Intrinsic value of Alliqua BioMedical - ALQA

Previous Close

$0.28

  Intrinsic Value

$0.17

stock screener

  Rating & Target

sell

-39%

  Value-price divergence*

+136%

Previous close

$0.28

 
Intrinsic value

$0.17

 
Up/down potential

-39%

 
Rating

sell

 
Value-price divergence*

+136%

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

We calculate the intrinsic value of ALQA 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 0.0

 

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, %
  50.00
  25.00
  23.00
  21.20
  19.58
  18.12
  16.81
  15.63
  14.57
  13.61
  12.75
  11.97
  11.28
  10.65
  10.08
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
  6.05
  5.94
Revenue, $m
  18
  23
  28
  34
  40
  47
  55
  64
  73
  83
  94
  105
  117
  129
  143
  156
  170
  185
  201
  217
  233
  251
  269
  288
  307
  327
  348
  370
  393
  417
  442
Variable operating expenses, $m
 
  30
  36
  44
  52
  61
  71
  82
  94
  107
  120
  133
  148
  164
  180
  198
  216
  235
  254
  274
  296
  318
  340
  364
  389
  414
  441
  469
  498
  528
  559
Fixed operating expenses, $m
 
  28
  28
  29
  30
  31
  31
  32
  33
  34
  35
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  53
  54
  55
  57
Total operating expenses, $m
  50
  58
  64
  73
  82
  92
  102
  114
  127
  141
  155
  168
  184
  201
  218
  237
  256
  276
  296
  317
  340
  363
  386
  412
  438
  464
  492
  522
  552
  583
  616
Operating income, $m
  -32
  -35
  -37
  -39
  -42
  -44
  -47
  -50
  -54
  -57
  -61
  -63
  -67
  -72
  -76
  -81
  -85
  -90
  -96
  -101
  -106
  -112
  -118
  -124
  -131
  -137
  -144
  -151
  -159
  -166
  -174
EBITDA, $m
  -28
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -88
  -92
  -96
  -100
  -104
  -109
Interest expense (income), $m
  2
  1
  2
  3
  3
  4
  6
  7
  8
  10
  11
  13
  15
  17
  19
  21
  23
  25
  27
  30
  32
  35
  38
  41
  44
  47
  50
  53
  57
  60
  64
Earnings before tax, $m
  -33
  -36
  -39
  -42
  -45
  -49
  -53
  -57
  -62
  -67
  -72
  -76
  -82
  -88
  -95
  -101
  -108
  -115
  -123
  -131
  -139
  -147
  -156
  -165
  -174
  -184
  -194
  -204
  -215
  -227
  -238
Tax expense, $m
  -1
  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
Net income, $m
  -28
  -36
  -39
  -42
  -45
  -49
  -53
  -57
  -62
  -67
  -72
  -76
  -82
  -88
  -95
  -101
  -108
  -115
  -123
  -131
  -139
  -147
  -156
  -165
  -174
  -184
  -194
  -204
  -215
  -227
  -238

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6
  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
  55
  61
  75
  91
  109
  129
  151
  174
  200
  227
  256
  287
  319
  353
  388
  426
  464
  505
  547
  591
  636
  683
  732
  784
  837
  892
  949
  1,009
  1,071
  1,136
  1,203
Adjusted assets (=assets-cash), $m
  49
  61
  75
  91
  109
  129
  151
  174
  200
  227
  256
  287
  319
  353
  388
  426
  464
  505
  547
  591
  636
  683
  732
  784
  837
  892
  949
  1,009
  1,071
  1,136
  1,203
Revenue / Adjusted assets
  0.367
  0.377
  0.373
  0.374
  0.367
  0.364
  0.364
  0.368
  0.365
  0.366
  0.367
  0.366
  0.367
  0.365
  0.369
  0.366
  0.366
  0.366
  0.367
  0.367
  0.366
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
Average production assets, $m
  34
  42
  52
  62
  75
  88
  103
  119
  136
  155
  175
  196
  218
  241
  265
  291
  317
  345
  373
  403
  434
  467
  500
  535
  571
  609
  648
  689
  732
  776
  822
Working capital, $m
  -8
  -2
  -3
  -3
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -11
  -12
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
Total debt, $m
  12
  10
  15
  21
  27
  34
  41
  50
  58
  68
  78
  88
  100
  111
  124
  137
  150
  164
  179
  194
  210
  226
  243
  261
  279
  298
  318
  339
  361
  383
  407
Total liabilities, $m
  22
  21
  26
  32
  38
  45
  52
  61
  69
  79
  89
  99
  111
  122
  135
  148
  161
  175
  190
  205
  221
  237
  254
  272
  290
  309
  329
  350
  372
  394
  418
Total equity, $m
  32
  40
  49
  60
  71
  84
  98
  114
  130
  148
  167
  187
  208
  230
  254
  278
  303
  330
  357
  386
  415
  446
  478
  512
  546
  582
  620
  659
  699
  742
  786
Total liabilities and equity, $m
  54
  61
  75
  92
  109
  129
  150
  175
  199
  227
  256
  286
  319
  352
  389
  426
  464
  505
  547
  591
  636
  683
  732
  784
  836
  891
  949
  1,009
  1,071
  1,136
  1,204
Debt-to-equity ratio
  0.375
  0.260
  0.310
  0.350
  0.380
  0.400
  0.420
  0.430
  0.450
  0.460
  0.470
  0.470
  0.480
  0.480
  0.490
  0.490
  0.500
  0.500
  0.500
  0.500
  0.500
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.520
  0.520
  0.520
Adjusted equity ratio
  0.531
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653
  0.653

