Intrinsic value of OraSure Technologies - OSUR

Previous Close

$18.19

  Intrinsic Value

$0.70

stock screener

  Rating & Target

str. sell

-96%

Previous close

$18.19

 
Intrinsic value

$0.70

 
Up/down potential

-96%

 
Rating

str. sell

We calculate the intrinsic value of OSUR 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 1.1

 

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, %
  6.67
  29.00
  26.60
  24.44
  22.50
  20.75
  19.17
  17.75
  16.48
  15.33
  14.30
  13.37
  12.53
  11.78
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
Revenue, $m
  128
  165
  209
  260
  319
  385
  459
  540
  629
  725
  829
  940
  1,058
  1,182
  1,313
  1,451
  1,596
  1,746
  1,903
  2,067
  2,238
  2,415
  2,599
  2,790
  2,989
  3,196
  3,411
  3,634
  3,866
  4,108
  4,360
Variable operating expenses, $m
 
  153
  193
  240
  294
  354
  422
  496
  577
  666
  761
  860
  968
  1,082
  1,202
  1,328
  1,460
  1,598
  1,742
  1,892
  2,048
  2,210
  2,378
  2,554
  2,736
  2,925
  3,121
  3,326
  3,538
  3,760
  3,990
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
  108
  153
  193
  240
  294
  354
  422
  496
  577
  666
  761
  860
  968
  1,082
  1,202
  1,328
  1,460
  1,598
  1,742
  1,892
  2,048
  2,210
  2,378
  2,554
  2,736
  2,925
  3,121
  3,326
  3,538
  3,760
  3,990
Operating income, $m
  20
  12
  16
  20
  25
  31
  37
  44
  51
  60
  68
  80
  90
  100
  111
  123
  135
  148
  161
  175
  190
  205
  220
  237
  254
  271
  289
  308
  328
  349
  370
EBITDA, $m
  26
  19
  24
  30
  36
  44
  52
  62
  72
  83
  95
  108
  121
  135
  150
  166
  183
  200
  218
  237
  256
  276
  298
  319
  342
  366
  390
  416
  443
  470
  499
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  2
  2
  2
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
Earnings before tax, $m
  20
  12
  16
  20
  24
  30
  35
  42
  49
  57
  65
  76
  85
  95
  105
  116
  127
  139
  152
  165
  178
  192
  207
  222
  238
  254
  271
  289
  307
  326
  346
Tax expense, $m
  0
  3
  4
  5
  7
  8
  10
  11
  13
  15
  18
  20
  23
  26
  28
  31
  34
  38
  41
  44
  48
  52
  56
  60
  64
  69
  73
  78
  83
  88
  93
Net income, $m
  20
  9
  11
  14
  18
  22
  26
  31
  36
  41
  47
  55
  62
  69
  77
  85
  93
  102
  111
  120
  130
  140
  151
  162
  173
  185
  198
  211
  224
  238
  253

