Intrinsic value of Omnicell - OMCL

Previous Close

$50.05

  Intrinsic Value

$22.43

stock screener

  Rating & Target

str. sell

-55%

  Value-price divergence*

+224%

Previous close

$50.05

 
Intrinsic value

$22.43

 
Up/down potential

-55%

 
Rating

str. sell

 
Value-price divergence*

+224%

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

We calculate the intrinsic value of OMCL 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 1.8

 

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, %
  42.89
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  693
  707
  723
  742
  763
  786
  811
  839
  869
  901
  935
  972
  1,012
  1,054
  1,098
  1,146
  1,196
  1,249
  1,305
  1,365
  1,428
  1,494
  1,563
  1,637
  1,715
  1,796
  1,882
  1,973
  2,068
  2,168
  2,273
Variable operating expenses, $m
 
  635
  649
  664
  682
  702
  724
  747
  773
  800
  829
  828
  862
  898
  936
  976
  1,019
  1,064
  1,112
  1,162
  1,216
  1,272
  1,332
  1,394
  1,460
  1,530
  1,603
  1,680
  1,761
  1,846
  1,936
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
  686
  635
  649
  664
  682
  702
  724
  747
  773
  800
  829
  828
  862
  898
  936
  976
  1,019
  1,064
  1,112
  1,162
  1,216
  1,272
  1,332
  1,394
  1,460
  1,530
  1,603
  1,680
  1,761
  1,846
  1,936
Operating income, $m
  6
  72
  74
  77
  80
  84
  88
  92
  96
  101
  106
  144
  150
  156
  163
  170
  177
  185
  194
  202
  212
  222
  232
  243
  254
  266
  279
  293
  307
  322
  337
EBITDA, $m
  64
  126
  129
  132
  136
  140
  145
  149
  155
  161
  167
  173
  180
  188
  196
  204
  213
  223
  233
  243
  254
  266
  279
  292
  306
  320
  335
  352
  369
  386
  405
Interest expense (income), $m
  5
  10
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  20
  21
  22
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  51
Earnings before tax, $m
  -2
  62
  64
  67
  69
  72
  75
  79
  82
  86
  91
  128
  133
  138
  143
  149
  155
  162
  169
  176
  183
  192
  200
  209
  218
  228
  239
  250
  261
  274
  287
Tax expense, $m
  -3
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  35
  36
  37
  39
  40
  42
  44
  46
  47
  50
  52
  54
  56
  59
  62
  64
  67
  71
  74
  77
Net income, $m
  1
  46
  47
  49
  51
  53
  55
  57
  60
  63
  66
  93
  97
  101
  105
  109
  113
  118
  123
  128
  134
  140
  146
  153
  159
  167
  174
  182
  191
  200
  209

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  54
  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
  935
  898
  919
  942
  969
  998
  1,031
  1,066
  1,104
  1,145
  1,189
  1,235
  1,286
  1,339
  1,396
  1,456
  1,520
  1,587
  1,659
  1,734
  1,814
  1,898
  1,987
  2,080
  2,179
  2,282
  2,392
  2,506
  2,627
  2,755
  2,888
Adjusted assets (=assets-cash), $m
  881
  898
  919
  942
  969
  998
  1,031
  1,066
  1,104
  1,145
  1,189
  1,235
  1,286
  1,339
  1,396
  1,456
  1,520
  1,587
  1,659
  1,734
  1,814
  1,898
  1,987
  2,080
  2,179
  2,282
  2,392
  2,506
  2,627
  2,755
  2,888
Revenue / Adjusted assets
  0.787
  0.787
  0.787
  0.788
  0.787
  0.788
  0.787
  0.787
  0.787
  0.787
  0.786
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
  0.787
Average production assets, $m
  208
  211
  216
  222
  228
  235
  243
  251
  260
  269
  280
  291
  303
  315
  328
  343
  358
  374
  390
  408
  427
  447
  467
  489
  513
  537
  563
  590
  618
  648
  680
Working capital, $m
  134
  90
  92
  94
  97
  100
  103
  107
  110
  114
  119
  123
  128
  134
  140
  146
  152
  159
  166
  173
  181
  190
  199
  208
  218
  228
  239
  251
  263
  275
  289
Total debt, $m
  254
  256
  267
  281
  296
  312
  330
  350
  371
  394
  419
  445
  474
  504
  535
  569
  605
  643
  683
  726
  770
  818
  867
  920
  975
  1,034
  1,095
  1,160
  1,228
  1,299
  1,374
Total liabilities, $m
  504
  505
  516
  530
  545
  561
  579
  599
  620
  643
  668
  694
  723
  753
  784
  818
  854
  892
  932
  975
  1,019
  1,067
  1,116
  1,169
  1,224
  1,283
  1,344
  1,409
  1,477
  1,548
  1,623
Total equity, $m
  432
  393
  402
  413
  424
  437
  451
  467
  483
  501
  521
  541
  563
  586
  611
  638
  666
  695
  727
  760
  794
  831
  870
  911
  954
  1,000
  1,047
  1,098
  1,151
  1,207
  1,265
Total liabilities and equity, $m
  936
  898
  918
  943
  969
  998
  1,030
  1,066
  1,103
  1,144
  1,189
  1,235
  1,286
  1,339
  1,395
  1,456
  1,520
  1,587
  1,659
  1,735
  1,813
  1,898
  1,986
  2,080
  2,178
  2,283
  2,391
  2,507
  2,628
  2,755
  2,888
Debt-to-equity ratio
  0.588
  0.650
  0.660
  0.680
  0.700
  0.710
  0.730
  0.750
  0.770
  0.790
  0.800
  0.820
  0.840
  0.860
  0.880
  0.890
  0.910
  0.920
  0.940
  0.960
  0.970
  0.980
  1.000
  1.010
  1.020
  1.030
  1.050
  1.060
  1.070
  1.080
  1.090
Adjusted equity ratio
  0.429
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438
  0.438

