Intrinsic value of Bio-Rad Laboratories Cl A - BIO

Previous Close

$249.04

  Intrinsic Value

$56.94

stock screener

  Rating & Target

str. sell

-77%

Previous close

$249.04

 
Intrinsic value

$56.94

 
Up/down potential

-77%

 
Rating

str. sell

We calculate the intrinsic value of BIO 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  2.43
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  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
  5.01
  5.01
  5.01
  5.01
  5.01
  5.00
Revenue, $m
  2,068
  2,173
  2,284
  2,400
  2,522
  2,650
  2,784
  2,924
  3,072
  3,227
  3,390
  3,560
  3,739
  3,927
  4,125
  4,332
  4,549
  4,778
  5,017
  5,269
  5,533
  5,810
  6,102
  6,407
  6,728
  7,065
  7,419
  7,790
  8,180
  8,590
  9,020
Variable operating expenses, $m
 
  1,993
  2,092
  2,196
  2,305
  2,419
  2,539
  2,665
  2,797
  2,936
  3,081
  3,186
  3,346
  3,515
  3,691
  3,877
  4,071
  4,276
  4,490
  4,715
  4,952
  5,200
  5,461
  5,734
  6,021
  6,323
  6,639
  6,972
  7,321
  7,687
  8,072
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
  2,016
  1,993
  2,092
  2,196
  2,305
  2,419
  2,539
  2,665
  2,797
  2,936
  3,081
  3,186
  3,346
  3,515
  3,691
  3,877
  4,071
  4,276
  4,490
  4,715
  4,952
  5,200
  5,461
  5,734
  6,021
  6,323
  6,639
  6,972
  7,321
  7,687
  8,072
Operating income, $m
  53
  181
  192
  204
  217
  231
  245
  260
  275
  291
  308
  374
  393
  413
  433
  455
  478
  502
  527
  554
  581
  610
  641
  673
  707
  742
  779
  818
  859
  902
  948
EBITDA, $m
  53
  297
  312
  328
  344
  362
  380
  399
  420
  441
  463
  486
  511
  536
  563
  592
  621
  652
  685
  720
  756
  794
  833
  875
  919
  965
  1,013
  1,064
  1,117
  1,173
  1,232
Interest expense (income), $m
  -21
  15
  17
  20
  22
  25
  28
  31
  34
  37
  40
  44
  47
  51
  55
  59
  64
  68
  73
  78
  84
  89
  95
  102
  108
  115
  122
  130
  138
  146
  155
Earnings before tax, $m
  42
  165
  175
  185
  195
  206
  217
  229
  242
  255
  268
  331
  346
  362
  378
  396
  414
  434
  454
  475
  498
  521
  546
  572
  599
  627
  657
  689
  722
  756
  793
Tax expense, $m
  14
  45
  47
  50
  53
  56
  59
  62
  65
  69
  72
  89
  93
  98
  102
  107
  112
  117
  123
  128
  134
  141
  147
  154
  162
  169
  177
  186
  195
  204
  214
Net income, $m
  28
  121
  128
  135
  142
  150
  158
  167
  176
  186
  196
  241
  252
  264
  276
  289
  302
  317
  331
  347
  363
  380
  398
  417
  437
  458
  480
  503
  527
  552
  579