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  119
  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
  208
  115
  145
  181
  222
  268
  319
  375
  437
  504
  577
  654
  735
  822
  913
  1,009
  1,110
  1,214
  1,324
  1,438
  1,556
  1,679
  1,807
  1,940
  2,079
  2,222
  2,372
  2,527
  2,689
  2,857
  3,032
Adjusted assets (=assets-cash), $m
  89
  115
  145
  181
  222
  268
  319
  375
  437
  504
  577
  654
  735
  822
  913
  1,009
  1,110
  1,214
  1,324
  1,438
  1,556
  1,679
  1,807
  1,940
  2,079
  2,222
  2,372
  2,527
  2,689
  2,857
  3,032
Revenue / Adjusted assets
  1.438
  1.435
  1.441
  1.436
  1.437
  1.437
  1.439
  1.440
  1.439
  1.438
  1.437
  1.437
  1.439
  1.438
  1.438
  1.438
  1.438
  1.438
  1.437
  1.437
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
  1.438
Average production assets, $m
  32
  41
  51
  64
  78
  95
  113
  133
  155
  178
  204
  231
  260
  291
  323
  357
  392
  430
  468
  509
  550
  594
  639
  686
  735
  786
  839
  894
  951
  1,011
  1,073
Working capital, $m
  139
  26
  33
  41
  50
  60
  72
  84
  98
  113
  129
  147
  165
  184
  205
  226
  249
  272
  297
  322
  349
  377
  405
  435
  466
  499
  532
  567
  603
  641
  680
Total debt, $m
  0
  6
  14
  23
  33
  44
  57
  71
  86
  103
  120
  139
  160
  181
  204
  227
  252
  278
  305
  333
  362
  393
  424
  457
  491
  527
  564
  602
  642
  684
  727
Total liabilities, $m
  22
  28
  36
  45
  55
  66
  79
  93
  108
  125
  142
  161
  182
  203
  226
  249
  274
  300
  327
  355
  384
  415
  446
  479
  513
  549
  586
  624
  664
  706
  749
Total equity, $m
  186
  86
  109
  136
  167
  201
  240
  283
  329
  380
  434
  492
  554
  619
  688
  760
  835
  914
  997
  1,082
  1,172
  1,264
  1,361
  1,461
  1,565
  1,673
  1,786
  1,903
  2,025
  2,151
  2,283
Total liabilities and equity, $m
  208
  114
  145
  181
  222
  267
  319
  376
  437
  505
  576
  653
  736
  822
  914
  1,009
  1,109
  1,214
  1,324
  1,437
  1,556
  1,679
  1,807
  1,940
  2,078
  2,222
  2,372
  2,527
  2,689
  2,857
  3,032
Debt-to-equity ratio
  0.000
  0.070
  0.130
  0.170
  0.200
  0.220
  0.240
  0.250
  0.260
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.300
  0.300
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
  0.320
Adjusted equity ratio
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  9
  11
  14
  18
  22
  26
  31
  36
  41
  47
  55
  62
  69
  77
  85
  93
  102
  111
  120
  130
  140
  151
  162
  173
  185
  198
  211
  224
  238
  253
Depreciation, amort., depletion, $m
  6
  7
  8
  10
  11
  13
  15
  18
  21
  23
  26
  28
  31
  35
  39
  43
  47
  52
  56
  61
  66
  72
  77
  83
  89
  95
  101
  108
  115
  122
  129
Funds from operations, $m
  15
  16
  19
  24
  29
  35
  41
  49
  56
  65
  74
  83
  93
  104
  116
  128
  140
  153
  167
  182
  196
  212
  228
  245
  262
  280
  299
  318
  339
  360
  382
Change in working capital, $m
  -8
  6
  7
  8
  9
  10
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
Cash from operations, $m
  23
  10
  13
  16
  20
  25
  30
  36
  42
  50
  58
  66
  75
  85
  95
  106
  118
  130
  143
  156
  170
  184
  199
  215
  231
  248
  265
  284
  302
  322
  343
Maintenance CAPEX, $m
  0
  -4
  -5
  -6
  -8
  -9
  -11
  -14
  -16
  -19
  -21
  -25
  -28
  -31
  -35
  -39
  -43
  -47
  -52
  -56
  -61
  -66
  -72
  -77
  -83
  -89
  -95
  -101
  -108
  -115
  -122
New CAPEX, $m
  -4
  -9
  -11
  -13
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
Cash from investing activities, $m
  -8
  -13
  -16
  -19
  -22
  -25
  -29
  -34
  -38
  -43
  -47
  -52
  -57
  -62
  -67
  -73
  -78
  -84
  -91
  -96
  -103
  -110
  -117
  -124
  -132
  -140
  -148
  -156
  -165
  -175
  -184
Free cash flow, $m
  15
  -3
  -3
  -3
  -2
  -1
  0
  2
  5
  7
  11
  14
  18
  23
  28
  33
  39
  46
  52
  59
  67
  74
  82
  91
  99
  108
  118
  127
  138
  148
  159
Issuance/(repayment) of debt, $m
  0
  6
  8
  9
  10
  11
  13
  14
  15
  17
  18
  19
  20
  21
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  38
  40
  42
  43
Issuance/(repurchase) of shares, $m
  -1
  11
  12
  12
  13
  13
  13
  12
  11
  9
  7
  3
  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  
  -1
  17
  20
  21
  23
  24
  26
  26
  26
  26
  25
  22
  20
  21
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  38
  40
  42
  43
Total cash flow (excl. dividends), $m
  14
  14
  16
  18
  21
  23
  26
  28
  31
  33
  35
  36
  38
  44
  50
  57
  64
  71
  79
  87
  96
  105
  114
  124
  134
  144
  155
  166
  177
  190
  202
Retained Cash Flow (-), $m
  -27
  -19
  -23
  -27
  -31
  -35
  -39
  -43
  -47
  -50
  -54
  -58
  -62
  -65
  -69
  -72
  -76
  -79
  -82
  -86
  -89
  -93
  -96
  -100
  -104
  -108
  -113
  -117
  -122
  -127
  -132
Prev. year cash balance distribution, $m
 
  119
  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
 
  113
  -7
  -8
  -10
  -11
  -13
  -14
  -16
  -17
  -19
  -22
  -23
  -21
  -18
  -15
  -11
  -7
  -3
  2
  7
  12
  18
  23
  29
  36
  42
  49
  56
  63
  70
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
 
