Intrinsic value of LeMaitre Vascular - LMAT

Previous Close

$33.96

  Intrinsic Value

$34.94

stock screener

  Rating & Target

hold

+3%

  Value-price divergence*

+515%

Previous close

$33.96

 
Intrinsic value

$34.94

 
Up/down potential

+3%

 
Rating

hold

 
Value-price divergence*

+515%

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

We calculate the intrinsic value of LMAT 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 0.6

 

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, %
  14.10
  20.00
  18.50
  17.15
  15.94
  14.84
  13.86
  12.97
  12.17
  11.46
  10.81
  10.23
  9.71
  9.24
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.03
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
Revenue, $m
  89
  107
  127
  148
  172
  197
  225
  254
  285
  317
  352
  388
  425
  465
  506
  548
  593
  639
  687
  736
  788
  842
  898
  956
  1,017
  1,080
  1,145
  1,213
  1,285
  1,359
  1,437
Variable operating expenses, $m
 
  58
  69
  80
  93
  106
  120
  136
  152
  169
  187
  204
  223
  244
  266
  288
  311
  335
  361
  387
  414
  442
  472
  502
  534
  567
  601
  637
  675
  714
  754
Fixed operating expenses, $m
 
  26
  26
  27
  28
  28
  29
  30
  30
  31
  32
  33
  34
  34
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  52
Total operating expenses, $m
  73
  84
  95
  107
  121
  134
  149
  166
  182
  200
  219
  237
  257
  278
  301
  324
  348
  373
  400
  427
  455
  484
  515
  546
  579
  613
  649
  686
  725
  765
  806
Operating income, $m
  16
  23
  32
  41
  52
  63
  75
  89
  102
  117
  133
  151
  168
  186
  205
  224
  244
  265
  287
  310
  333
  358
  383
  410
  437
  466
  496
  528
  560
  594
  630
EBITDA, $m
  20
  27
  36
  46
  57
  69
  82
  95
  110
  125
  141
  158
  176
  194
  214
  234
  255
  276
  299
  323
  347
  372
  399
  426
  455
  485
  516
  549
  582
  618
  655
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
Earnings before tax, $m
  16
  23
  31
  41
  51
  63
  75
  88
  102
  116
  131
  150
  167
  184
  203
  222
  242
  262
  284
  306
  330
  354
  379
  405
  433
  461
  491
  522
  554
  588
  623
Tax expense, $m
  5
  6
  8
  11
  14
  17
  20
  24
  27
  31
  35
  40
  45
  50
  55
  60
  65
  71
  77
  83
  89
  96
  102
  109
  117
  125
  133
  141
  150
  159
  168
Net income, $m
  11
  17
  23
  30
  38
  46
  55
  64
  74
  85
  96
  109
  122
  135
  148
  162
  176
  192
  207
  224
  241
  258
  277
  296
  316
  337
  358
  381
  404
  429
  455

