Intrinsic value of AngioDynamics - ANGO

Previous Close

$17.25

  Intrinsic Value

$7.75

stock screener

  Rating & Target

str. sell

-55%

Previous close

$17.25

 
Intrinsic value

$7.75

 
Up/down potential

-55%

 
Rating

str. sell

We calculate the intrinsic value of ANGO 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 0.6

 

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, %
  -1.13
  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
  350
  357
  365
  375
  385
  397
  410
  424
  439
  455
  472
  491
  511
  532
  555
  579
  604
  631
  659
  689
  721
  754
  790
  827
  866
  907
  951
  996
  1,044
  1,095
  1,148
Variable operating expenses, $m
 
  355
  363
  371
  380
  391
  402
  415
  428
  443
  458
  439
  457
  476
  496
  517
  540
  564
  589
  616
  644
  674
  706
  739
  774
  811
  850
  891
  933
  979
  1,026
Fixed operating expenses, $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
Total operating expenses, $m
  337
  355
  363
  371
  380
  391
  402
  415
  428
  443
  458
  439
  457
  476
  496
  517
  540
  564
  589
  616
  644
  674
  706
  739
  774
  811
  850
  891
  933
  979
  1,026
Operating income, $m
  13
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  52
  54
  56
  59
  61
  64
  67
  70
  73
  77
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122
EBITDA, $m
  38
  47
  48
  49
  51
  52
  54
  56
  58
  60
  62
  65
  67
  70
  73
  76
  80
  83
  87
  91
  95
  99
  104
  109
  114
  120
  125
  131
  138
  144
  151
Interest expense (income), $m
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
Earnings before tax, $m
  10
  -1
  -1
  0
  1
  2
  3
  5
  6
  7
  9
  47
  48
  50
  52
  54
  57
  59
  62
  64
  67
  70
  73
  76
  80
  83
  87
  91
  96
  100
  105
Tax expense, $m
  5
  0
  0
  0
  0
  1
  1
  1
  2
  2
  2
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
Net income, $m
  5
  -1
  -1
  0
  1
  2
  2
  3
  4
  5
  6
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  76

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  49
  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
  708
  672
  688
  705
  725
  747
  771
  798
  826
  857
  890
  925
  962
  1,002
  1,045
  1,090
  1,138
  1,188
  1,242
  1,298
  1,358
  1,421
  1,487
  1,557
  1,631
  1,708
  1,790
  1,876
  1,967
  2,062
  2,162
Adjusted assets (=assets-cash), $m
  659
  672
  688
  705
  725
  747
  771
  798
  826
  857
  890
  925
  962
  1,002
  1,045
  1,090
  1,138
  1,188
  1,242
  1,298
  1,358
  1,421
  1,487
  1,557
  1,631
  1,708
  1,790
  1,876
  1,967
  2,062
  2,162
Revenue / Adjusted assets
  0.531
  0.531
  0.531
  0.532
  0.531
  0.531
  0.532
  0.531
  0.531
  0.531
  0.530
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
Average production assets, $m
  203
  207
  212
  217
  223
  230
  238
  246
  254
  264
  274
  285
  296
  309
  322
  336
  350
  366
  382
  400
  418
  438
  458
  480
  502
  526
  551
  578
  606
  635
  666
Working capital, $m
  82
  39
  40
  41
  42
  43
  45
  46
  48
  50
  51
  54
  56
  58
  60
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  99
  104
  109
  114
  119
  125
Total debt, $m
  96
  95
  99
  104
  110
  116
  123
  130
  138
  147
  157
  167
  177
  189
  201
  214
  227
  242
  257
  273
  290
  308
  327
  347
  368
  390
  413
  438
  464
  491
  519
Total liabilities, $m
  193
  192
  196
  201
  207
  213
  220
  227
  235
  244
  254
  264
  274
  286
  298
  311
  324
  339
  354
  370
  387
  405
  424
  444
  465
  487
  510
  535
  561
  588
  616
Total equity, $m
  515
  481
  492
  504
  519
  534
  552
  570
  591
  613
  636
  661
  688
  717
  747
  779
  813
  850
  888
  928
  971
  1,016
  1,063
  1,113
  1,166
  1,222
  1,280
  1,341
  1,406
  1,474
  1,546
Total liabilities and equity, $m
  708
  673
  688
  705
  726
  747
  772
  797
  826
  857
  890
  925
  962
  1,003
  1,045
  1,090
  1,137
  1,189
  1,242
  1,298
  1,358
  1,421
  1,487
  1,557
  1,631
  1,709
  1,790
  1,876
  1,967
  2,062
  2,162
Debt-to-equity ratio
  0.186
  0.200
  0.200
  0.210
  0.210
  0.220
  0.220
  0.230
  0.230
  0.240
  0.250
  0.250
  0.260
  0.260
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.310
  0.310
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
  0.340
Adjusted equity ratio
  0.707
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715
  0.715

