Intrinsic value of Dynatronics - DYNT

Previous Close

$2.65

  Intrinsic Value

$14.92

stock screener

  Rating & Target

str. buy

+463%

Previous close

$2.65

 
Intrinsic value

$14.92

 
Up/down potential

+463%

 
Rating

str. buy

We calculate the intrinsic value of DYNT 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 0.0

 

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, %
  20.00
  37.50
  34.25
  31.33
  28.69
  26.32
  24.19
  22.27
  20.54
  18.99
  17.59
  16.33
  15.20
  14.18
  13.26
  12.43
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
Revenue, $m
  36
  50
  66
  87
  112
  142
  176
  215
  260
  309
  363
  423
  487
  556
  630
  708
  791
  878
  969
  1,065
  1,165
  1,270
  1,378
  1,491
  1,609
  1,731
  1,858
  1,990
  2,127
  2,269
  2,418
Variable operating expenses, $m
 
  41
  55
  72
  93
  117
  145
  177
  214
  254
  299
  347
  400
  457
  518
  582
  650
  722
  797
  876
  958
  1,043
  1,133
  1,226
  1,322
  1,423
  1,527
  1,635
  1,748
  1,865
  1,987
Fixed operating expenses, $m
 
  7
  7
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
Total operating expenses, $m
  37
  48
  62
  80
  101
  125
  153
  185
  223
  263
  308
  356
  409
  467
  528
  592
  660
  733
  808
  887
  969
  1,055
  1,145
  1,238
  1,335
  1,436
  1,540
  1,649
  1,762
  1,879
  2,002
Operating income, $m
  -2
  1
  4
  8
  12
  17
  23
  30
  37
  46
  55
  66
  77
  89
  102
  116
  130
  146
  162
  179
  196
  214
  233
  253
  274
  295
  318
  341
  365
  390
  416
EBITDA, $m
  -2
  2
  5
  8
  13
  18
  24
  31
  39
  48
  57
  68
  79
  92
  105
  119
  134
  149
  166
  183
  201
  220
  239
  260
  281
  303
  325
  349
  374
  399
  426
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  5
  5
  6
  7
  8
  9
  10
  12
  13
  14
  16
  17
  18
  20
  22
  23
  25
  27
  29
  31
Earnings before tax, $m
  -2
  1
  4
  7
  11
  16
  21
  28
  35
  43
  51
  61
  72
  83
  95
  108
  121
  135
  150
  166
  182
  199
  216
  235
  254
  274
  294
  316
  338
  361
  385
Tax expense, $m
  0
  0
  1
  2
  3
  4
  6
  7
  9
  12
  14
  17
  19
  22
  26
  29
  33
  37
  41
  45
  49
  54
  58
  63
  69
  74
  79
  85
  91
  98
  104
Net income, $m
  -2
  1
  3
  5
  8
  11
  15
  20
  25
  31
  38
  45
  52
  61
  69
  79
  88
  99
  110
  121
  133
  145
  158
  171
  185
  200
  215
  231
  247
  264
  281