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  839
  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
  3,851
  3,164
  3,325
  3,494
  3,671
  3,857
  4,052
  4,257
  4,472
  4,697
  4,934
  5,182
  5,443
  5,717
  6,004
  6,305
  6,622
  6,954
  7,303
  7,669
  8,054
  8,458
  8,881
  9,326
  9,794
  10,284
  10,799
  11,340
  11,907
  12,503
  13,129
Adjusted assets (=assets-cash), $m
  3,012
  3,164
  3,325
  3,494
  3,671
  3,857
  4,052
  4,257
  4,472
  4,697
  4,934
  5,182
  5,443
  5,717
  6,004
  6,305
  6,622
  6,954
  7,303
  7,669
  8,054
  8,458
  8,881
  9,326
  9,794
  10,284
  10,799
  11,340
  11,907
  12,503
  13,129
Revenue / Adjusted assets
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
Average production assets, $m
  651
  685
  719
  756
  794
  835
  877
  921
  968
  1,016
  1,068
  1,121
  1,178
  1,237
  1,299
  1,365
  1,433
  1,505
  1,580
  1,660
  1,743
  1,830
  1,922
  2,018
  2,119
  2,226
  2,337
  2,454
  2,577
  2,706
  2,841
Working capital, $m
  1,374
  563
  592
  622
  653
  686
  721
  757
  796
  836
  878
  922
  968
  1,017
  1,068
  1,122
  1,178
  1,237
  1,299
  1,365
  1,433
  1,505
  1,580
  1,659
  1,743
  1,830
  1,921
  2,018
  2,119
  2,225
  2,336
Total debt, $m
  435
  500
  567
  638
  713
  791
  873
  959
  1,049
  1,144
  1,243
  1,348
  1,457
  1,572
  1,693
  1,819
  1,952
  2,092
  2,238
  2,392
  2,554
  2,723
  2,901
  3,088
  3,284
  3,490
  3,707
  3,934
  4,172
  4,422
  4,685
Total liabilities, $m
  1,264
  1,329
  1,396
  1,467
  1,542
  1,620
  1,702
  1,788
  1,878
  1,973
  2,072
  2,177
  2,286
  2,401
  2,522
  2,648
  2,781
  2,921
  3,067
  3,221
  3,383
  3,552
  3,730
  3,917
  4,113
  4,319
  4,536
  4,763
  5,001
  5,251
  5,514
Total equity, $m
  2,587
  1,835
  1,928
  2,026
  2,129
  2,237
  2,350
  2,469
  2,594
  2,724
  2,862
  3,006
  3,157
  3,316
  3,482
  3,657
  3,841
  4,034
  4,236
  4,448
  4,671
  4,905
  5,151
  5,409
  5,680
  5,965
  6,263
  6,577
  6,906
  7,252
  7,615
Total liabilities and equity, $m
  3,851
  3,164
  3,324
  3,493
  3,671
  3,857
  4,052
  4,257
  4,472
  4,697
  4,934
  5,183
  5,443
  5,717
  6,004
  6,305
  6,622
  6,955
  7,303
  7,669
  8,054
  8,457
  8,881
  9,326
  9,793
  10,284
  10,799
  11,340
  11,907
  12,503
  13,129
Debt-to-equity ratio
  0.168
  0.270
  0.290
  0.320
  0.330
  0.350
  0.370
  0.390
  0.400
  0.420
  0.430
  0.450
  0.460
  0.470
  0.490
  0.500
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.560
  0.570
  0.580
  0.590
  0.590
  0.600
  0.600
  0.610
  0.620
Adjusted equity ratio
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  28
  121
  128
  135
  142
  150
  158
  167
  176
  186
  196
  241
  252
  264
  276
  289
  302
  317
  331
  347
  363
  380
  398
  417
  437
  458
  480
  503
  527
  552
  579
Depreciation, amort., depletion, $m
  0
  116
  120
  123
  127
  131
  135
  140
  144
  149
  154
  112
  118
  124
  130
  136
  143
  150
  158
  166
  174
  183
  192
  202
  212
  223
  234
  245
  258
  271
  284
Funds from operations, $m
  229
  237
  247
  258
  269
  281
  294
  307
  321
  335
  350
  353
  370
  388
  406
  425
  446
  467
  489
  513
  538
  563
  591
  619
  649
  681
  714
  748
  785
  823
  863
Change in working capital, $m
  13
  27
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  49
  51
  54
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  92
  96
  101
  106
  111
Cash from operations, $m
  216
  210
  219
  228
  238
  248
  259
  271
  283
  295
  308
  309
  324
  339
  355
  372
  389
  408
  427
  448
  469
  492
  515
  540
  566
  593
  622
  652
  684
  717
  752
Maintenance CAPEX, $m
  0
  -65
  -68
  -72
  -76
  -79
  -83
  -88
  -92
  -97
  -102
  -107
  -112
  -118
  -124
  -130
  -136
  -143
  -150
  -158
  -166
  -174
  -183
  -192
  -202
  -212
  -223
  -234
  -245
  -258
  -271
New CAPEX, $m
  -142
  -34
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -69
  -72
  -75
  -79
  -83
  -87
  -92
  -96
  -101
  -106
  -111
  -117
  -123
  -129
  -135
Cash from investing activities, $m
  -214
  -99
  -103
  -109
  -114
  -119
  -125
  -132
  -138
  -146
  -153
  -161
  -168
  -177
  -186
  -195
  -205
  -215
  -225
  -237
  -249
  -261
  -275
  -288
  -303
  -318
  -334
  -351
  -368
  -387
  -406
Free cash flow, $m
  2
  111
  115
  120
  124
  129
  133
  139
  144
  150
  155
  149
  155
  162
  169
  177
  184
  193
  201
  210
  220
  230
  240
  251
  263
  275
  288
  301
  315
  330
  346
Issuance/(repayment) of debt, $m
  0
  65
  68
  71
  74
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
  127
  133
  140
  147
  154
  161
  170
  178
  187
  196
  206
  216
  227
  238
  250
  263
Issuance/(repurchase) of shares, $m
  11
  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  
  9
  65
  68
  71
  74
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
  127
  133
  140
  147
  154
  161
  170
  178
  187
  196
  206
  216
  227
  238
  250
  263
Total cash flow (excl. dividends), $m
  -1
  176
  183
  190
  198
  207
  215
  225
  234
  244
  255
  253
  265
  277
  290
  303
  317
  332
  348
  364
  381
  399
  418
  438
  459
  481
  504
  528
  554
  580
  608
Retained Cash Flow (-), $m
  -96
  -87
  -93
  -98
  -103
  -108
  -113
  -119
  -125
  -131
  -137
  -144
  -151
  -159
  -167
  -175
  -184
  -193
  -202
  -212
  -223
  -234
  -246
  -258
  -271
  -284
  -299
  -314
  -329
  -346
  -363
Prev. year cash balance distribution, $m
 
