Intrinsic value of Landauer - LDR

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$52.45

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$52.45

 
Intrinsic value

$16.57

 
Up/down potential

-68%

 
Rating

str. sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of LDR 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 0.5

 

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, %
  -1.32
  2.70
  2.93
  3.14
  3.32
  3.49
  3.64
  3.78
  3.90
  4.01
  4.11
  4.20
  4.28
  4.35
  4.42
  4.47
  4.53
  4.57
  4.62
  4.65
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.83
  4.85
  4.87
  4.88
  4.89
Revenue, $m
  149
  153
  158
  162
  168
  174
  180
  187
  194
  202
  210
  219
  228
  238
  249
  260
  272
  284
  297
  311
  326
  341
  357
  374
  392
  411
  431
  452
  474
  497
  521
Variable operating expenses, $m
 
  129
  133
  137
  142
  146
  152
  157
  163
  170
  176
  180
  188
  196
  205
  214
  224
  234
  245
  256
  268
  281
  294
  308
  323
  339
  355
  372
  390
  409
  429
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
  123
  129
  133
  137
  142
  146
  152
  157
  163
  170
  176
  180
  188
  196
  205
  214
  224
  234
  245
  256
  268
  281
  294
  308
  323
  339
  355
  372
  390
  409
  429
Operating income, $m
  27
  24
  24
  25
  26
  27
  28
  30
  31
  32
  34
  39
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
EBITDA, $m
  38
  34
  35
  36
  38
  39
  40
  42
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  76
  80
  84
  88
  92
  96
  101
  106
  111
  117
Interest expense (income), $m
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
Earnings before tax, $m
  28
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  53
  55
  57
  60
  63
  66
  69
  72
  76
Tax expense, $m
  10
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  20
Net income, $m
  18
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  13
  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
  191
  183
  188
  194
  201
  208
  215
  223
  232
  241
  251
  262
  273
  285
  297
  311
  325
  340
  355
  372
  389
  408
  427
  447
  469
  491
  515
  540
  566
  594
  623
Adjusted assets (=assets-cash), $m
  178
  183
  188
  194
  201
  208
  215
  223
  232
  241
  251
  262
  273
  285
  297
  311
  325
  340
  355
  372
  389
  408
  427
  447
  469
  491
  515
  540
  566
  594
  623
Revenue / Adjusted assets
  0.837
  0.836
  0.840
  0.835
  0.836
  0.837
  0.837
  0.839
  0.836
  0.838
  0.837
  0.836
  0.835
  0.835
  0.838
  0.836
  0.837
  0.835
  0.837
  0.836
  0.838
  0.836
  0.836
  0.837
  0.836
  0.837
  0.837
  0.837
  0.837
  0.837
  0.836
Average production assets, $m
  61
  63
  64
  66
  69
  71
  74
  76
  79
  83
  86
  90
  93
  97
  102
  106
  111
  116
  122
  127
  133
  140
  146
  153
  160
  168
  176
  185
  194
  203
  213
Working capital, $m
  21
  8
  9
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
Total debt, $m
  109
  102
  106
  112
  117
  124
  131
  138
  146
  154
  163
  173
  183
  193
  205
  217
  229
  243
  257
  272
  287
  304
  321
  340
  359
  379
  401
  423
  447
  472
  498
Total liabilities, $m
  172
  165
  169
  175
  180
  187
  194
  201
  209
  217
  226
  236
  246
  256
  268
  280
  292
  306
  320
  335
  350
  367
  384
  403
  422
  442
  464
  486
  510
  535
  561
Total equity, $m
  19
  18
  19
  19
  20
  21
  22
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
Total liabilities and equity, $m
  191
  183
  188
  194
  200
  208
  216
  223
  232
  241
  251
  262
  273
  284
  298
  311
  324
  340
  356
  372
  389
  408
  427
  448
  469
  491
  516
  540
  567
  594
  623
Debt-to-equity ratio
  5.737
  5.550
  5.650
  5.750
  5.860
  5.960
  6.070
  6.180
  6.280
  6.390
  6.490
  6.590
  6.690
  6.790
  6.880
  6.970
  7.060
  7.140
  7.230
  7.310
  7.380
  7.450
  7.520
  7.590
  7.660
  7.720
  7.780
  7.830
  7.890
  7.940
  7.990
Adjusted equity ratio
  0.034
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  18
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
Depreciation, amort., depletion, $m
  11
  11
  11
  11
  11
  12
  12
  12
  13
  13
  13
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  25
Funds from operations, $m
  28
  25
  26
  27
  28
  29
  29
  30
  32
  33
  34
  34
  36
  37
  39
  41
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
Change in working capital, $m
  -4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  32
  23
  26
  27
  27
  28
  29
  30
  31
  32
  34
  34
  35
  37
  38
  40
  42
  44
  45
  47
  50
  52
  54
  57
  59
  62
  65
  68
  71
  75
  78
Maintenance CAPEX, $m
  0
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
New CAPEX, $m
  -9
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
Cash from investing activities, $m
  2
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -12
  -14
  -14
  -15
  -15
  -17
  -17
  -18
  -18
  -20
  -21
  -21
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
Free cash flow, $m
  34
  14
  17
  17
  17
  18
  18
  19
  19
  20
  21
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  38
  39
  41
  43
  45
Issuance/(repayment) of debt, $m
  -24
  -7
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  24
  25
  26
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  -24
  -7
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  24
  25
  26
Total cash flow (excl. dividends), $m
  9
  7
  22
  22
  23
  24
  25
  26
  27
  28
  30
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
Retained Cash Flow (-), $m
  -8
  -12
  -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
  -3
  -3
  -3
Prev. year cash balance distribution, $m
 