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
  0
Total assets, $m
  26
  36
  48
  63
  81
  102
  127
  156
  188
  223
  262
  305
  352
  401
  455
  511
  571
  634
  700
  769
  841
  917
  995
  1,077
  1,162
  1,250
  1,341
  1,437
  1,536
  1,639
  1,746
Adjusted assets (=assets-cash), $m
  26
  36
  48
  63
  81
  102
  127
  156
  188
  223
  262
  305
  352
  401
  455
  511
  571
  634
  700
  769
  841
  917
  995
  1,077
  1,162
  1,250
  1,341
  1,437
  1,536
  1,639
  1,746
Revenue / Adjusted assets
  1.385
  1.389
  1.375
  1.381
  1.383
  1.392
  1.386
  1.378
  1.383
  1.386
  1.385
  1.387
  1.384
  1.387
  1.385
  1.386
  1.385
  1.385
  1.384
  1.385
  1.385
  1.385
  1.385
  1.384
  1.385
  1.385
  1.386
  1.385
  1.385
  1.384
  1.385
Average production assets, $m
  2
  2
  3
  4
  5
  6
  7
  9
  11
  13
  15
  18
  20
  23
  26
  30
  33
  37
  41
  45
  49
  53
  58
  63
  68
  73
  78
  84
  89
  95
  102
Working capital, $m
  5
  10
  13
  17
  22
  28
  34
  42
  50
  60
  70
  82
  94
  108
  122
  137
  153
  170
  188
  207
  226
  246
  267
  289
  312
  336
  360
  386
  413
  440
  469
Total debt, $m
  6
  11
  18
  26
  36
  47
  60
  76
  93
  112
  133
  156
  181
  208
  237
  267
  299
  333
  369
  406
  445
  485
  527
  571
  617
  664
  714
  765
  818
  874
  931
Total liabilities, $m
  14
  19
  26
  34
  44
  55
  68
  84
  101
  120
  141
  164
  189
  216
  245
  275
  307
  341
  377
  414
  453
  493
  535
  579
  625
  672
  722
  773
  826
  882
  939
Total equity, $m
  12
  17
  22
  29
  37
  47
  59
  72
  87
  103
  121
  141
  162
  185
  210
  236
  264
  293
  323
  355
  389
  424
  460
  497
  537
  577
  620
  664
  709
  757
  806
Total liabilities and equity, $m
  26
  36
  48
  63
  81
  102
  127
  156
  188
  223
  262
  305
  351
  401
  455
  511
  571
  634
  700
  769
  842
  917
  995
  1,076
  1,162
  1,249
  1,342
  1,437
  1,535
  1,639
  1,745
Debt-to-equity ratio
  0.500
  0.680
  0.800
  0.890
  0.950
  1.000
  1.030
  1.050
  1.070
  1.090
  1.100
  1.110
  1.120
  1.120
  1.130
  1.130
  1.130
  1.140
  1.140
  1.140
  1.140
  1.150
  1.150
  1.150
  1.150
  1.150
  1.150
  1.150
  1.150
  1.150
  1.150
Adjusted equity ratio
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462
  0.462

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  1
  3
  5
  8
  11
  15
  20
  25
  31
  38
  45
  52
  61
  69
  79
  88
  99
  110
  121
  133
  145
  158
  171
  185
  200
  215
  231
  247
  264
  281
Depreciation, amort., depletion, $m
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
Funds from operations, $m
  -3
  1
  3
  6
  9
  12
  17
  21
  27
  33
  39
  47
  54
  63
  72
  82
  92
  102
  114
  125
  138
  150
  164
  178
  192
  207
  223
  239
  256
  273
  291
Change in working capital, $m
  -1
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
Cash from operations, $m
  -2
  -1
  0
  2
  4
  7
  10
  14
  18
  23
  29
  35
  42
  50
  58
  66
  76
  86
  96
  107
  118
  130
  143
  156
  169
  183
  198
  213
  229
  246
  263
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -10
New CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
Cash from investing activities, $m
  -9
  -1
  -1
  -1
  -1
  -1
  -2
  -3
  -3
  -3
  -3
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -12
  -14
  -14
  -15
  -16
Free cash flow, $m
  -11
  -2
  -1
  1
  3
  5
  8
  11
  15
  20
  25
  31
  38
  45
  52
  60
  69
  79
  88
  99
  110
  121
  133
  145
  158
  172
  185
  200
  215
  231
  247
Issuance/(repayment) of debt, $m
  2
  5
  7
  8
  10
  11
  13
  15
  17
  19
  21
  23
  25
  27
  29
  30
  32
  34
  36
  37
  39
  41
  42
  44
  46
  47
  49
  51
  53
  55
  58
Issuance/(repurchase) of shares, $m
  8
  4
  3
  2
  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  
  10
  9
  10
  10
  10
  11
  13
  15
  17
  19
  21
  23
  25
  27
  29
  30
  32
  34
  36
  37
  39
  41
  42
  44
  46
  47
  49
  51
  53
  55
  58
Total cash flow (excl. dividends), $m
  -1
  7
  9
  11
  13
  16
  21
  27
  33
  39
  46
  54
  63
  71
  81
  91
  101
  112
  124
  136
  148
  161
  175
  189
  204
  219
  235
  251
  268
  286
  305
Retained Cash Flow (-), $m
  -6
  -5
  -6
  -7
  -8
  -10
  -11
  -13
  -15
  -16
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -49
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
 
  2
  3
  4
  4
  7
  10
  14
  18
  23
  28
  34
  41
  48
  56
  65
  74
  83
  93
  104
  115
  127
  139
  151
  165
  178
  192
  207
  223
  238
  255
Discount rate, %
 
