Intrinsic value of Endologix - ELGX

Previous Close

$5.02

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

  Value-price divergence*

-37%

Previous close

$5.02

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

 
Value-price divergence*

-37%

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

We calculate the intrinsic value of ELGX 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 0.4

 

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, %
  25.32
  2.40
  2.66
  2.89
  3.10
  3.29
  3.46
  3.62
  3.76
  3.88
  3.99
  4.09
  4.18
  4.27
  4.34
  4.41
  4.46
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
Revenue, $m
  193
  198
  203
  209
  215
  222
  230
  238
  247
  257
  267
  278
  290
  302
  315
  329
  344
  359
  376
  393
  411
  431
  451
  472
  495
  519
  543
  570
  597
  626
  657
Variable operating expenses, $m
 
  265
  272
  279
  287
  297
  306
  317
  328
  341
  354
  356
  371
  386
  403
  421
  440
  460
  481
  503
  526
  551
  577
  604
  633
  663
  695
  729
  764
  801
  840
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
  286
  265
  272
  279
  287
  297
  306
  317
  328
  341
  354
  356
  371
  386
  403
  421
  440
  460
  481
  503
  526
  551
  577
  604
  633
  663
  695
  729
  764
  801
  840
Operating income, $m
  -93
  -67
  -69
  -70
  -72
  -74
  -76
  -79
  -81
  -84
  -87
  -78
  -81
  -84
  -88
  -92
  -96
  -100
  -105
  -110
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
  -175
  -183
EBITDA, $m
  -84
  -50
  -52
  -53
  -55
  -57
  -58
  -61
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -87
  -91
  -96
  -100
  -105
  -109
  -115
  -120
  -126
  -132
  -138
  -145
  -152
  -159
  -167
Interest expense (income), $m
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
Earnings before tax, $m
  -154
  -73
  -75
  -77
  -79
  -81
  -84
  -87
  -89
  -92
  -96
  -87
  -91
  -95
  -99
  -104
  -108
  -113
  -119
  -124
  -130
  -136
  -143
  -150
  -157
  -165
  -173
  -181
  -190
  -199
  -209
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
  -155
  -73
  -75
  -77
  -79
  -81
  -84
  -87
  -89
  -92
  -96
  -87
  -91
  -95
  -99
  -104
  -108
  -113
  -119
  -124
  -130
  -136
  -143
  -150
  -157
  -165
  -173
  -181
  -190
  -199
  -209

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  47
  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
  360
  320
  329
  338
  349
  360
  373
  386
  401
  416
  433
  451
  470
  490
  511
  533
  557
  582
  609
  637
  667
  698
  731
  765
  802
  840
  881
  923
  968
  1,015
  1,065
Adjusted assets (=assets-cash), $m
  313
  320
  329
  338
  349
  360
  373
  386
  401
  416
  433
  451
  470
  490
  511
  533
  557
  582
  609
  637
  667
  698
  731
  765
  802
  840
  881
  923
  968
  1,015
  1,065
Revenue / Adjusted assets
  0.617
  0.619
  0.617
  0.618
  0.616
  0.617
  0.617
  0.617
  0.616
  0.618
  0.617
  0.616
  0.617
  0.616
  0.616
  0.617
  0.618
  0.617
  0.617
  0.617
  0.616
  0.617
  0.617
  0.617
  0.617
  0.618
  0.616
  0.618
  0.617
  0.617
  0.617
Average production assets, $m
  87
  89
  92
  94
  97
  100
  104
  107
  112
  116
  120
  125
  131
  136
  142
  148
  155
  162
  169
  177
  186
  194
  203
  213
  223
  234
  245
  257
  269
  283
  296
Working capital, $m
  85
  39
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  118
  123
  129
Total debt, $m
  177
  183
  189
  197
  205
  214
  224
  235
  246
  259
  272
  286
  301
  316
  333
  351
  370
  389
  410
  433
  456
  481
  507
  534
  563
  593
  625
  659
  694
  731
  770
Total liabilities, $m
  247
  253
  259
  267
  275
  284
  294
  305
  316
  329
  342
  356
  371
  386
  403
  421
  440
  459
  480
  503
  526
  551
  577
  604
  633
  663
  695
  729
  764
  801
  840
Total equity, $m
  113
  68
  69
  71
  74
  76
  79
  82
  85
  88
  91
  95
  99
  103
  108
  113
  118
  123
  128
  134
  141
  147
  154
  162
  169
  177
  186
  195
  204
  214
  225
Total liabilities and equity, $m
  360
  321
  328
  338
  349
  360
  373
  387
  401
  417
  433
  451
  470
  489
  511
  534
  558
  582
  608
  637
  667
  698
  731
  766
  802
  840
  881
  924
  968
  1,015
  1,065
Debt-to-equity ratio
  1.566
  2.700
  2.730
  2.760
  2.790
  2.820
  2.850
  2.880
  2.910
  2.940
  2.970
  3.000
  3.030
  3.060
  3.090
  3.120
  3.140
  3.170
  3.190
  3.220
  3.240
  3.260
  3.290
  3.310
  3.330
  3.340
  3.360
  3.380
  3.400
  3.410
  3.430
Adjusted equity ratio
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211
  0.211

