Intrinsic value of NeuroMetrix - NURO

Previous Close

$1.93

  Intrinsic Value

$0.54

stock screener

  Rating & Target

str. sell

-72%

Previous close

$1.93

 
Intrinsic value

$0.54

 
Up/down potential

-72%

 
Rating

str. sell

We calculate the intrinsic value of NURO 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  71.43
  33.30
  30.47
  27.92
  25.63
  23.57
  21.71
  20.04
  18.54
  17.18
  15.96
  14.87
  13.88
  12.99
  12.19
  11.47
  10.83
  10.24
  9.72
  9.25
  8.82
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
Revenue, $m
  12
  16
  21
  27
  34
  41
  50
  61
  72
  84
  98
  112
  128
  144
  162
  180
  200
  220
  242
  264
  287
  312
  337
  363
  390
  419
  448
  479
  511
  544
  578
Variable operating expenses, $m
 
  19
  24
  31
  39
  48
  59
  71
  84
  98
  114
  131
  149
  168
  189
  210
  233
  257
  282
  308
  335
  364
  393
  424
  456
  489
  523
  559
  596
  634
  675
Fixed operating expenses, $m
 
  13
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  24
  24
  25
  25
  26
  27
  27
Total operating expenses, $m
  27
  32
  38
  45
  53
  63
  74
  86
  100
  114
  131
  148
  166
  186
  207
  229
  252
  277
  302
  329
  356
  386
  415
  447
  480
  513
  548
  584
  622
  661
  702
Operating income, $m
  -15
  -16
  -17
  -18
  -20
  -22
  -23
  -26
  -28
  -30
  -33
  -36
  -39
  -42
  -45
  -49
  -53
  -57
  -61
  -65
  -69
  -74
  -79
  -84
  -89
  -94
  -100
  -105
  -111
  -117
  -124
EBITDA, $m
  -15
  -16
  -17
  -18
  -20
  -22
  -23
  -26
  -28
  -30
  -33
  -36
  -39
  -42
  -45
  -49
  -53
  -57
  -61
  -65
  -69
  -74
  -79
  -84
  -89
  -94
  -100
  -105
  -111
  -117
  -124
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
Earnings before tax, $m
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
  -34
  -37
  -40
  -43
  -47
  -50
  -54
  -58
  -62
  -67
  -71
  -76
  -81
  -86
  -92
  -97
  -103
  -109
  -115
  -122
  -128
Tax expense, $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
Net income, $m
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
  -34
  -37
  -40
  -43
  -47
  -50
  -54
  -58
  -62
  -67
  -71
  -76
  -81
  -86
  -92
  -97
  -103
  -109
  -115
  -122
  -128

