Intrinsic value of Analogic - ALOG

Previous Close

$83.55

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$83.55

 
Intrinsic value

$49.98

 
Up/down potential

-40%

 
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 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 1.0

 

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
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
Revenue, $m
  509
  535
  563
  592
  623
  655
  688
  723
  760
  799
  839
  882
  927
  974
  1,023
  1,074
  1,128
  1,185
  1,245
  1,308
  1,373
  1,442
  1,515
  1,591
  1,671
  1,754
  1,842
  1,935
  2,032
  2,133
  2,240
Variable operating expenses, $m
 
  276
  290
  305
  320
  336
  353
  371
  389
  409
  429
  443
  466
  489
  514
  540
  567
  596
  626
  657
  690
  725
  761
  799
  839
  882
  926
  972
  1,021
  1,072
  1,126
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
  509
  528
  549
  571
  593
  616
  641
  666
  692
  720
  741
  771
  802
  835
  869
  904
  941
  980
  1,020
  1,062
  1,106
  1,152
  1,200
  1,250
  1,303
  1,357
  1,414
  1,474
  1,537
  1,602
Operating income, $m
  25
  26
  34
  43
  52
  62
  72
  83
  94
  107
  120
  141
  156
  171
  188
  206
  224
  244
  265
  288
  311
  336
  363
  391
  421
  452
  485
  520
  558
  597
  639
EBITDA, $m
  48
  48
  57
  67
  76
  87
  98
  110
  123
  136
  150
  165
  181
  198
  216
  235
  255
  277
  300
  324
  349
  376
  404
  435
  467
  500
  536
  574
  614
  656
  700
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
Earnings before tax, $m
  20
  26
  34
  42
  51
  61
  71
  81
  93
  105
  118
  139
  153
  169
  185
  202
  221
  240
  261
  283
  306
  330
  356
  384
  413
  444
  477
  511
  548
  586
  627
Tax expense, $m
  8
  7
  9
  11
  14
  16
  19
  22
  25
  28
  32
  37
  41
  46
  50
  55
  60
  65
  70
  76
  83
  89
  96
  104
  112
  120
  129
  138
  148
  158
  169
Net income, $m
  12
  19
  25
  31
  37
  44
  52
  59
  68
  77
  86
  101
  112
  123
  135
  148
  161
  175
  190
  206
  223
  241
  260
  280
  302
  324
  348
  373
  400
  428
  458