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -155
  -73
  -75
  -77
  -79
  -81
  -84
  -87
  -89
  -92
  -96
  -87
  -91
  -95
  -99
  -104
  -108
  -113
  -119
  -124
  -130
  -136
  -143
  -150
  -157
  -165
  -173
  -181
  -190
  -199
  -209
Depreciation, amort., depletion, $m
  9
  17
  17
  17
  17
  18
  18
  18
  18
  19
  19
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
Funds from operations, $m
  -70
  -56
  -58
  -60
  -62
  -64
  -66
  -68
  -71
  -74
  -77
  -80
  -84
  -87
  -91
  -95
  -100
  -104
  -109
  -114
  -120
  -125
  -131
  -138
  -144
  -152
  -159
  -167
  -175
  -184
  -193
Change in working capital, $m
  5
  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
  5
  6
  6
Cash from operations, $m
  -75
  -57
  -59
  -61
  -63
  -65
  -68
  -70
  -73
  -76
  -79
  -82
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -118
  -123
  -129
  -135
  -142
  -149
  -156
  -164
  -172
  -180
  -189
  -199
Maintenance CAPEX, $m
  0
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
New CAPEX, $m
  -3
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
Cash from investing activities, $m
  -29
  -7
  -7
  -8
  -8
  -8
  -9
  -10
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -26
  -28
  -30
Free cash flow, $m
  -104
  -64
  -66
  -69
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -117
  -123
  -129
  -135
  -141
  -148
  -155
  -163
  -171
  -179
  -188
  -197
  -207
  -217
  -228
Issuance/(repayment) of debt, $m
  0
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  34
  35
  37
  39
Issuance/(repurchase) of shares, $m
  6
  75
  77
  79
  81
  84
  86
  89
  92
  96
  99
  91
  95
  99
  104
  108
  113
  119
  124
  130
  136
  143
  150
  157
  165
  173
  181
  190
  199
  209
  220
Cash from financing (excl. dividends), $m  
  5
  81
  84
  87
  89
  93
  96
  100
  103
  108
  112
  105
  110
  115
  121
  126
  132
  139
  145
  152
  159
  168
  176
  184
  194
  203
  213
  224
  234
  246
  259
Total cash flow (excl. dividends), $m
  -98
  16
  17
  18
  19
  19
  20
  20
  21
  22
  22
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  30
Retained Cash Flow (-), $m
  -10
  -75
  -77
  -79
  -81
  -84
  -86
  -89
  -92
  -96
  -99
  -91
  -95
  -99
  -104
  -108
  -113
  -119
  -124
  -130
  -136
  -143
  -150
  -157
  -165
  -173
  -181
  -190
  -199
  -209
  -220
Prev. year cash balance distribution, $m
 
  47
  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
 
  -12
  -60
  -61
  -63
  -65
  -67
  -69
  -71
  -74
  -77
  -80
  -83
  -87
  -91
  -94
  -99
  -103
  -108
  -113
  -118
  -124
  -129
  -136
  -142
  -149
  -156
  -164
  -172
  -180
  -189
Discount rate, %
 
  9.30
  9.77
  10.25
  10.77
  11.30
  11.87
  12.46
  13.09
  13.74
  14.43
  15.15
  15.91
  16.70
  17.54
  18.41
  19.33
  20.30
  21.32
  22.38
  23.50
  24.68
  25.91
  27.20
  28.57
  29.99
  31.49
  33.07
  34.72
  36.46
  38.28
PV of cash for distribution, $m
 
  -11
  -49
  -46
  -42
  -38
  -34
  -30
  -27
  -23
  -20
  -17
  -14
  -12
  -9
  -7
  -6
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  76.1
  58.0
  44.1
  33.6
  25.6
  19.5
  14.8
  11.3
  8.6
  6.6
  5.2
  4.0
  3.2
  2.5
  1.9
  1.5
  1.2
  0.9
  0.7
  0.6
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0

