Intrinsic value of Luminex - LMNX

Previous Close

$21.51

  Intrinsic Value

$1.81

stock screener

  Rating & Target

str. sell

-92%

Previous close

$21.51

 
Intrinsic value

$1.81

 
Up/down potential

-92%

 
Rating

str. sell

We calculate the intrinsic value of LMNX 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 0.9

 

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, %
  13.87
  18.80
  17.42
  16.18
  15.06
  14.05
  13.15
  12.33
  11.60
  10.94
  10.35
  9.81
  9.33
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
Revenue, $m
  271
  322
  378
  439
  505
  576
  652
  733
  818
  907
  1,001
  1,099
  1,202
  1,308
  1,420
  1,536
  1,656
  1,781
  1,911
  2,046
  2,187
  2,333
  2,485
  2,643
  2,807
  2,979
  3,157
  3,343
  3,537
  3,739
  3,951
Variable operating expenses, $m
 
  278
  324
  376
  431
  490
  553
  621
  692
  766
  845
  918
  1,004
  1,093
  1,186
  1,283
  1,384
  1,488
  1,597
  1,710
  1,827
  1,949
  2,076
  2,208
  2,346
  2,489
  2,638
  2,793
  2,956
  3,125
  3,301
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
  251
  278
  324
  376
  431
  490
  553
  621
  692
  766
  845
  918
  1,004
  1,093
  1,186
  1,283
  1,384
  1,488
  1,597
  1,710
  1,827
  1,949
  2,076
  2,208
  2,346
  2,489
  2,638
  2,793
  2,956
  3,125
  3,301
Operating income, $m
  19
  44
  54
  64
  75
  86
  99
  112
  126
  141
  156
  181
  197
  215
  233
  252
  272
  293
  314
  336
  359
  383
  408
  434
  461
  490
  519
  549
  581
  615
  649
EBITDA, $m
  39
  68
  80
  93
  107
  122
  138
  155
  173
  192
  212
  233
  255
  277
  301
  325
  351
  377
  405
  434
  463
  494
  526
  560
  595
  631
  669
  708
  749
  792
  837
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  19
  20
  21
Earnings before tax, $m
  20
  44
  53
  63
  74
  85
  97
  110
  123
  137
  152
  176
  192
  209
  227
  245
  265
  284
  305
  326
  349
  372
  396
  421
  447
  474
  502
  532
  563
  595
  628
Tax expense, $m
  6
  12
  14
  17
  20
  23
  26
  30
  33
  37
  41
  48
  52
  57
  61
  66
  71
  77
  82
  88
  94
  100
  107
  114
  121
  128
  136
  144
  152
  161
  170
Net income, $m
  14
  32
  39
  46
  54
  62
  71
  80
  90
  100
  111
  129
  141
  153
  166
  179
  193
  208
  223
  238
  255
  271
  289
  307
  326
  346
  367
  388
  411
  434
  459