  109
  -6
  -7
  -8
  -9
  -9
  -10
  -10
  -10
  -10
  -11
  -10
  -8
  -6
  -4
  -3
  -2
  -1
  0
  1
  1
  1
  2
  1
  1
  1
  1
  1
  1
  1
Current shareholders' claim on cash, %
  100
  97.3
  95.1
  93.3
  91.8
  90.6
  89.6
  88.9
  88.3
  87.9
  87.6
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5
  87.5

OraSure Technologies, Inc. (OraSure) is involved in the development, manufacture, marketing and sale of oral fluid diagnostic products and specimen collection devices using its technologies, as well as other diagnostic products, including immunoassays and other in vitro diagnostic tests that are used on other specimen types. The Company operates in two segments: OSUR and DNAG. OSUR consists of the development, manufacture and sale of diagnostic products, specimen collection devices, and medical devices. DNAG or molecular collection systems business consists primarily of the development, manufacture and sale of oral fluid collection devices that are used to collect, stabilize, and store samples of genetic material for molecular testing. It also manufactures and sells medical devices used for the removal of benign skin lesions by cryosurgery or freezing. It sells over-the-counter (OTC) cryosurgical products to consumers in North America, Europe, Central and South America, and Australia.

FINANCIAL RATIOS  of  OraSure Technologies (OSUR)

Valuation Ratios
P/E Ratio 50.9
Price to Sales 8
Price to Book 5.5
Price to Tangible Book
Price to Cash Flow 44.3
Price to Free Cash Flow 53.6
Growth Rates
Sales Growth Rate 6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 10.1%
Ret/ On Assets - 3 Yr. Avg. 3.9%
Return On Total Capital 11.6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.5%
Return On Equity 11.6%
Return On Equity - 3 Yr. Avg. 4.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 68.8%
Gross Margin - 3 Yr. Avg. 66.2%
EBITDA Margin 20.3%
EBITDA Margin - 3 Yr. Avg. 11.6%
Operating Margin 15.6%
Oper. Margin - 3 Yr. Avg. 5.9%
Pre-Tax Margin 15.6%
Pre-Tax Margin - 3 Yr. Avg. 6.5%
Net Profit Margin 15.6%
Net Profit Margin - 3 Yr. Avg. 5.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -4.6%
Payout Ratio 0%

OSUR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OSUR stock intrinsic value calculation we used $128 million for the last fiscal year's total revenue generated by OraSure Technologies. The default revenue input number comes from 2016 income statement of OraSure Technologies. 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 OSUR stock valuation model: a) initial revenue growth rate of 29% 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 OSUR is calculated based on our internal credit rating of OraSure Technologies, 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 OraSure Technologies.
    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 OSUR stock the variable cost ratio is equal to 93%.

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 OSUR 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 OraSure Technologies.

Corporate tax rate of 27% is the nominal tax rate for OraSure Technologies. 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 OSUR 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 OSUR are equal to 24.6%.

Life of production assets of 8.3 years is the average useful life of capital assets used in OraSure Technologies 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 OSUR is equal to 15.6%. 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 - $186 million for OraSure Technologies - 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 59.289 million for OraSure Technologies 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 OraSure Technologies at the current share price and the inputted number of shares is $1.1 billion.

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COMPANY NEWS

▶ OraSure Technologies Announces 2018 Annual Meeting Date   [Dec-08-17 06:00AM  GlobeNewswire]
▶ Why OraSure Technologies, Inc. Zoomed Higher Today   [Nov-21-17 04:23PM  Motley Fool]
▶ Is This Why OraSure Technologies, Inc. Is Tanking Today?   [Nov-02-17 02:13PM  Motley Fool]
▶ OraSure meets 3Q profit forecasts   [05:20PM  Associated Press]
▶ OraSure Technologies Earnings Conference Call Invitation   [Oct-11-17 06:00AM  GlobeNewswire]
▶ Stocks With Rising Relative Price Strength: MiMedx   [03:00AM  Investor's Business Daily]
▶ Why OraSure Technologies, Inc. Jumped Higher Today   [Aug-03-17 01:44PM  Motley Fool]
▶ OraSure posts 2Q profit   [Aug-02-17 10:51PM  Associated Press]
▶ OraSure Technologies Earnings Conference Call Invitation   [Jul-12-17 06:00AM  GlobeNewswire]
▶ Why OraSure Technologies, Inc. Jumped Higher Today   [Jun-27-17 06:25PM  Motley Fool]
▶ 5 Top Efficient Stocks to Add to Your Portfolio   [May-19-17 09:40AM  Zacks]
▶ Why OraSure Technologies, Inc. Jumped Higher Today   [May-04-17 04:52PM  Motley Fool]
▶ OraSure posts 1Q profit   [May-03-17 05:01PM  Associated Press]
▶ OraSure Technologies Earnings Conference Call Invitation   [Apr-12-17 06:00AM  GlobeNewswire]
Financial statements of OSUR
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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