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  -1
  -1
  0
  1
  2
  2
  3
  4
  5
  6
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  76
Depreciation, amort., depletion, $m
  25
  45
  45
  46
  46
  46
  47
  47
  47
  48
  48
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  26
  27
  28
  29
Funds from operations, $m
  81
  44
  45
  46
  47
  48
  49
  50
  52
  53
  55
  47
  48
  50
  52
  55
  57
  59
  62
  65
  67
  70
  74
  77
  80
  84
  88
  92
  97
  101
  106
Change in working capital, $m
  25
  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
  6
  6
Cash from operations, $m
  56
  43
  44
  45
  46
  47
  48
  49
  50
  51
  53
  45
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  76
  80
  83
  87
  91
  96
  100
Maintenance CAPEX, $m
  0
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
New CAPEX, $m
  -3
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
Cash from investing activities, $m
  -3
  -13
  -14
  -14
  -16
  -17
  -17
  -19
  -20
  -20
  -22
  -23
  -25
  -25
  -27
  -28
  -30
  -32
  -32
  -34
  -36
  -38
  -39
  -42
  -44
  -46
  -48
  -50
  -54
  -56
  -59
Free cash flow, $m
  53
  30
  30
  30
  30
  30
  30
  30
  30
  31
  31
  22
  22
  23
  23
  24
  25
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
Issuance/(repayment) of debt, $m
  -24
  4
  4
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
Issuance/(repurchase) of shares, $m
  -3
  11
  12
  12
  13
  14
  15
  15
  16
  17
  17
  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  
  -38
  15
  16
  17
  19
  20
  22
  22
  24
  26
  26
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
Total cash flow (excl. dividends), $m
  15
  45
  46
  48
  49
  50
  52
  53
  55
  56
  57
  32
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
Retained Cash Flow (-), $m
  -8
  -11
  -12
  -13
  -14
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -53
  -56
  -58
  -62
  -65
  -68
  -72
Prev. year cash balance distribution, $m
 
  44
  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
 
  78
  34
  35
  35
  35
  34
  34
  34
  34
  34
  7
  6
  5
  5
  4
  4
  4
  3
  3
  2
  2
  1
  1
  1
  0
  0
  -1
  -1
  -2
  -2
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
 
  74
  32
  30
  29
  27
  25
  23
  21
  20
  18
  3
  3
  2
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  98.1
  96.2
  94.3
  92.3
  90.3
  88.3
  86.3
  84.4
  82.5
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7
  80.7

AngioDynamics, Inc. designs, manufactures and sells a range of medical, surgical and diagnostic devices used by professional healthcare providers for vascular access, for the treatment of peripheral vascular disease and for use in oncology and surgical settings. The Company's devices are used in minimally invasive, image-guided procedures. The Company offers products within three product groupings: Peripheral Vascular, Vascular Access and Oncology/Surgery. The Company's Peripheral Vascular products include Fluid Management, Venous, Thrombus Management, as well as other core products. The Company's BioFlo products incorporate Endexo Technology into the manufacturing and design of its Vascular Access products. Its Oncology/Surgery product offerings include its Microwave Ablation products, Radiofrequency Ablation (RFA) and its NanoKnife product lines.

FINANCIAL RATIOS  of  AngioDynamics (ANGO)

Valuation Ratios
P/E Ratio 127.1
Price to Sales 1.8
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 11.3
Price to Free Cash Flow 12
Growth Rates
Sales Growth Rate -1.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate -25.4%
Financial Strength
Quick Ratio 10
Current Ratio 0
LT Debt to Equity 17.7%
Total Debt to Equity 18.6%
Interest Coverage 4
Management Effectiveness
Return On Assets 0.9%
Ret/ On Assets - 3 Yr. Avg. 0.2%
Return On Total Capital 0.8%
Ret/ On T. Cap. - 3 Yr. Avg. -2.1%
Return On Equity 1%
Return On Equity - 3 Yr. Avg. -2.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 50.3%
Gross Margin - 3 Yr. Avg. 49.6%
EBITDA Margin 10.9%
EBITDA Margin - 3 Yr. Avg. 8.6%
Operating Margin 3.7%
Oper. Margin - 3 Yr. Avg. 1.1%
Pre-Tax Margin 2.9%
Pre-Tax Margin - 3 Yr. Avg. -0.1%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. -3.9%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. -418.1%
Payout Ratio 0%

ANGO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ANGO stock intrinsic value calculation we used $350 million for the last fiscal year's total revenue generated by AngioDynamics. The default revenue input number comes from 2017 income statement of AngioDynamics. 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 ANGO 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 ANGO is calculated based on our internal credit rating of AngioDynamics, 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 AngioDynamics.
    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 ANGO stock the variable cost ratio is equal to 99.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ANGO 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 AngioDynamics.

Corporate tax rate of 27% is the nominal tax rate for AngioDynamics. 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 ANGO 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 ANGO are equal to 58%.

Life of production assets of 22.6 years is the average useful life of capital assets used in AngioDynamics 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 ANGO is equal to 10.9%. 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 - $515 million for AngioDynamics - 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 36.716 million for AngioDynamics 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 AngioDynamics at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

▶ AngioDynamics misses Street 1Q forecasts   [Sep-28-17 09:41PM  Associated Press]
▶ AngioDynamics reports 4Q loss   [04:49PM  Associated Press]
▶ Albany public company files lawsuit alleging competitor violated antitrust laws   [May-31-17 03:48PM  American City Business Journals]
▶ Endo international, AngioDynamics Lead Biotech Movers   [Apr-07-17 09:25AM  TheStreet.com]
▶ ETFs with exposure to AngioDynamics, Inc. : April 5, 2017   [Apr-05-17 04:18PM  Capital Cube]
▶ AngioDynamics tops 3Q profit forecasts   [06:12AM  Associated Press]
▶ How Nantkwest Inc (NK) Stacks Up Versus Peers   [Dec-16-16 12:13AM  at Insider Monkey]
▶ Is NeoGenomics, Inc. (NEO) A Good Stock To Buy?   [08:28AM  at Insider Monkey]
Financial statements of ANGO
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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