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  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
  8
  5
  7
  9
  11
  14
  17
  20
  24
  28
  33
  37
  43
  48
  54
  60
  67
  73
  81
  88
  96
  104
  112
  121
  130
  140
  149
  160
  170
  181
  193
Adjusted assets (=assets-cash), $m
  4
  5
  7
  9
  11
  14
  17
  20
  24
  28
  33
  37
  43
  48
  54
  60
  67
  73
  81
  88
  96
  104
  112
  121
  130
  140
  149
  160
  170
  181
  193
Revenue / Adjusted assets
  3.000
  3.200
  3.000
  3.000
  3.091
  2.929
  2.941
  3.050
  3.000
  3.000
  2.970
  3.027
  2.977
  3.000
  3.000
  3.000
  2.985
  3.014
  2.988
  3.000
  2.990
  3.000
  3.009
  3.000
  3.000
  2.993
  3.007
  2.994
  3.006
  3.006
  2.995
Average production assets, $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
Working capital, $m
  5
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
Total debt, $m
  0
  1
  2
  4
  5
  7
  10
  12
  15
  18
  21
  25
  29
  33
  37
  42
  47
  52
  57
  63
  69
  75
  81
  88
  95
  102
  109
  117
  125
  133
  142
Total liabilities, $m
  3
  4
  5
  7
  8
  10
  13
  15
  18
  21
  24
  28
  32
  36
  40
  45
  50
  55
  60
  66
  72
  78
  84
  91
  98
  105
  112
  120
  128
  136
  145
Total equity, $m
  5
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  17
  18
  20
  22
  24
  26
  28
  30
  33
  35
  37
  40
  43
  45
  48
Total liabilities and equity, $m
  8
  5
  7
  9
  11
  13
  17
  20
  24
  28
  32
  37
  43
  48
  53
  60
  67
  73
  80
  88
  96
  104
  112
  121
  131
  140
  149
  160
  171
  181
  193
Debt-to-equity ratio
  0.000
  0.750
  1.280
  1.650
  1.930
  2.130
  2.290
  2.410
  2.500
  2.570
  2.630
  2.680
  2.720
  2.750
  2.780
  2.800
  2.820
  2.840
  2.850
  2.860
  2.870
  2.880
  2.890
  2.900
  2.910
  2.910
  2.920
  2.920
  2.930
  2.930
  2.940
Adjusted equity ratio
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
  -34
  -37
  -40
  -43
  -47
  -50
  -54
  -58
  -62
  -67
  -71
  -76
  -81
  -86
  -92
  -97
  -103
  -109
  -115
  -122
  -128
Depreciation, amort., depletion, $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
Funds from operations, $m
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -26
  -28
  -31
  -34
  -37
  -40
  -43
  -47
  -50
  -54
  -58
  -62
  -67
  -71
  -76
  -81
  -86
  -92
  -97
  -103
  -109
  -115
  -122
  -128
Change in working capital, $m
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
Cash from operations, $m
  -15
  -16
  -18
  -19
  -21
  -22
  -25
  -27
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -52
  -56
  -60
  -64
  -69
  -73
  -78
  -83
  -89
  -94
  -100
  -106
  -112
  -118
  -124
  -131
Maintenance CAPEX, $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
New CAPEX, $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 investing activities, $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
Free cash flow, $m
  -15
  -16
  -18
  -19
  -21
  -22
  -25
  -27
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -52
  -56
  -60
  -64
  -69
  -73
  -78
  -83
  -89
  -94
  -100
  -106
  -112
  -118
  -124
  -131
Issuance/(repayment) of debt, $m
  0
  1
  1
  1
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
Issuance/(repurchase) of shares, $m
  7
  16
  18
  19
  21
  22
  25
  27
  29
  32
  35
  38
  41
  44
  48
  52
  56
  60
  64
  69
  73
  78
  83
  89
  94
  100
  106
  112
  118
  125
  131
Cash from financing (excl. dividends), $m  
  7
  17
  19
  20
  23
  24
  27
  30
  32
  35
  38
  42
  45
  48
  52
  57
  61
  65
  69
  75
  79
  84
  89
  96
  101
  107
  113
  120
  126
  133
  140
Total cash flow (excl. dividends), $m
  -9
  1
  1
  1
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
Retained Cash Flow (-), $m
  8
  -16
  -18
  -19
  -21
  -22
  -25
  -27
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -52
  -56
  -60
  -64
  -69
  -73
  -78
  -83
  -89
  -94
  -100
  -106
  -112
  -118
  -125
  -131
Prev. year cash balance distribution, $m
 
  4
  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
 
  -11
  -16
  -18
  -19
  -20
  -22
  -24
  -26
  -29
  -31
  -34
  -37
  -40
  -44
  -47
  -51
  -55
  -59
  -63
  -68
  -72
  -77
  -82
  -87
  -93
  -98
  -104
  -110
  -116
  -123
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
 
  -11
  -15
  -15
  -16
  -16
  -16
  -16
  -16
  -17
  -16
  -16
  -16
  -15
  -15
  -14
  -13
  -12
  -11
  -10
  -9
  -7
  -6
  -5
  -4
  -4
  -3
  -2
  -2
  -1
  -1
Current shareholders' claim on cash, %
  100
  5.2
  0.3
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
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NeuroMetrix, Inc. is a healthcare company combining bioelectrical and digital medicine to address chronic health conditions, including chronic pain, sleep disorders and diabetes. The Company is engaged in the sale of medical equipment, and consumables and accessories. It has two principal product lines: Wearable neuro-stimulation therapeutic devices and Point-of-care neuropathy diagnostic tests. Its products include ADVANCE NCS/EMG System (the ADVANCE System), Quell, SENSUS and DPNCheck. Quell is a wearable device for relief of chronic intractable pain, such as nerve pain due to diabetes and lower back problems. The SENSUS pain therapy device, the technological predecessor to Quell, is a prescription neuro-stimulation device based on transcutaneous electrical nerve stimulation (TENS) for relief of chronic, intractable pain. DPNCheck is a quantitative nerve conduction test. ADVANCE System is a platform for the performance of traditional nerve conduction studies.