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  93
  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
  451
  425
  499
  580
  668
  761
  861
  968
  1,080
  1,198
  1,322
  1,452
  1,587
  1,729
  1,876
  2,029
  2,188
  2,353
  2,525
  2,703
  2,889
  3,082
  3,282
  3,491
  3,708
  3,935
  4,170
  4,416
  4,672
  4,940
  5,219
Adjusted assets (=assets-cash), $m
  358
  425
  499
  580
  668
  761
  861
  968
  1,080
  1,198
  1,322
  1,452
  1,587
  1,729
  1,876
  2,029
  2,188
  2,353
  2,525
  2,703
  2,889
  3,082
  3,282
  3,491
  3,708
  3,935
  4,170
  4,416
  4,672
  4,940
  5,219
Revenue / Adjusted assets
  0.757
  0.758
  0.758
  0.757
  0.756
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
Average production assets, $m
  124
  147
  172
  200
  230
  263
  297
  334
  373
  414
  456
  501
  548
  597
  647
  700
  755
  812
  872
  933
  997
  1,064
  1,133
  1,205
  1,280
  1,358
  1,440
  1,524
  1,613
  1,705
  1,801
Working capital, $m
  134
  49
  57
  66
  76
  87
  98
  111
  123
  137
  151
  166
  181
  198
  214
  232
  250
  269
  289
  309
  330
  352
  375
  399
  424
  450
  477
  505
  534
  565
  597
Total debt, $m
  0
  9
  18
  29
  40
  53
  66
  80
  94
  110
  126
  143
  161
  179
  199
  219
  240
  261
  284
  307
  331
  357
  383
  410
  439
  468
  499
  531
  565
  600
  637
Total liabilities, $m
  47
  56
  65
  76
  87
  100
  113
  127
  141
  157
  173
  190
  208
  226
  246
  266
  287
  308
  331
  354
  378
  404
  430
  457
  486
  515
  546
  578
  612
  647
  684
Total equity, $m
  404
  370
  434
  504
  580
  662
  749
  841
  939
  1,041
  1,149
  1,262
  1,379
  1,502
  1,630
  1,763
  1,901
  2,045
  2,194
  2,349
  2,510
  2,678
  2,852
  3,034
  3,223
  3,419
  3,624
  3,838
  4,060
  4,293
  4,535
Total liabilities and equity, $m
  451
  426
  499
  580
  667
  762
  862
  968
  1,080
  1,198
  1,322
  1,452
  1,587
  1,728
  1,876
  2,029
  2,188
  2,353
  2,525
  2,703
  2,888
  3,082
  3,282
  3,491
  3,709
  3,934
  4,170
  4,416
  4,672
  4,940
  5,219
Debt-to-equity ratio
  0.000
  0.020
  0.040
  0.060
  0.070
  0.080
  0.090
  0.090
  0.100
  0.110
  0.110
  0.110
  0.120
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
Adjusted equity ratio
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  32
  39
  46
  54
  62
  71
  80
  90
  100
  111
  129
  141
  153
  166
  179
  193
  208
  223
  238
  255
  271
  289
  307
  326
  346
  367
  388
  411
  434
  459
Depreciation, amort., depletion, $m
  20
  24
  26
  29
  33
  36
  39
  43
  47
  52
  56
  52
  57
  62
  67
  73
  79
  85
  91
  97
  104
  111
  118
  126
  133
  141
  150
  159
  168
  178
  188
Funds from operations, $m
  51
  56
  65
  75
  86
  98
  110
  123
  137
  152
  167
  181
  198
  215
  233
  252
  272
  292
  313
  335
  358
  382
  407
  433
  460
  488
  517
  547
  579
  612
  646
Change in working capital, $m
  1
  8
  8
  9
  10
  11
  11
  12
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
Cash from operations, $m
  50
  49
  57
  66
  76
  87
  99
  111
  124
  138
  153
  166
  182
  199
  216
  235
  254
  273
  294
  315
  337
  360
  384
  409
  435
  462
  490
  519
  550
  581
  614
Maintenance CAPEX, $m
  0
  -13
  -15
  -18
  -21
  -24
  -27
  -31
  -35
  -39
  -43
  -48
  -52
  -57
  -62
  -67
  -73
  -79
  -85
  -91
  -97
  -104
  -111
  -118
  -126
  -133
  -141
  -150
  -159
  -168
  -178
New CAPEX, $m
  -13
  -23
  -26
  -28
  -30
  -32
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -69
  -72
  -75
  -78
  -81
  -85
  -88
  -92
  -96
Cash from investing activities, $m
  -63
  -36
  -41
  -46
  -51
  -56
  -62
  -68
  -74
  -80
  -86
  -93
  -99
  -106
  -113
  -120
  -128
  -136
  -144
  -153
  -161
  -171
  -180
  -190
  -201
  -211
  -222
  -235
  -247
  -260
  -274
Free cash flow, $m
  -13
  12
  16
  20
  25
  31
  37
  44
  51
  59
  67
  74
  83
  93
  103
  114
  126
  138
  150
  163
  176
  190
  204
  219
  234
  250
  267
  284
  302
  321
  340
Issuance/(repayment) of debt, $m
  -25
  9
  10
  11
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
Issuance/(repurchase) of shares, $m
  3
  26
  25
  24
  22
  20
  16
  12
  8
  2
  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  
  -22
  35
  35
  35
  33
  32
  29
  26
  23
  17
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
Total cash flow (excl. dividends), $m
  -35
  47
  51
  55
  59
  63
  66
  70
  73
  77
  83
  91
  101
  112
  123
  134
  147
  159
  172
  186
  200
  215
  230
  246
  263
  280
  298
  316
  336
  356
  377
Retained Cash Flow (-), $m
  -35
  -59
  -64
  -70
  -76
  -82
  -87
  -92
  -98
  -103
  -108
  -113
  -118
  -123
  -128
  -133
  -138
  -144
  -149
  -155
  -161
  -168
  -174
  -181
  -189
  -197
  -205
  -214
  -223
  -232
  -243
Prev. year cash balance distribution, $m
 