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -28
  -36
  -39
  -42
  -45
  -49
  -53
  -57
  -62
  -67
  -72
  -76
  -82
  -88
  -95
  -101
  -108
  -115
  -123
  -131
  -139
  -147
  -156
  -165
  -174
  -184
  -194
  -204
  -215
  -227
  -238
Depreciation, amort., depletion, $m
  4
  5
  5
  6
  7
  8
  9
  11
  12
  14
  15
  16
  17
  19
  21
  23
  25
  28
  30
  32
  35
  37
  40
  43
  46
  49
  52
  55
  59
  62
  66
Funds from operations, $m
  -15
  -31
  -33
  -36
  -38
  -41
  -43
  -47
  -50
  -53
  -57
  -61
  -65
  -69
  -73
  -78
  -83
  -88
  -93
  -98
  -104
  -110
  -116
  -122
  -128
  -135
  -142
  -149
  -157
  -164
  -172
Change in working capital, $m
  3
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  -18
  -31
  -33
  -35
  -37
  -40
  -43
  -46
  -49
  -52
  -56
  -60
  -64
  -68
  -72
  -77
  -81
  -86
  -92
  -97
  -102
  -108
  -114
  -120
  -127
  -133
  -140
  -147
  -154
  -162
  -170
Maintenance CAPEX, $m
  0
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -10
  -11
  -12
  -14
  -16
  -17
  -19
  -21
  -23
  -25
  -28
  -30
  -32
  -35
  -37
  -40
  -43
  -46
  -49
  -52
  -55
  -59
  -62
New CAPEX, $m
  -1
  -8
  -10
  -11
  -12
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
Cash from investing activities, $m
  2
  -11
  -13
  -15
  -17
  -20
  -22
  -24
  -27
  -30
  -32
  -35
  -38
  -40
  -43
  -46
  -49
  -53
  -57
  -60
  -63
  -67
  -71
  -75
  -79
  -84
  -88
  -93
  -97
  -103
  -108
Free cash flow, $m
  -16
  -42
  -46
  -50
  -55
  -59
  -65
  -70
  -76
  -82
  -88
  -95
  -101
  -108
  -116
  -123
  -131
  -139
  -148
  -157
  -166
  -175
  -185
  -195
  -206
  -217
  -228
  -240
  -252
  -265
  -278
Issuance/(repayment) of debt, $m
  -2
  4
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  22
  23
Issuance/(repurchase) of shares, $m
  0
  44
  48
  52
  57
  62
  67
  73
  78
  85
  91
  96
  103
  111
  118
  126
  134
  142
  150
  159
  169
  178
  188
  198
  209
  220
  231
  243
  256
  269
  282
Cash from financing (excl. dividends), $m  
  -4
  48
  53
  58
  63
  69
  75
  81
  87
  94
  101
  107
  114
  123
  130
  139
  147
  156
  165
  174
  185
  194
  205
  216
  227
  239
  251
  264
  278
  291
  305
Total cash flow (excl. dividends), $m
  -21
  6
  7
  8
  9
  9
  10
  11
  12
  12
  13
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  28
Retained Cash Flow (-), $m
  20
  -44
  -48
  -52
  -57
  -62
  -67
  -73
  -78
  -85
  -91
  -96
  -103
  -111
  -118
  -126
  -134
  -142
  -150
  -159
  -169
  -178
  -188
  -198
  -209
  -220
  -231
  -243
  -256
  -269
  -282
Prev. year cash balance distribution, $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 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
 
  -38
  -41
  -44
  -48
  -53
  -57
  -62
  -67
  -72
  -78
  -84
  -90
  -97
  -103
  -110
  -118
  -125
  -133
  -141
  -150
  -159
  -168
  -177
  -187
  -197
  -208
  -219
  -230
  -242
  -255
Discount rate, %
 