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1
  46
  47
  49
  51
  53
  55
  57
  60
  63
  66
  93
  97
  101
  105
  109
  113
  118
  123
  128
  134
  140
  146
  153
  159
  167
  174
  182
  191
  200
  209
Depreciation, amort., depletion, $m
  58
  54
  54
  55
  56
  56
  57
  58
  59
  60
  61
  29
  30
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
Funds from operations, $m
  28
  100
  101
  104
  106
  109
  112
  115
  119
  123
  127
  122
  127
  132
  137
  143
  149
  155
  162
  169
  177
  184
  193
  202
  211
  220
  231
  241
  253
  265
  277
Change in working capital, $m
  -20
  2
  2
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
Cash from operations, $m
  48
  98
  99
  101
  104
  106
  109
  112
  115
  119
  122
  118
  122
  127
  132
  137
  143
  149
  155
  162
  169
  176
  184
  192
  201
  210
  220
  230
  241
  252
  264
Maintenance CAPEX, $m
  0
  -21
  -21
  -22
  -22
  -23
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
New CAPEX, $m
  -29
  -4
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
Cash from investing activities, $m
  -341
  -25
  -26
  -28
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -80
  -83
  -87
  -92
  -96
Free cash flow, $m
  -293
  73
  73
  74
  75
  76
  78
  79
  81
  83
  85
  79
  81
  84
  87
  90
  93
  97
  101
  105
  109
  114
  118
  123
  129
  134
  140
  147
  153
  160
  167
Issuance/(repayment) of debt, $m
  250
  10
  12
  13
  15
  17
  18
  20
  21
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  53
  55
  58
  61
  65
  68
  72
  75
Issuance/(repurchase) of shares, $m
  18
  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  
  266
  10
  12
  13
  15
  17
  18
  20
  21
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  42
  45
  47
  50
  53
  55
  58
  61
  65
  68
  72
  75
Total cash flow (excl. dividends), $m
  -28
  83
  85
  87
  90
  93
  96
  99
  102
  106
  110
  105
  109
  114
  119
  124
  129
  135
  141
  147
  154
  161
  168
  176
  184
  193
  202
  211
  221
  232
  243
Retained Cash Flow (-), $m
  -30
  -7
  -9
  -10
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
Prev. year cash balance distribution, $m
 
  46
  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
 
  122
  76
  77
  78
  80
  82
  84
  86
  88
  91
  85
  87
  91
  94
  98
  101
  105
  110
  114
  119
  124
  129
  135
  141
  147
  154
  161
  168
  176
  184
Discount rate, %
 
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
 
  115
  68
  64
  61
  58
  54
  50
  47
  43
  39
  32
  29
  26
  23
  20
  17
  15
  12
  10
  8
  7
  5
  4
  3
  2
  2
  1
  1
  1
  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
  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