  93
  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
 
  82
  -13
  -15
  -17
  -19
  -21
  -23
  -24
  -26
  -24
  -22
  -17
  -11
  -5
  1
  8
  16
  23
  31
  39
  47
  56
  65
  74
  83
  93
  103
  113
  124
  135
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
 
  78
  -12
  -13
  -14
  -15
  -15
  -15
  -15
  -15
  -13
  -10
  -7
  -4
  -2
  0
  2
  3
  4
  5
  5
  5
  5
  4
  4
  3
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100
  96.5
  93.8
  91.6
  89.9
  88.6
  87.7
  87.1
  86.8
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7
  86.7

Luminex Corporation develops, manufactures and sells biological testing technologies with applications throughout the diagnostics, pharmaceutical and life sciences industries. The Company's products are focused on the molecular diagnostic testing market, which includes human genetics, personalized medicine and infectious disease segments. The Company has a range of instruments using its xMAP technology, which includes its LUMINEX 100/200 systems offer 100-plex testing; the Company's FLEXMAP 3D system is its high-throughput, 500-plex testing system, and its MAGPIX system provides 50-plex testing using imaging rather than flow cytometry. By using its xMAP technology, the end users are able to generate multiple simultaneous results per sample. The Company primarily serves the diagnostics, pharmaceutical and life sciences industries by marketing products, including its testing equipment and assays, to a range of testing laboratories.

FINANCIAL RATIOS  of  Luminex (LMNX)

Valuation Ratios
P/E Ratio 65.8
Price to Sales 3.4
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 18.4
Price to Free Cash Flow 24.9
Growth Rates
Sales Growth Rate 13.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35%
Cap. Spend. - 3 Yr. Gr. Rate -7.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.3%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 3.6%
Ret/ On T. Cap. - 3 Yr. Avg. 9.2%
Return On Equity 3.6%
Return On Equity - 3 Yr. Avg. 9.2%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 66.4%
Gross Margin - 3 Yr. Avg. 69.3%
EBITDA Margin 14.8%
EBITDA Margin - 3 Yr. Avg. 17.7%
Operating Margin 7.4%
Oper. Margin - 3 Yr. Avg. 11.1%
Pre-Tax Margin 7.4%
Pre-Tax Margin - 3 Yr. Avg. 11.2%
Net Profit Margin 5.2%
Net Profit Margin - 3 Yr. Avg. 12.6%
Effective Tax Rate 30%
Eff/ Tax Rate - 3 Yr. Avg. -7.1%
Payout Ratio 0%

LMNX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LMNX stock intrinsic value calculation we used $271 million for the last fiscal year's total revenue generated by Luminex. The default revenue input number comes from 2016 income statement of Luminex. 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 LMNX stock valuation model: a) initial revenue growth rate of 18.8% 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 LMNX is calculated based on our internal credit rating of Luminex, 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 Luminex.
    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 LMNX stock the variable cost ratio is equal to 86.7%.

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 LMNX 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 Luminex.

Corporate tax rate of 27% is the nominal tax rate for Luminex. 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 LMNX 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 LMNX are equal to 45.6%.

Life of production assets of 9.6 years is the average useful life of capital assets used in Luminex 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 LMNX is equal to 15.1%. 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 - $404 million for Luminex - 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 44.071 million for Luminex 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 Luminex at the current share price and the inputted number of shares is $0.9 billion.

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COMPANY NEWS

▶ ETFs with exposure to Luminex Corp. : November 3, 2017   [Nov-03-17 12:17PM  Capital Cube]
▶ Luminex misses 3Q revenue forecasts   [Oct-30-17 06:03PM  Associated Press]
▶ Luminex Corporation Declares Third Quarter Cash Dividend   [Sep-12-17 08:30AM  PR Newswire]
▶ ETFs with exposure to Luminex Corp. : August 21, 2017   [Aug-21-17 04:34PM  Capital Cube]
▶ Luminex tops Street 2Q forecasts   [Aug-07-17 11:11PM  Associated Press]
Financial statements of LMNX
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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