  839
  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
 
  928
  90
  92
  96
  99
  102
  106
  110
  113
  118
  109
  113
  118
  123
  128
  134
  140
  146
  152
  158
  165
  173
  180
  188
  197
  206
  215
  225
  235
  245
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
 
  889
  82
  80
  79
  77
  74
  71
  68
  65
  62
  52
  48
  45
  41
  38
  34
  30
  27
  23
  20
  17
  14
  12
  10
  8
  6
  5
  3
  3
  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

Bio-Rad Laboratories, Inc. (Bio-Rad) is a manufacturer and distributor of its life science research and clinical diagnostics products. The Company operates through two segments: Life Science and Clinical Diagnostics. It manufactures and supplies the life science research, healthcare, analytical chemistry and other markets with a range of products and systems used to separate complex chemical and biological materials and to identify, analyze and purify their components. The Life Science segment develops, manufactures, sells and services reagents, apparatus and instruments used for biological research. The Clinical Diagnostics segment develops, manufactures, sells and services automated test systems, informatics systems, test kits and specialized quality controls for the healthcare market. As of December 31, 2016, Bio-Rad sold more than 8,000 products and services to a client base, including scientific research, healthcare, education and government customers around the world.

FINANCIAL RATIOS  of  Bio-Rad Laboratories Cl A (BIO)

Valuation Ratios
P/E Ratio 263.1
Price to Sales 3.6
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 34.1
Price to Free Cash Flow 99.5
Growth Rates
Sales Growth Rate 2.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 25.7%
Cap. Spend. - 3 Yr. Gr. Rate 4.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 16.8%
Total Debt to Equity 16.8%
Interest Coverage -1
Management Effectiveness
Return On Assets 0.4%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 2.8%
Return On Equity 1.1%
Return On Equity - 3 Yr. Avg. 3.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 55.1%
Gross Margin - 3 Yr. Avg. 55%
EBITDA Margin 1%
EBITDA Margin - 3 Yr. Avg. 4.1%
Operating Margin 2.5%
Oper. Margin - 3 Yr. Avg. 5.9%
Pre-Tax Margin 2%
Pre-Tax Margin - 3 Yr. Avg. 5.1%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 29.5%
Payout Ratio 0%

BIO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BIO stock intrinsic value calculation we used $2068 million for the last fiscal year's total revenue generated by Bio-Rad Laboratories Cl A. The default revenue input number comes from 2016 income statement of Bio-Rad Laboratories Cl A. 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 BIO stock valuation model: a) initial revenue growth rate of 5.1% 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 BIO is calculated based on our internal credit rating of Bio-Rad Laboratories Cl A, 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 Bio-Rad Laboratories Cl A.
    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 BIO stock the variable cost ratio is equal to 91.8%.

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 BIO 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 Bio-Rad Laboratories Cl A.

Corporate tax rate of 27% is the nominal tax rate for Bio-Rad Laboratories Cl A. 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 BIO 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 BIO are equal to 31.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Bio-Rad Laboratories Cl A 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 BIO is equal to 25.9%. 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 - $2587 million for Bio-Rad Laboratories Cl A - 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 34.944 million for Bio-Rad Laboratories Cl A 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 Bio-Rad Laboratories Cl A at the current share price and the inputted number of shares is $8.7 billion.

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COMPANY NEWS

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▶ Bio-Rad to Webcast Investor Day 2017   [Nov-21-17 03:58PM  Business Wire]
▶ Bio-Rad posts 3Q profit   [Nov-06-17 05:37AM  Associated Press]
▶ Bio-Rad tops Street 3Q forecasts   [Nov-02-17 07:09PM  Associated Press]
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Financial statements of BIO
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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