Intrinsic value of Analogic - ALOG

Previous Close

$71.20

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$71.20

 
Intrinsic value

$32.74

 
Up/down potential

-54%

 
Rating

str. 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 ALOG 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 0.9

 

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, %
  -5.74
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.57
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
Revenue, $m
  509
  525
  542
  561
  581
  603
  626
  651
  678
  706
  736
  768
  802
  838
  876
  916
  958
  1,003
  1,049
  1,099
  1,151
  1,206
  1,264
  1,325
  1,389
  1,456
  1,527
  1,601
  1,679
  1,762
  1,848
Variable operating expenses, $m
 
  271
  280
  289
  299
  310
  322
  335
  348
  362
  377
  386
  403
  421
  440
  460
  481
  504
  527
  552
  578
  606
  635
  666
  698
  732
  767
  805
  844
  885
  929
Fixed operating expenses, $m
 
  233
  238
  244
  251
  257
  263
  270
  277
  283
  291
  298
  305
  313
  321
  329
  337
  345
  354
  363
  372
  381
  391
  401
  411
  421
  431
  442
  453
  465
  476
Total operating expenses, $m
  484
  504
  518
  533
  550
  567
  585
  605
  625
  645
  668
  684
  708
  734
  761
  789
  818
  849
  881
  915
  950
  987
  1,026
  1,067
  1,109
  1,153
  1,198
  1,247
  1,297
  1,350
  1,405
Operating income, $m
  25
  21
  24
  27
  31
  36
  41
  47
  53
  60
  68
  84
  94
  104
  115
  127
  140
  153
  168
  184
  201
  219
  238
  258
  280
  304
  328
  354
  382
  412
  443
EBITDA, $m
  48
  43
  46
  50
  55
  60
  66
  72
  79
  87
  96
  106
  116
  127
  139
  152
  166
  181
  197
  214
  232
  252
  273
  295
  318
  344
  370
  399
  429
  460
  494
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
Earnings before tax, $m
  20
  21
  24
  27
  31
  35
  40
  46
  52
  59
  67
  83
  92
  102
  113
  124
  137
  150
  165
  180
  197
  214
  233
  253
  275
  297
  322
  347
  375
  404
  435
Tax expense, $m
  8
  6
  6
  7
  8
  10
  11
  12
  14
  16
  18
  22
  25
  28
  30
  34
  37
  41
  44
  49
  53
  58
  63
  68
  74
  80
  87
  94
  101
  109
  117
Net income, $m
  12
  15
  17
  20
  22
  26
  29
  34
  38
  43
  49
  60
  67
  74
  82
  91
  100
  110
  120
  131
  144
  156
  170
  185
  200
  217
  235
  254
  274
  295
  317

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  119
  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
  633
  530
  548
  566
  587
  609
  633
  658
  685
  713
  744
  776
  810
  846
  885
  925
  968
  1,013
  1,060
  1,110
  1,163
  1,218
  1,277
  1,338
  1,403
  1,471
  1,542
  1,617
  1,696
  1,780
  1,867
Adjusted assets (=assets-cash), $m
  514
  530
  548
  566
  587
  609
  633
  658
  685
  713
  744
  776
  810
  846
  885
  925
  968
  1,013
  1,060
  1,110
  1,163
  1,218
  1,277
  1,338
  1,403
  1,471
  1,542
  1,617
  1,696
  1,780
  1,867
Revenue / Adjusted assets
  0.990
  0.991
  0.989
  0.991
  0.990
  0.990
  0.989
  0.989
  0.990
  0.990
  0.989
  0.990
  0.990
  0.991
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
Average production assets, $m
  101
  104
  107
  111
  115
  119
  124
  129
  134
  140
  146
  152
  159
  166
  173
  181
  190
  198
  208
  218
  228
  239
  250
  262
  275
  288
  302
  317
  333
  349
  366
Working capital, $m
  311
  198
  204
  211
  219
  227
  236
  246
  256
  266
  278
  290
  302
  316
  330
  345
  361
  378
  396
  414
  434
  455
  476
  499
  523
  549
  576
  604
  633
  664
  697
Total debt, $m
  0
  3
  6
  10
  14
  19
  23
  28
  34
  39
  45
  52
  58
  66
  73
  81
  90
  99
  108
  118
  128
  139
  151
  163
  176
  189
  203
  218
  234
  250
  268
Total liabilities, $m
  102
  105
  108
  112
  116
  121
  125
  130
  136
  141
  147
  154
  160
  168
  175
  183
  192
  201
  210
  220
  230
  241
  253
  265
  278
  291
  305
  320
  336
  352
  370
Total equity, $m
  531
  425
  439
  454
  471
  488
  507
  528
  549
  572
  597
  622
  650
  679
  709
  742
  776
  812
  850
  890
  932
  977
  1,024
  1,073
  1,125
  1,179
  1,237
  1,297
  1,361
  1,427
  1,497
Total liabilities and equity, $m
  633
  530
  547
  566
  587
  609
  632
  658
  685
  713
  744
  776
  810
  847
  884
  925
  968
  1,013
  1,060
  1,110
  1,162
  1,218
  1,277
  1,338
  1,403
  1,470
  1,542
  1,617
  1,697
  1,779
  1,867
Debt-to-equity ratio
  0.000
  0.010
  0.010
  0.020
  0.030
  0.040
  0.050
  0.050
  0.060
  0.070
  0.080
  0.080
  0.090
  0.100
  0.100
  0.110
  0.120
  0.120
  0.130
  0.130
  0.140
  0.140
  0.150
  0.150
  0.160
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
Adjusted equity ratio
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802
  0.802