Omnicell, Inc. provides automation and business analytics software solutions for medication and supply management in healthcare worldwide. The company operates through two segments, Automation and Analytics, and Medication Adherence. It offers OmniRx, a dispensing system that automates the management and dispensing of medications at the point of use; SinglePointe, a software product that controls medications; AnywhereRN, that remotely queue automated dispensing cabinets; Pandora Analytics, a reporting and data analytics tool; and Savvy Mobile System, which provides a platform for hospital information systems. The company also provides OmniLinkRx, a prescription routing system; WorkflowRx, an automated pharmacy storage, retrieval, and packaging system; Central Pharmacy and Satellite Pharmacy Manager, an automated pharmacy storage and retrieval system; Controlled Substance Management, a controlled substance inventory management system; and Anesthesia Workstation that manages anesthesia supplies and medications. In addition, it offers Omnicell Supply Solution, which automates the management and dispensing of medical and surgical supplies; Omnicell Open Supply Solution for inventory management; Supply/Rx Combination Solution for managing supplies and medications; Omnicell Tissue Center that manages the chain of custody for bone and tissue specimens; OptiFlex SS, a module for the perioperative areas; OptiFlex CL, a module for the cardiac catheterization lab and other procedure areas; and OptiFlex MS, a system for managing medical and surgical supplies. Further, Omnicell, Inc. offers Central Pharmacy, Point of Care, and IV Solutions; software; and consumable medication blister cards, packaging equipment, and ancillary products and services to institutional pharmacies. The company was formerly known as Omnicell Technologies, Inc. and changed its name to Omnicell, Inc. in 2001. Omnicell, Inc. was founded in 1992 and is headquartered in Mountain View, California.

FINANCIAL RATIOS  of  Omnicell (OMCL)

Valuation Ratios
P/E Ratio 1833.3
Price to Sales 2.6
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 38.2
Price to Free Cash Flow 96.5
Growth Rates
Sales Growth Rate 42.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 45%
Cap. Spend. - 3 Yr. Gr. Rate 7.7%
Financial Strength
Quick Ratio 7
Current Ratio 0.1
LT Debt to Equity 56.9%
Total Debt to Equity 58.8%
Interest Coverage 1
Management Effectiveness
Return On Assets -0.2%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 0.2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.5%
Return On Equity 0.2%
Return On Equity - 3 Yr. Avg. 5.5%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 45.3%
Gross Margin - 3 Yr. Avg. 49.8%
EBITDA Margin 8.8%
EBITDA Margin - 3 Yr. Avg. 13.1%
Operating Margin 1%
Oper. Margin - 3 Yr. Avg. 7.5%
Pre-Tax Margin -0.3%
Pre-Tax Margin - 3 Yr. Avg. 6.8%
Net Profit Margin 0.1%
Net Profit Margin - 3 Yr. Avg. 4.5%
Effective Tax Rate 150%
Eff/ Tax Rate - 3 Yr. Avg. 73.1%
Payout Ratio 0%

OMCL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OMCL stock intrinsic value calculation we used $693 million for the last fiscal year's total revenue generated by Omnicell. The default revenue input number comes from 2016 income statement of Omnicell. 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 OMCL stock valuation model: a) initial revenue growth rate of 2% 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 5.6%, whose default value for OMCL is calculated based on our internal credit rating of Omnicell, 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 Omnicell.
    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 OMCL stock the variable cost ratio is equal to 89.9%.

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 OMCL 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 3.9% for Omnicell.

Corporate tax rate of 27% is the nominal tax rate for Omnicell. 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 OMCL 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 OMCL are equal to 29.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Omnicell 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 OMCL is equal to 12.7%. 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 - $432 million for Omnicell - 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 36.601 million for Omnicell 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 Omnicell at the current share price and the inputted number of shares is $1.8 billion.

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COMPANY NEWS

▶ Omnicell tops Street 2Q forecasts   [Jul-28-17 01:36AM  Associated Press]
▶ ETFs with exposure to Omnicell, Inc. : July 10, 2017   [Jul-10-17 02:59PM  Capital Cube]
▶ ETFs with exposure to Omnicell, Inc. : June 27, 2017   [Jun-27-17 03:30PM  Capital Cube]
▶ Omnicell reports 1Q loss   [May-04-17 09:16AM  Associated Press]
▶ Omnicell Acquires InPharmics   [Apr-19-17 08:00AM  PR Newswire]
▶ Is Omnicell, Inc. (OMCL) a Good Stock to Buy?   [Dec-20-16 02:51PM  at Insider Monkey]
Financial statements of OMCL
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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