61
  71
  81
  92
  104
  116
  129
  143
  157
  172
  187
  204
  221
  238
  257
  276
  295
  316
  337
  359
  382
  406
  431
  457
  485
  513
  542
  573
  605
  639
Revenue / Adjusted assets
  0.872
  0.656
  0.648
  0.642
  0.652
  0.644
  0.647
  0.651
  0.643
  0.650
  0.645
  0.647
  0.647
  0.647
  0.647
  0.646
  0.649
  0.647
  0.649
  0.647
  0.649
  0.649
  0.648
  0.650
  0.648
  0.647
  0.647
  0.649
  0.647
  0.648
  0.648
Average production assets, $m
  24
  28
  32
  37
  42
  47
  53
  59
  65
  72
  79
  86
  93
  101
  109
  117
  126
  135
  144
  154
  164
  175
  186
  197
  209
  222
  235
  248
  262
  277
  292
Working capital, $m
  38
  8
  9
  11
  12
  14
  15
  17
  19
  21
  23
  25
  27
  29
  32
  34
  37
  39
  42
  45
  48
  51
  54
  58
  61
  65
  68
  72
  77
  81
  85
Total debt, $m
  34
  41
  49
  58
  67
  77
  87
  98
  109
  121
  134
  147
  161
  175
  190
  205
  221
  237
  255
  273
  291
  310
  331
  352
  373
  396
  420
  445
  470
  497
  526
Total liabilities, $m
  45
  51
  59
  68
  77
  87
  97
  108
  119
  131
  144
  157
  171
  185
  200
  215
  231
  247
  265
  283
  301
  320
  341
  362
  383
  406
  430
  455
  480
  507
  536
Total equity, $m
  26
  10
  11
  13
  15
  17
  19
  21
  23
  25
  28
  30
  33
  36
  39
  42
  45
  48
  51
  55
  58
  62
  66
  70
  74
  79
  83
  88
  93
  98
  104
Total liabilities and equity, $m
  71
  61
  70
  81
  92
  104
  116
  129
  142
  156
  172
  187
  204
  221
  239
  257
  276
  295
  316
  338
  359
  382
  407
  432
  457
  485
  513
  543
  573
  605
  640
Debt-to-equity ratio
  1.308
  4.160
  4.300
  4.410
  4.500
  4.580
  4.640
  4.690
  4.740
  4.780
  4.810
  4.840
  4.870
  4.890
  4.910
  4.930
  4.950
  4.960
  4.980
  4.990
  5.000
  5.010
  5.020
  5.030
  5.040
  5.050
  5.050
  5.060
  5.070
  5.070
  5.080
Adjusted equity ratio
  -0.128
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162
  0.162

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -33
  -38
  -37
  -37
  -36
  -35
  -34
  -33
  -32
  -31
  -29
  -28
  -27
  -25
  -23
  -22
  -20
  -18
  -16
  -14
  -12
  -9
  -7
  -4
  -2
  1
  3
  6
  8
  11
  14
Depreciation, amort., depletion, $m
  3
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  14
  14
  15
  16
  17
  19
  20
  21
  22
  23
  25
  26
  28
  29
Funds from operations, $m
  -25
  -35
  -34
  -33
  -32
  -30
  -29
  -27
  -25
  -23
  -21
  -19
  -17
  -15
  -12
  -10
  -7
  -4
  -2
  2
  5
  8
  12
  15
  19
  23
  27
  30
  34
  38
  43
Change in working capital, $m
  0
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
Cash from operations, $m
  -25
  -36
  -35
  -34
  -33
  -32
  -30
  -29
  -27
  -25
  -23
  -21
  -19
  -17
  -15
  -12
  -10
  -7
  -4
  -1
  2
  5
  9
  12
  16
  20
  23
  26
  30
  34
  38
Maintenance CAPEX, $m
  0
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -28
New CAPEX, $m
  0
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
Cash from investing activities, $m
  0
  -6
  -7
  -8
  -9
  -9
  -11
  -11
  -12
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
Free cash flow, $m
  -25
  -43
  -42
  -42
  -42
  -41
  -41
  -40
  -39
  -38
  -38
  -36
  -35
  -34
  -33
  -32
  -30
  -29
  -27
  -26
  -24
  -22
  -20
  -18
  -16
  -14
  -12
  -11
  -9
  -7
  -5
Issuance/(repayment) of debt, $m
  0
  7
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
Issuance/(repurchase) of shares, $m
  27
  39
  39
  38
  38
  37
  36
  35
  34
  33
  32
  31
  29
  28
  26
  25
  23
  21
  19
  17
  15
  13
  11
  8
  6
  3
  1
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  25
  46
  47
  47
  47
  47
  46
  46
  45
  45
  45
  44
  43
  42
  41
  40
  39
  38
  36
  35
  34
  32
  31
  29
  28
  26
  25
  25
  26
  27
  28
Total cash flow (excl. dividends), $m
  0
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  17
  20
  23
Retained Cash Flow (-), $m
  0
  -39
  -39
  -38
  -38
  -37
  -36
  -35
  -34
  -33
  -32
  -31
  -29
  -28
  -26
  -25
  -23
  -21
  -19
  -17
  -15
  -13
  -11
  -8
  -6
  -4
  -5
  -5
  -5
  -5
  -5
Prev. year cash balance distribution, $m
 