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  12
  15
  17
  20
  22
  26
  29
  34
  38
  43
  49
  60
  67
  74
  82
  91
  100
  110
  120
  131
  144
  156
  170
  185
  200
  217
  235
  254
  274
  295
  317
Depreciation, amort., depletion, $m
  23
  22
  22
  23
  23
  24
  25
  25
  26
  27
  28
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  51
Funds from operations, $m
  19
  37
  40
  42
  46
  50
  54
  59
  64
  70
  77
  82
  89
  97
  106
  116
  126
  137
  149
  162
  175
  190
  205
  221
  239
  257
  277
  298
  320
  343
  368
Change in working capital, $m
  -14
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
Cash from operations, $m
  33
  82
  33
  35
  38
  41
  45
  49
  54
  59
  65
  70
  76
  84
  92
  101
  110
  120
  131
  143
  156
  169
  183
  198
  215
  232
  250
  270
  290
  312
  336
Maintenance CAPEX, $m
  0
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
New CAPEX, $m
  -13
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
Cash from investing activities, $m
  -21
  -17
  -17
  -19
  -19
  -20
  -22
  -22
  -23
  -25
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -40
  -43
  -44
  -47
  -49
  -51
  -54
  -57
  -60
  -62
  -65
Free cash flow, $m
  12
  65
  15
  17
  19
  21
  24
  27
  31
  35
  40
  43
  49
  55
  62
  69
  77
  85
  94
  104
  115
  126
  139
  152
  165
  180
  196
  213
  231
  250
  270
Issuance/(repayment) of debt, $m
  0
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
Issuance/(repurchase) of shares, $m
  -12
  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  
  -12
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  15
  16
  16
  17
Total cash flow (excl. dividends), $m
  0
  68
  19
  21
  23
  26
  29
  32
  36
  41
  46
  49
  55
  62
  69
  77
  85
  94
  104
  114
  125
  137
  150
  164
  178
  194
  210
  228
  246
  266
  287
Retained Cash Flow (-), $m
  0
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -57
  -60
  -63
  -67
  -70
Prev. year cash balance distribution, $m
 
  119
  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
 
  174
  5
  5
  6
  8
  10
  12
  15
  18
  21
  23
  28
  33
  38
  44
  51
  58
  66
  74
  83
  93
  103
  114
  126
  139
  153
  167
  183
  200
  217
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
 
  167
  4
  5
  5
  6
  7
  8
  9
  10
  11
  11
  12
  13
  13
  13
  13
  13
  12
  11
  11
  10
  9
  7
  6
  5
  4
  4
  3
  2
  2
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