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  24
  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
  102
  94
  111
  130
  151
  173
  197
  223
  250
  278
  308
  340
  373
  407
  443
  481
  519
  560
  602
  645
  691
  738
  787
  838
  891
  946
  1,004
  1,064
  1,126
  1,191
  1,259
Adjusted assets (=assets-cash), $m
  78
  94
  111
  130
  151
  173
  197
  223
  250
  278
  308
  340
  373
  407
  443
  481
  519
  560
  602
  645
  691
  738
  787
  838
  891
  946
  1,004
  1,064
  1,126
  1,191
  1,259
Revenue / Adjusted assets
  1.141
  1.138
  1.144
  1.138
  1.139
  1.139
  1.142
  1.139
  1.140
  1.140
  1.143
  1.141
  1.139
  1.143
  1.142
  1.139
  1.143
  1.141
  1.141
  1.141
  1.140
  1.141
  1.141
  1.141
  1.141
  1.142
  1.140
  1.140
  1.141
  1.141
  1.141
Average production assets, $m
  16
  19
  22
  26
  30
  34
  39
  44
  50
  55
  61
  67
  74
  81
  88
  95
  103
  111
  119
  128
  137
  147
  156
  166
  177
  188
  199
  211
  224
  236
  250
Working capital, $m
  49
  30
  36
  42
  48
  55
  63
  71
  80
  89
  99
  109
  120
  131
  142
  154
  167
  179
  193
  207
  221
  237
  252
  269
  286
  303
  322
  341
  361
  382
  404
Total debt, $m
  0
  3
  6
  9
  13
  17
  21
  26
  31
  36
  41
  47
  53
  59
  65
  72
  79
  86
  94
  102
  110
  118
  127
  136
  145
  155
  166
  176
  188
  199
  211
Total liabilities, $m
  14
  17
  20
  23
  27
  31
  35
  40
  45
  50
  55
  61
  67
  73
  79
  86
  93
  100
  108
  116
  124
  132
  141
  150
  159
  169
  180
  190
  202
  213
  225
Total equity, $m
  88
  77
  91
  107
  124
  142
  162
  183
  205
  228
  253
  279
  306
  334
  364
  395
  426
  460
  494
  530
  567
  606
  646
  688
  731
  777
  824
  873
  924
  978
  1,034
Total liabilities and equity, $m
  102
  94
  111
  130
  151
  173
  197
  223
  250
  278
  308
  340
  373
  407
  443
  481
  519
  560
  602
  646
  691
  738
  787
  838
  890
  946
  1,004
  1,063
  1,126
  1,191
  1,259
Debt-to-equity ratio
  0.000
  0.040
  0.060
  0.090
  0.100
  0.120
  0.130
  0.140
  0.150
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
  0.180
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
Adjusted equity ratio
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  17
  23
  30
  38
  46
  55
  64
  74
  85
  96
  109
  122
  135
  148
  162
  176
  192
  207
  224
  241
  258
  277
  296
  316
  337
  358
  381
  404
  429
  455
Depreciation, amort., depletion, $m
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
Funds from operations, $m
  17
  21
  27
  35
  43
  52
  61
  71
  81
  93
  104
  116
  129
  143
  157
  171
  187
  203
  219
  237
  254
  273
  292
  313
  334
  355
  378
  402
  427
  453
  480
Change in working capital, $m
  0
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
Cash from operations, $m
  17
  16
  22
  29
  36
  44
  53
  63
  73
  83
  95
  106
  119
  132
  145
  160
  174
  190
  206
  223
  240
  258
  277
  296
  317
  338
  360
  383
  407
  432
  458
Maintenance CAPEX, $m
  0
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
New CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
Cash from investing activities, $m
  -17
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -9
  -11
  -12
  -12
  -14
  -14
  -15
  -16
  -18
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
Free cash flow, $m
  0
  11
  17
  23
  29
  37
  45
  54
  63
  73
  83
  94
  105
  117
  130
  143
  157
  171
  186
  202
  218
  235
  252
  270
  289
  309
  330
  351
  373
  396
  421
Issuance/(repayment) of debt, $m
  0
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  0
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
Total cash flow (excl. dividends), $m
  0
  14
  20
  26
  33
  41
  49
  58
  68
  78
  89
  99
  111
  124
  136
  150
  164
  179
  194
  210
  226
  243
  261
  280
  299
  319
  340
  362
  384
  408
  433
Retained Cash Flow (-), $m
  -10
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -56
Prev. year cash balance distribution, $m
 
  24
  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
 
  25
  5
  11
  16
  23
  30
  37
  46
  54
  64
  73
  84
  95
  107
  119
  132
  146
  159
  174
  189
  205
  221
  238
  255
  274
  293
  312
  333
  355
  377
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
 
  24
  5
  9
  13
  17
  21
  25
  28
  31
  34
  35
  36
  36
  36
  35
  34
  32
  29
  27
  24
  21
  18
  16
  13
  11
  9
  7
  5
  4
  3
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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LeMaitre Vascular, Inc. develops, manufactures, and markets medical devices and implants for the treatment of peripheral vascular disease worldwide. The company provides angioscope, a fiber optic catheter used for viewing the lumen of a blood vessel; carotid shunts to temporarily divert or shut blood to the brain during the removal of plaque from the carotid artery in a carotid endarterectomy surgery; and powered phlebectomy devices that enable less invasive removal of varicose veins. It also offers embolectomy catheters to remove blood clots from arteries or veins; occlusion catheters that temporarily occlude blood flow; and perfusion catheters that temporarily perfuse blood and other liquids into the vasculature. In addition, the company provides radiopaque tape, a medical-grade tape applied to the skin and provides interventionists to cross-reference between the inside and the outside of a patientÂ’s body, and allows them to locate tributaries or lesions beneath the skin; and remote endarterectomy devices to remove severe atherosclerotic blockages from the arteries of the leg. Further, it offers valvulotomes for use as a bypass vessel to carry blood past diseased arteries to the lower leg or the foot; vascular grafts to bypass or replace diseased arteries; vascular patches used in conjunction with carotid endarterectomy, remote endarterectomy, and other vascular reconstructions; vessel closure systems that allows surgeons to attach vessels to one another by deploying titanium clips in place of suturing; and laparoscopic cholecystectomy devices to inject dye into the cystic duct during laparoscopic cholecystectomy. LeMaitre Vascular, Inc. markets its products through direct and indirect sales force, as well as distributors. The company was formerly known as Vascutech, Inc. and changed its name to LeMaitre Vascular, Inc. in April 2001. LeMaitre Vascular, Inc. was founded in 1983 and is headquartered in Burlington, Massachusetts.