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
 
  -35
  -36
  -36
  -36
  -35
  -35
  -34
  -33
  -31
  -29
  -27
  -25
  -22
  -20
  -17
  -15
  -12
  -10
  -8
  -7
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  33.8
  12.5
  5.0
  2.1
  0.9
  0.4
  0.2
  0.1
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Alliqua BioMedical, Inc. provides wound care solutions in the United States and internationally. The company offers the MIST Therapy system for the treatment of acute and chronic wounds; Extracellular Matrix, a suite of advanced wound management products; Biovance, a decellularized and dehydrated allograft for the management of non-infected partial-and full-thickness wounds; SilverSeal, a hydrogel wound dressing with silver coated fibers; connective tissue matrix (CTM) products; and Hydress, an over-the-counter hydrogel wound dressing. It also provides contact dressings, island dressings, and wraps using TheraBond 3D antimicrobial barrier systems. In addition, the company offers Sorbion sachet S, a primary dressing for exudating wounds, such as surgical wounds, venous leg ulcers, and diabetic ulcers; Sorbion sana, a primary wound dressing that provides an another form of wound treatment; and products with hydrokinetic fibers as primary dressings. Further, it provides contract manufacturing services, including the development, manufacture, and market of high water content, electron beam cross-linked, aqueous polymer hydrogels, or gels used for wound care, medical diagnostics, transdermal drug delivery, and cosmetics. The company has a license, marketing, development, and supply agreement with Anthrogenesis Corporation to develop and market Extracellular Matrix, Biovance, and CTM products. Alliqua BioMedical, Inc. primarily serves medical device manufacturers through independent network of agents. The company is headquartered in Yardley, Pennsylvania.

FINANCIAL RATIOS  of  Alliqua BioMedical (ALQA)

Valuation Ratios
P/E Ratio -0.3
Price to Sales 0.5
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow -0.5
Price to Free Cash Flow -0.4
Growth Rates
Sales Growth Rate 50%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 37.5%
Interest Coverage -16
Management Effectiveness
Return On Assets -35.9%
Ret/ On Assets - 3 Yr. Avg. -61.4%
Return On Total Capital -51.9%
Ret/ On T. Cap. - 3 Yr. Avg. -82.3%
Return On Equity -66.7%
Return On Equity - 3 Yr. Avg. -90.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 55.6%
Gross Margin - 3 Yr. Avg. 41.9%
EBITDA Margin -150%
EBITDA Margin - 3 Yr. Avg. -279.4%
Operating Margin -177.8%
Oper. Margin - 3 Yr. Avg. -309.3%
Pre-Tax Margin -183.3%
Pre-Tax Margin - 3 Yr. Avg. -308.3%
Net Profit Margin -155.6%
Net Profit Margin - 3 Yr. Avg. -290.7%
Effective Tax Rate 3%
Eff/ Tax Rate - 3 Yr. Avg. 3.3%
Payout Ratio 0%

ALQA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALQA stock intrinsic value calculation we used $18 million for the last fiscal year's total revenue generated by Alliqua BioMedical. The default revenue input number comes from 2016 income statement of Alliqua BioMedical. 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 ALQA stock valuation model: a) initial revenue growth rate of 25% 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 6.7%, whose default value for ALQA is calculated based on our internal credit rating of Alliqua BioMedical, 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 Alliqua BioMedical.
    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 ALQA stock the variable cost ratio is equal to 133.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $27 million in the base year in the intrinsic value calculation for ALQA 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 16.7% for Alliqua BioMedical.

Corporate tax rate of 27% is the nominal tax rate for Alliqua BioMedical. 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 ALQA 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 ALQA are equal to 186.1%.

Life of production assets of 12.5 years is the average useful life of capital assets used in Alliqua BioMedical 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 ALQA is equal to -10%. 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 - $32 million for Alliqua BioMedical - 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 29.091 million for Alliqua BioMedical 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 Alliqua BioMedical at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Alliqua reports 2Q loss   [Aug-10-17 11:54PM  Associated Press]
▶ Alliqua reports 1Q loss   [May-09-17 08:55AM  Associated Press]
▶ Hedge Funds Arent Crazy About A. M. Castle & Co (CASL) Anymore   [Dec-20-16 02:26PM  at Insider Monkey]
▶ 6 Stocks Under $10 Making Big Moves Higher   [08:39AM  at TheStreet]
▶ 5 Breakout Stocks Under $10 Set to Soar   [May-05-16 10:49AM  at TheStreet]
Stock chart of ALQA Financial statements of ALQA
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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