Endologix, Inc. develops, manufactures, markets, and sells medical devices for the treatment of abdominal aortic aneurysms in the United States and internationally. The company offers minimally-invasive endovascular repair (EVAR) products, including EVAR stent graft and catheter delivery system under the Powerlink, IntuiTrak, AFX, and VELA Proximal Endograft brand names. It also provides endovascular sealing (EVAS) product that is based on the Nellix EVAS system to seal the aneurysm, and provides blood flow to the legs through two blood lumens. In addition, the company offers proximal aortic extensions and limb extensions, which attach to the main body of its EVAR device, allowing physicians to customize it to fit the patient’s anatomy; and accessories to facilitate the optimal delivery of its EVAR products, including compatible guidewires, snares, and catheter introducer sheaths. It sells its products through direct sales force, network of agents, and independent distributors or agents. The company was formerly known as Radiance Medical Systems, Inc. and changed its name to Endologix, Inc. in May 2002. Endologix, Inc. was founded in 1992 and is headquartered in Irvine, California.

FINANCIAL RATIOS  of  Endologix (ELGX)

Valuation Ratios
P/E Ratio -2.7
Price to Sales 2.2
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow -5.5
Price to Free Cash Flow -5.3
Growth Rates
Sales Growth Rate 25.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 156.6%
Total Debt to Equity 156.6%
Interest Coverage -25
Management Effectiveness
Return On Assets -43.1%
Ret/ On Assets - 3 Yr. Avg. -23.9%
Return On Total Capital -55.3%
Ret/ On T. Cap. - 3 Yr. Avg. -31.4%
Return On Equity -143.5%
Return On Equity - 3 Yr. Avg. -71.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 64.2%
Gross Margin - 3 Yr. Avg. 67.4%
EBITDA Margin -72%
EBITDA Margin - 3 Yr. Avg. -41.3%
Operating Margin -48.2%
Oper. Margin - 3 Yr. Avg. -32.3%
Pre-Tax Margin -79.8%
Pre-Tax Margin - 3 Yr. Avg. -46.8%
Net Profit Margin -80.3%
Net Profit Margin - 3 Yr. Avg. -44.8%
Effective Tax Rate -0.6%
Eff/ Tax Rate - 3 Yr. Avg. 5.3%
Payout Ratio 0%

ELGX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ELGX stock intrinsic value calculation we used $193 million for the last fiscal year's total revenue generated by Endologix. The default revenue input number comes from 2016 income statement of Endologix. 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 ELGX stock valuation model: a) initial revenue growth rate of 2.4% 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 9.3%, whose default value for ELGX is calculated based on our internal credit rating of Endologix, 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 Endologix.
    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 ELGX stock the variable cost ratio is equal to 134.2%.

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 ELGX 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 Endologix.

Corporate tax rate of 27% is the nominal tax rate for Endologix. 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 ELGX 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 ELGX are equal to 45.1%.

Life of production assets of 18 years is the average useful life of capital assets used in Endologix 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 ELGX is equal to 19.7%. 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 - $113 million for Endologix - 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 81.702 million for Endologix 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 Endologix at the current share price and the inputted number of shares is $0.4 billion.

RELATED COMPANIES Price Int.Val. Rating
CSII Cardiovascular 32.05 0.78  str.sell
LMAT LeMaitre Vascu 28.31 34.94  buy
AVGR Avinger 0.510 0.04  str.sell
ANGO AngioDynamics 15.65 5.71  str.sell
TCMD Tactile System 30.00 11.98  str.sell
BSX Boston Scienti 27.62 19.06  sell

COMPANY NEWS

▶ ETFs with exposure to Endologix, Inc. : May 26, 2017   [May-26-17 01:06PM  Capital Cube]
▶ Why Endologix Shares Are Hitting a Multiyear Low   [May-18-17 12:30PM  24/7 Wall St.]
▶ ETFs with exposure to Endologix, Inc. : May 11, 2017   [May-11-17 04:35PM  Capital Cube]
▶ Endologix reports 1Q loss   [May-04-17 05:14PM  Associated Press]
▶ [$$] Deerfield Management Invests Up to $170 Million in Endologix   [Apr-05-17 11:47AM  The Wall Street Journal]
▶ Endologix Poised for a Potentially Volatile Breakout   [Mar-28-17 09:41AM  TheStreet.com]
▶ 5 Stocks Trending Close to Major Breakouts   [Mar-17-17 01:49PM  TheStreet.com]
▶ Columbia Wanger Buys LCI Industries, Nasdaq   [Mar-09-17 02:28PM  GuruFocus.com]
▶ Why Endologix, Inc. Stock Gained 20% in January   [Feb-07-17 04:12PM  at Motley Fool]
Stock chart of ELGX Financial statements of ELGX Annual reports of ELGX
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.