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
  541
  569
  598
  629
  661
  695
  731
  768
  807
  848
  891
  936
  983
  1,033
  1,085
  1,140
  1,197
  1,258
  1,321
  1,387
  1,457
  1,530
  1,607
  1,687
  1,772
  1,861
  1,954
  2,052
  2,155
  2,263
Adjusted assets (=assets-cash), $m
  514
  541
  569
  598
  629
  661
  695
  731
  768
  807
  848
  891
  936
  983
  1,033
  1,085
  1,140
  1,197
  1,258
  1,321
  1,387
  1,457
  1,530
  1,607
  1,687
  1,772
  1,861
  1,954
  2,052
  2,155
  2,263
Revenue / Adjusted assets
  0.990
  0.989
  0.989
  0.990
  0.990
  0.991
  0.990
  0.989
  0.990
  0.990
  0.989
  0.990
  0.990
  0.991
  0.990
  0.990
  0.989
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
  0.991
  0.990
  0.990
  0.990
  0.990
  0.990
  0.990
Average production assets, $m
  101
  106
  112
  117
  123
  130
  136
  143
  151
  158
  166
  175
  183
  193
  202
  213
  223
  235
  247
  259
  272
  286
  300
  315
  331
  347
  365
  383
  402
  422
  444
Working capital, $m
  311
  202
  212
  223
  235
  247
  259
  273
  287
  301
  316
  333
  349
  367
  386
  405
  425
  447
  469
  493
  518
  544
  571
  600
  630
  661
  695
  729
  766
  804
  845
Total debt, $m
  0
  5
  11
  16
  23
  29
  36
  43
  50
  58
  66
  74
  83
  93
  103
  113
  124
  135
  147
  160
  173
  186
  201
  216
  232
  249
  266
  285
  304
  325
  346
Total liabilities, $m
  102
  107
  113
  118
  125
  131
  138
  145
  152
  160
  168
  176
  185
  195
  205
  215
  226
  237
  249
  262
  275
  288
  303
  318
  334
  351
  368
  387
  406
  427
  448
Total equity, $m
  531
  434
  456
  480
  504
  530
  558
  586
  616
  647
  680
  715
  751
  789
  828
  870
  914
  960
  1,009
  1,059
  1,113
  1,168
  1,227
  1,289
  1,353
  1,421
  1,492
  1,567
  1,646
  1,728
  1,815
Total liabilities and equity, $m
  633
  541
  569
  598
  629
  661
  696
  731
  768
  807
  848
  891
  936
  984
  1,033
  1,085
  1,140
  1,197
  1,258
  1,321
  1,388
  1,456
  1,530
  1,607
  1,687
  1,772
  1,860
  1,954
  2,052
  2,155
  2,263
Debt-to-equity ratio
  0.000
  0.010
  0.020
  0.030
  0.040
  0.050
  0.060
  0.070
  0.080
  0.090
  0.100
  0.100
  0.110
  0.120
  0.120
  0.130
  0.140
  0.140
  0.150
  0.150
  0.160
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
  0.180
  0.180
  0.190
  0.190
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
  19
  25
  31
  37
  44
  52
  59
  68
  77
  86
  101
  112
  123
  135
  148
  161
  175
  190
  206
  223
  241
  260
  280
  302
  324
  348
  373
  400
  428
  458
Depreciation, amort., depletion, $m
  23
  22
  23
  24
  25
  25
  26
  27
  28
  29
  30
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  59
  62
Funds from operations, $m
  19
  41
  48
  55
  62
  70
  78
  87
  96
  106
  116
  125
  137
  150
  163
  177
  192
  208
  225
  242
  261
  281
  302
  324
  347
  372
  399
  426
  456
  487
  519
Change in working capital, $m
  -14
  10
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  22
  24
  25
  26
  27
  29
  30
  32
  33
  35
  37
  38
  40
Cash from operations, $m
  33
  82
  37
  44
  50
  58
  65
  73
  82
  91
  101
  109
  120
  132
  145
  158
  172
  186
  202
  219
  236
  255
  274
  295
  317
  341
  365
  392
  419
  448
  479
Maintenance CAPEX, $m
  0
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -59
New CAPEX, $m
  -13
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
Cash from investing activities, $m
  -21
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -37
  -38
  -41
  -42
  -45
  -46
  -49
  -52
  -54
  -57
  -60
  -63
  -65
  -69
  -72
  -76
  -80
Free cash flow, $m
  12
  63
  17
  22
  28
  34
  41
  48
  55
  63
  71
  78
  87
  97
  108
  119
  131
  144
  158
  172
  187
  203
  220
  239
  258
  278
  300
  323
  347
  372
  399
Issuance/(repayment) of debt, $m
  0
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
  21
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
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  17
  18
  18
  19
  20
  21
Total cash flow (excl. dividends), $m
  0
  68
  23
  28
  34
  41
  47
  55
  62
  70
  79
  86
  96
  107
  118
  130
  142
  155
  170
  184
  200
  217
  235
  254
  274
  295
  317
  341
  366
  393
  421
Retained Cash Flow (-), $m
  0
  -22
  -22
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -79
  -82
  -87
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
 
  166
  0
  5
  10
  15
  20
  26
  32
  39
  46
  52
  60
  69
  78
  88
  98
  109
  121
  134
  147
  161
  176
  192
  209
  227
  246
  266
  288
  310
  334
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
 
  159
  0
  4
  8
  11
  15
  18
  20
  23
  24
  25
  26
  26
  26
  26
  25
  24
  22
  21
  19
  17
  15
  13
  11
  9
  7
  6
  4
  3
  3
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 86.3
Price to Sales 2
Price to Book 2
Price to Tangible Book
Price to Cash Flow 31.4
Price to Free Cash Flow 51.8
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 5.2% 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 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 12.262 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 $1.0 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
OSIS OSI Systems 72.58 prem.  prem.
GE General Electr 30.00 prem.  prem.
LLL L3 Technologie 168.35 prem.  prem.
IIN IntriCon 8.25 prem.  prem.
HRT Arrhythmia Res 4.15 prem.  prem.

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 Annual reports 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.