  13
  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
 
  8
  21
  22
  23
  24
  24
  25
  26
  27
  29
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
Discount rate, %
 
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
 
  7
  18
  17
  15
  14
  13
  12
  11
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
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
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Landauer, Inc., together with its subsidiaries, provides technical and analytical services, and outsourced medical physics services worldwide. The company’s Radiation Measurement segment provides analytical services to determine occupational and environmental radiation exposure; manufactures various radiation detection monitors; and distributes and collects monitors to and from customers, as well as analyzes and reports exposure findings. It also sells dosimetry detectors and reading equipment. This segment primarily serves hospitals, medical and dental offices, universities, national laboratories, nuclear facilities, and other industries. Its Medical Physics segment offers therapeutic and imaging physics services comprising clinical physics support, equipment commissioning, accreditation support, and imaging equipment testing to hospitals, radiation therapy centers, and imaging centers. The company was founded in 1954 and is based in Glenwood, Illinois.

FINANCIAL RATIOS  of  Landauer (LDR)

Valuation Ratios
P/E Ratio 28.4
Price to Sales 3.4
Price to Book 26.9
Price to Tangible Book
Price to Cash Flow 15.9
Price to Free Cash Flow 22.2
Growth Rates
Sales Growth Rate -1.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 12.5%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 573.7%
Total Debt to Equity 573.7%
Interest Coverage 8
Management Effectiveness
Return On Assets 10.3%
Ret/ On Assets - 3 Yr. Avg. 3.2%
Return On Total Capital 13.2%
Ret/ On T. Cap. - 3 Yr. Avg. 3.1%
Return On Equity 120%
Return On Equity - 3 Yr. Avg. 61.3%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 50.3%
Gross Margin - 3 Yr. Avg. 51.6%
EBITDA Margin 28.9%
EBITDA Margin - 3 Yr. Avg. 12.8%
Operating Margin 17.4%
Oper. Margin - 3 Yr. Avg. 2.3%
Pre-Tax Margin 18.8%
Pre-Tax Margin - 3 Yr. Avg. 2.1%
Net Profit Margin 12.1%
Net Profit Margin - 3 Yr. Avg. 2%
Effective Tax Rate 35.7%
Eff/ Tax Rate - 3 Yr. Avg. 34.4%
Payout Ratio 61.1%

LDR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LDR stock intrinsic value calculation we used $149 million for the last fiscal year's total revenue generated by Landauer. The default revenue input number comes from 2016 income statement of Landauer. 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 LDR stock valuation model: a) initial revenue growth rate of 2.7% 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 8.6%, whose default value for LDR is calculated based on our internal credit rating of Landauer, 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 Landauer.
    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 LDR stock the variable cost ratio is equal to 84.6%.

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 LDR 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 Landauer.

Corporate tax rate of 27% is the nominal tax rate for Landauer. 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 LDR 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 LDR are equal to 40.9%.

Life of production assets of 8.7 years is the average useful life of capital assets used in Landauer 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 LDR is equal to 5.4%. 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 - $19 million for Landauer - 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 9.583 million for Landauer 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 Landauer at the current share price and the inputted number of shares is $0.5 billion.


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COMPANY NEWS

▶ Landauer posts 2Q profit   [May-09-17 06:08PM  Associated Press]
▶ Landauer, Inc. Declares Regular Cash Dividend   [May-05-17 01:20PM  PR Newswire]
▶ Landauer, Inc. Value Analysis (NYSE:LDR) : April 13, 2017   [Apr-13-17 12:54PM  Capital Cube]
▶ New Strong Sell Stocks for March 2nd   [Mar-02-17 09:53AM  Zacks]
▶ Landauer, Inc. Declares Regular Cash Dividend   [Feb-21-17 04:05PM  PR Newswire]
▶ Landauer posts 1Q profit   [06:23PM  Associated Press]
▶ Landauer posts 4Q profit   [04:31PM  AP]
▶ Is Landauer, Inc. (LDR) A Good Stock to Buy?   [Dec-12-16 08:49PM  at Insider Monkey]
▶ Landauer, Inc. Declares Regular Cash Dividend   [Dec-01-16 06:15PM  PR Newswire]
▶ Landauer posts 3Q profit   [05:39PM  AP]
▶ Landauer, Inc. Declares Regular Cash Dividend   [May-13-16 11:59AM  PR Newswire]
▶ Landauer, Inc. Declares Regular Cash Dividend   [Feb-19-16 04:30PM  PR Newswire]
Stock chart of LDR Financial statements of LDR Annual reports of LDR
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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