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
 
  2
  3
  3
  3
  4
  5
  6
  7
  8
  8
  9
  8
  8
  7
  7
  6
  5
  4
  3
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  76.9
  65.5
  60.7
  60.0
  60.0
  60.0
  60.0
  60.0
  60.0
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Dynatronics Corporation is a manufacturer and distributor of physical medicine products. The Company's products include a line of medical equipment for physical medicine applications, including therapy devices, medical supplies and soft goods, treatment tables and rehabilitation equipment. Its products are used by physical therapists, chiropractors, sports medicine practitioners, podiatrists, physicians and other physical medicine professionals. Its physical medicine products include therapeutic modalities, such as Dynatron Solaris, including electrotherapy and thermal therapy, and 25 Series, including electrotherapy and ultrasound; manufactured capital products, including traction systems and wood furniture; manufactured supplies, including cold packs, straps, wedges, bolsters and mats; distributed capital products, including hydrotherapy, weight training equipment and pilates, and distributed supplies, including clinical accessories, sports med and taping products, lotions and gels.

FINANCIAL RATIOS  of  Dynatronics (DYNT)

Valuation Ratios
P/E Ratio -6.2
Price to Sales 0.3
Price to Book 1
Price to Tangible Book
Price to Cash Flow -6.2
Price to Free Cash Flow -6.2
Growth Rates
Sales Growth Rate 20%
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 0
Current Ratio 0
LT Debt to Equity 33.3%
Total Debt to Equity 50%
Interest Coverage 0
Management Effectiveness
Return On Assets -9.8%
Ret/ On Assets - 3 Yr. Avg. -11.2%
Return On Total Capital -14.3%
Ret/ On T. Cap. - 3 Yr. Avg. -16.1%
Return On Equity -22.2%
Return On Equity - 3 Yr. Avg. -27.9%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 33.3%
Gross Margin - 3 Yr. Avg. 32.6%
EBITDA Margin -5.6%
EBITDA Margin - 3 Yr. Avg. -4.1%
Operating Margin -2.8%
Oper. Margin - 3 Yr. Avg. -4.3%
Pre-Tax Margin -5.6%
Pre-Tax Margin - 3 Yr. Avg. -5.2%
Net Profit Margin -5.6%
Net Profit Margin - 3 Yr. Avg. -6.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -33.3%
Payout Ratio 0%

DYNT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DYNT stock intrinsic value calculation we used $36 million for the last fiscal year's total revenue generated by Dynatronics. The default revenue input number comes from 2017 income statement of Dynatronics. 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 DYNT stock valuation model: a) initial revenue growth rate of 37.5% 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 8.3%, whose default value for DYNT is calculated based on our internal credit rating of Dynatronics, 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 Dynatronics.
    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 DYNT stock the variable cost ratio is equal to 83.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7 million in the base year in the intrinsic value calculation for DYNT 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 Dynatronics.

Corporate tax rate of 27% is the nominal tax rate for Dynatronics. 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 DYNT 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 DYNT are equal to 4.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Dynatronics 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 DYNT is equal to 19.4%. 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 - $12 million for Dynatronics - 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 4.709 million for Dynatronics 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 Dynatronics at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Dynatronics Holds Annual Meeting of Shareholders   [Nov-29-17 06:00PM  PR Newswire]
▶ Is Dynatronics Corporation (DYNT) A Financially Sound Company?   [Oct-24-17 03:08PM  Simply Wall St.]
▶ Dynatronics Completes Acquisition of Bird & Cronin, Inc.   [Oct-02-17 02:19PM  PR Newswire]
▶ New Strong Sell Stocks for September 28th   [Sep-28-17 09:27AM  Zacks]
▶ Is It Too Late To Buy Dynatronics Corporation (DYNT)?   [Sep-22-17 03:11PM  Simply Wall St.]
▶ Dynatronics and Hausmann to Attend NATA Trade Show   [Jun-26-17 09:00AM  PR Newswire]
▶ Dynatronics Announces Fiscal 2017 Third Quarter Results   [May-15-17 04:05PM  PR Newswire]
▶ Dynatronics Completes Acquisition of Hausmann Industries   [Apr-04-17 09:05AM  PR Newswire]
▶ Dynatronics Announces Transition in Executive Management   [May-23-16 04:05PM  PR Newswire]
▶ Dynatronics Strengthens Sales Organization Leadership   [Mar-02-16 08:05AM  PR Newswire]
▶ Dynatronics Expands Presence at the University of Utah   [Jan-19-16 08:15AM  PR Newswire]
Financial statements of DYNT
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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