Analogic Corporation designs, manufactures, and sells medical imaging, ultrasound, and security systems and subsystems to original equipment manufacturers (OEMs) and end users primarily for the healthcare and airport security markets worldwide. The company operates in three segments: Medical Imaging, Ultrasound, and Security and Detection. The Medical Imaging segment provides medical imaging systems and subsystems, including computed tomography (CT) detector systems, data acquisition systems, data management systems, and integrated CT gantries; magnetic resonance imaging products comprising gradient and radio frequency amplifiers; and digital mammography products consisting of detector plates, as well as motion control devices for use in computer-controlled automation systems. The Ultrasound segment designs and manufactures medical ultrasound systems under the BK Ultrasound brand for use in urology, surgery, point-of-care, anesthesia, and general imaging applications. This segment also provides its products for cardiology, radiology, OB/GYN, surgery, and interventional radiology applications, as well as offers various transducers. This segment sells its products through its direct sales force, as well as through a network of independent sales representatives and distributors. The Security and Detection segment designs and manufactures automated threat detection systems for aviation baggage inspection applications. This segment offers checked baggage, checkpoint CT, and high speed in-line baggage handling systems; and rapid DNA analysis systems to analyze multiple human DNA samples. This segment sells its products primarily through multinational OEM partners. The company was founded in 1967 and is headquartered in Peabody, Massachusetts.

FINANCIAL RATIOS  of  Analogic (ALOG)

Valuation Ratios
P/E Ratio 73.6
Price to Sales 1.7
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 26.8
Price to Free Cash Flow 44.1
Growth Rates
Sales Growth Rate -5.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 30%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital 2.3%
Ret/ On T. Cap. - 3 Yr. Avg. 5.1%
Return On Equity 2.3%
Return On Equity - 3 Yr. Avg. 5.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 44.8%
Gross Margin - 3 Yr. Avg. 43.2%
EBITDA Margin 8.4%
EBITDA Margin - 3 Yr. Avg. 10%
Operating Margin 4.9%
Oper. Margin - 3 Yr. Avg. 6%
Pre-Tax Margin 3.9%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin 2.4%
Net Profit Margin - 3 Yr. Avg. 5%
Effective Tax Rate 40%
Eff/ Tax Rate - 3 Yr. Avg. 14.1%
Payout Ratio 41.7%

ALOG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALOG stock intrinsic value calculation we used $509 million for the last fiscal year's total revenue generated by Analogic. The default revenue input number comes from 2016 income statement of Analogic. 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 ALOG stock valuation model: a) initial revenue growth rate of 3.1% 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 ALOG is calculated based on our internal credit rating of Analogic, 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 Analogic.
    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 ALOG stock the variable cost ratio is equal to 51.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $227 million in the base year in the intrinsic value calculation for ALOG 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 Analogic.

Corporate tax rate of 27% is the nominal tax rate for Analogic. 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 ALOG 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 ALOG are equal to 19.8%.

Life of production assets of 7.2 years is the average useful life of capital assets used in Analogic 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 ALOG is equal to 37.7%. 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 - $531 million for Analogic - 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 12.539 million for Analogic 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 Analogic at the current share price and the inputted number of shares is $0.9 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
OSIS OSI Systems 71.64 296.17  str.buy
GE General Electr 29.55 17.05  sell
LLL L3 Technologie 167.89 733.72  str.buy
IIN IntriCon 9.55 2.61  str.sell

COMPANY NEWS

▶ ETFs with exposure to Analogic Corp. : April 19, 2017   [Apr-19-17 02:08PM  Capital Cube]
▶ Analogic posts 2Q profit   [04:22PM  Associated Press]
▶ Analogic Corporation to Webcast Annual Stockholders Meeting   [Jan-12-17 03:15PM  GlobeNewswire]
▶ Analogic to Present at Upcoming Investor Conferences   [Dec-28-16 01:00PM  GlobeNewswire]
▶ Analogic Announces Leadership Transition   [Oct-24-16 09:00AM  GlobeNewswire]
▶ The Morning Risk Report: Analogic Settlement Offers Clues on New Policies   [Jun-23-16 07:30AM  at The Wall Street Journal]
▶ Analogic Resolves Distributor Inquiry   [09:00AM  GlobeNewswire]
▶ Medical Device Company Settles Foreign Bribery Charges   [04:06PM  at The Wall Street Journal]
▶ Analogic to Present at Jefferies 2016 Healthcare Conference   [May-26-16 03:00PM  GlobeNewswire]
Stock chart of ALOG Financial statements of ALOG
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.