FINANCIAL RATIOS  of  NeuroMetrix (NURO)

Valuation Ratios
P/E Ratio -0.1
Price to Sales 0.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow -0.1
Price to Free Cash Flow -0.1
Growth Rates
Sales Growth Rate 71.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
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 -125%
Ret/ On Assets - 3 Yr. Avg. -88.1%
Return On Total Capital -166.7%
Ret/ On T. Cap. - 3 Yr. Avg. -146.4%
Return On Equity -166.7%
Return On Equity - 3 Yr. Avg. -146.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 41.7%
Gross Margin - 3 Yr. Avg. 44.8%
EBITDA Margin -125%
EBITDA Margin - 3 Yr. Avg. -129%
Operating Margin -125%
Oper. Margin - 3 Yr. Avg. -152.8%
Pre-Tax Margin -125%
Pre-Tax Margin - 3 Yr. Avg. -129%
Net Profit Margin -125%
Net Profit Margin - 3 Yr. Avg. -129%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

NURO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NURO stock intrinsic value calculation we used $12 million for the last fiscal year's total revenue generated by NeuroMetrix. The default revenue input number comes from 2016 income statement of NeuroMetrix. 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 NURO stock valuation model: a) initial revenue growth rate of 33.3% 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 NURO is calculated based on our internal credit rating of NeuroMetrix, 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 NeuroMetrix.
    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 NURO stock the variable cost ratio is equal to 116.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $13 million in the base year in the intrinsic value calculation for NURO 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 NeuroMetrix.

Corporate tax rate of 27% is the nominal tax rate for NeuroMetrix. 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 NURO 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 NURO are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in NeuroMetrix 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 NURO is equal to 8.3%. 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 - $5 million for NeuroMetrix - 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 2.335 million for NeuroMetrix 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 NeuroMetrix at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Heres Why Neurometrix Inc Rose as Much as 60% Today   [Jan-17-18 02:13PM  SmarterAnalyst]
▶ 7 Stocks Move in Premarket Trade Wednesday   [11:17AM  GuruFocus.com]
▶ NeuroMetrix Reports Preliminary 2017 Financial Highlights   [Jan-08-18 07:00AM  GlobeNewswire]
▶ What Is NeuroMetrix Incs (NURO) Share Price Doing?   [Nov-01-17 02:45PM  Simply Wall St.]
▶ NeuroMetrix Closes $3.5 Million Equity Offering   [Oct-31-17 10:07AM  Business Wire]
▶ NeuroMetrix Reports Q3 2017 Financial Results   [Oct-19-17 07:00AM  Business Wire]
▶ NeuroMetrix Reports Q2 2017 Financial Results   [Jul-20-17 07:00AM  Business Wire]
▶ NeuroMetrix Wins SBANE New England Innovation Award   [May-17-17 11:00AM  Business Wire]
▶ NeuroMetrix Announces One-for-Eight Reverse Split   [May-11-17 11:45AM  Business Wire]
▶ NeuroMetrix Hosts Inaugural Quell User Event   [May-05-17 01:02PM  Business Wire]
▶ NeuroMetrix Reports Q1 2017 Financial Results   [Apr-20-17 07:00AM  Business Wire]
▶ NeuroMetrix Review Ahead of Thursday's Earnings Call   [Apr-19-17 08:30AM  Accesswire]
▶ NeuroMetrix Named a 50+ Innovation Leader   [Apr-13-17 10:00AM  Business Wire]
▶ NeuroMetrix Reports Strong Quell Demand in Q4 2016   [Jan-10-17 07:00AM  Business Wire]
▶ NeuroMetrix to Present at Biotech Showcase 2017   [Jan-03-17 03:14PM  Business Wire]
▶ NeuroMetrix Announces Participation in CES 2017   [Dec-22-16 04:00PM  Business Wire]
▶ NeuroMetrix Announces $26.5 Million Public Offering   [Dec-20-16 08:00AM  Business Wire]
Financial statements of NURO
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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