  18
  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
 
  -18
  -34
  -34
  -33
  -32
  -30
  -29
  -28
  -26
  -25
  -23
  -22
  -20
  -18
  -16
  -14
  -12
  -10
  -8
  -5
  -3
  0
  3
  6
  8
  8
  9
  12
  15
  18
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  -17
  -30
  -28
  -25
  -22
  -19
  -17
  -14
  -12
  -10
  -8
  -6
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  43.5
  20.7
  10.7
  5.9
  3.5
  2.2
  1.4
  1.0
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1

Alimera Sciences, Inc., a pharmaceutical company, engages in the research, development, and commercialization of prescription ophthalmic pharmaceuticals in the United States, Germany, Portugal, and the United Kingdom. The company focuses on diseases affecting the back of the eye or retina. The company offers ILUVIEN, an intravitreal implant for the treatment of diabetic macular edema (DME), which is a disease of the retina that affects individuals with diabetes and can lead to severe vision loss and blindness. Its ILUVIEN is inserted in the back of the patient’s eye in a non-surgical procedure, which allows for a self-sealing wound by delivering a constant micro-dose of the non-proprietary corticosteroid fluocinolone acetonide in the eye. It has license agreement with pSivida US, Inc. for the development and sale of ILUVIEN, and a delivery device to deliver other corticosteroids to the back of the eye for the treatment and prevention of eye diseases in humans (other than uveitis) or to treat DME. Alimera Sciences, Inc. was founded in 2003 and is headquartered in Alpharetta, Georgia.

FINANCIAL RATIOS  of  Alimera Sciences (ALIM)

Valuation Ratios
P/E Ratio -2.8
Price to Sales 2.7
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow -3.6
Price to Free Cash Flow -3.6
Growth Rates
Sales Growth Rate 54.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 130.8%
Total Debt to Equity 130.8%
Interest Coverage -7
Management Effectiveness
Return On Assets -41.4%
Ret/ On Assets - 3 Yr. Avg. -42%
Return On Total Capital -55.5%
Ret/ On T. Cap. - 3 Yr. Avg. -62%
Return On Equity -126.9%
Return On Equity - 3 Yr. Avg. -122.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 94.1%
Gross Margin - 3 Yr. Avg. 92.4%
EBITDA Margin -76.5%
EBITDA Margin - 3 Yr. Avg. -203.5%
Operating Margin -91.2%
Oper. Margin - 3 Yr. Avg. -231.1%
Pre-Tax Margin -97.1%
Pre-Tax Margin - 3 Yr. Avg. -229.3%
Net Profit Margin -97.1%
Net Profit Margin - 3 Yr. Avg. -229.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

ALIM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALIM stock intrinsic value calculation we used $34 million for the last fiscal year's total revenue generated by Alimera Sciences. The default revenue input number comes from 2016 income statement of Alimera Sciences. 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 ALIM stock valuation model: a) initial revenue growth rate of 16.7% 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 6.2%, whose default value for ALIM is calculated based on our internal credit rating of Alimera Sciences, 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 Alimera Sciences.
    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 ALIM stock the variable cost ratio is equal to 55.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $50 million in the base year in the intrinsic value calculation for ALIM 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 11.9% for Alimera Sciences.

Corporate tax rate of 27% is the nominal tax rate for Alimera Sciences. 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 ALIM 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 ALIM are equal to 70.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Alimera Sciences 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 ALIM is equal to 20.6%. 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 - $26 million for Alimera Sciences - 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 65.886 million for Alimera Sciences 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 Alimera Sciences at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
PSDV pSivida 1.14 0.48  str.sell
REGN Regeneron Phar 469.74 168.23  str.sell
TCON TRACON Pharmac 2.20 0.45  str.sell

COMPANY NEWS

▶ Alimera Sciences reports 2Q loss   [Aug-04-17 01:08AM  Associated Press]
▶ Alimera Sciences reports 1Q loss   [May-08-17 06:11PM  Associated Press]
▶ Alimera Sciences reports 4Q loss   [05:03AM  Associated Press]
▶ Is Alimera Sciences Inc (ALIM) A Good Stock To Buy?   [Dec-18-16 11:35AM  at Insider Monkey]
Stock chart of ALIM Financial statements of ALIM
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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