FINANCIAL RATIOS  of  LeMaitre Vascular (LMAT)

Valuation Ratios
P/E Ratio 57.4
Price to Sales 7.1
Price to Book 7.2
Price to Tangible Book
Price to Cash Flow 37.1
Price to Free Cash Flow 45.1
Growth Rates
Sales Growth Rate 14.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.4%
Ret/ On Assets - 3 Yr. Avg. 8.7%
Return On Total Capital 13.3%
Ret/ On T. Cap. - 3 Yr. Avg. 10.2%
Return On Equity 13.3%
Return On Equity - 3 Yr. Avg. 10.2%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 70.8%
Gross Margin - 3 Yr. Avg. 69.2%
EBITDA Margin 22.5%
EBITDA Margin - 3 Yr. Avg. 17.7%
Operating Margin 18%
Oper. Margin - 3 Yr. Avg. 13.5%
Pre-Tax Margin 18%
Pre-Tax Margin - 3 Yr. Avg. 13.5%
Net Profit Margin 12.4%
Net Profit Margin - 3 Yr. Avg. 9.4%
Effective Tax Rate 31.3%
Eff/ Tax Rate - 3 Yr. Avg. 30.6%
Payout Ratio 27.3%

LMAT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LMAT stock intrinsic value calculation we used $89 million for the last fiscal year's total revenue generated by LeMaitre Vascular. The default revenue input number comes from 2016 income statement of LeMaitre Vascular. 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 LMAT stock valuation model: a) initial revenue growth rate of 20% 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 LMAT is calculated based on our internal credit rating of LeMaitre Vascular, 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 LeMaitre Vascular.
    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 LMAT stock the variable cost ratio is equal to 55.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $25 million in the base year in the intrinsic value calculation for LMAT 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 LeMaitre Vascular.

Corporate tax rate of 27% is the nominal tax rate for LeMaitre Vascular. 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 LMAT 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 LMAT are equal to 17.4%.

Life of production assets of 10 years is the average useful life of capital assets used in LeMaitre Vascular 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 LMAT is equal to 28.1%. 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 - $88 million for LeMaitre Vascular - 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 18.434 million for LeMaitre Vascular 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 LeMaitre Vascular at the current share price and the inputted number of shares is $0.6 billion.

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COMPANY NEWS

▶ Heart-Felt Buys: 6 Cardiac Opportunities   [Aug-03-17 02:05PM  Forbes]
▶ LeMaitre tops Street 2Q forecasts   [Jul-28-17 08:04PM  Associated Press]
▶ 3 Under-the-Radar Stocks in the Healthcare Sector   [Jul-26-17 08:08AM  Motley Fool]
▶ LeMaitre Vascular Set to Join S&P SmallCap 600   [May-01-17 06:08PM  PR Newswire]
▶ Here's Why LeMaitre Vascular Stock Is Soaring Today   [Apr-27-17 12:45PM  Motley Fool]
▶ LeMaitre tops Street 1Q forecasts   [Apr-26-17 06:02PM  Associated Press]
▶ LeMaitre misses Street 4Q forecasts   [Feb-21-17 05:04PM  Associated Press]
▶ How LeMaitre Vascular Inc (LMAT) Stacks Up Against Its Peers   [Dec-13-16 03:54AM  at Insider Monkey]
Stock chart of LMAT Financial statements of LMAT
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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