Intrinsic value of Analogic - ALOG

Previous Close

$80.85

  Intrinsic Value

$11.05

stock screener

  Rating & Target

str. sell

-86%

Previous close

$80.85

 
Intrinsic value

$11.05

 
Up/down potential

-86%

 
Rating

str. sell

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

We calculate the intrinsic value of ALOG 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 2017), $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 1.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -4.52
  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
  486
  496
  507
  520
  535
  551
  569
  588
  609
  632
  656
  682
  710
  739
  770
  804
  839
  876
  916
  957
  1,001
  1,048
  1,096
  1,148
  1,202
  1,260
  1,320
  1,383
  1,450
  1,520
  1,594
Variable operating expenses, $m
 
  471
  482
  495
  509
  524
  541
  559
  579
  601
  624
  648
  675
  703
  732
  764
  797
  833
  870
  910
  952
  996
  1,042
  1,091
  1,143
  1,197
  1,255
  1,315
  1,378
  1,445
  1,515
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
  553
  471
  482
  495
  509
  524
  541
  559
  579
  601
  624
  648
  675
  703
  732
  764
  797
  833
  870
  910
  952
  996
  1,042
  1,091
  1,143
  1,197
  1,255
  1,315
  1,378
  1,445
  1,515
Operating income, $m
  -67
  24
  25
  26
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  72
  75
  79
EBITDA, $m
  -42
  45
  46
  47
  48
  50
  51
  53
  55
  57
  59
  61
  64
  67
  69
  72
  76
  79
  83
  86
  90
  94
  99
  103
  108
  114
  119
  125
  131
  137
  144
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
Earnings before tax, $m
  -66
  24
  25
  25
  26
  27
  28
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
Tax expense, $m
  8
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Net income, $m
  -74
  18
  18
  19
  19
  20
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
  46
  49
  51
  53

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  148
  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
  538
  398
  407
  417
  429
  442
  456
  472
  489
  507
  526
  547
  569
  593
  618
  645
  673
  703
  735
  768
  803
  841
  880
  921
  965
  1,011
  1,059
  1,110
  1,164
  1,220
  1,279
Adjusted assets (=assets-cash), $m
  390
  398
  407
  417
  429
  442
  456
  472
  489
  507
  526
  547
  569
  593
  618
  645
  673
  703
  735
  768
  803
  841
  880
  921
  965
  1,011
  1,059
  1,110
  1,164
  1,220
  1,279
Revenue / Adjusted assets
  1.246
  1.246
  1.246
  1.247
  1.247
  1.247
  1.248
  1.246
  1.245
  1.247
  1.247
  1.247
  1.248
  1.246
  1.246
  1.247
  1.247
  1.246
  1.246
  1.246
  1.247
  1.246
  1.245
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
Average production assets, $m
  141
  143
  147
  150
  155
  159
  164
  170
  176
  183
  190
  197
  205
  214
  223
  232
  242
  253
  265
  277
  289
  303
  317
  332
  347
  364
  381
  400
  419
  439
  461
Working capital, $m
  304
  159
  163
  167
  172
  177
  183
  189
  196
  203
  211
  219
  228
  237
  247
  258
  269
  281
  294
  307
  321
  336
  352
  369
  386
  404
  424
  444
  465
  488
  512
Total debt, $m
  0
  2
  3
  5
  8
  10
  13
  16
  20
  23
  27
  31
  36
  41
  46
  51
  57
  63
  69
  76
  83
  90
  98
  106
  115
  124
  134
  144
  155
  166
  178
Total liabilities, $m
  78
  80
  81
  83
  86
  88
  91
  94
  98
  101
  105
  109
  114
  119
  124
  129
  135
  141
  147
  154
  161
  168
  176
  184
  193
  202
  212
  222
  233
  244
  256
Total equity, $m
  460
  318
  326
  334
  343
  354
  365
  378
  391
  406
  421
  438
  456
  475
  495
  516
  539
  562
  588
  615
  643
  673
  704
  737
  772
  809
  847
  888
  931
  976
  1,024
Total liabilities and equity, $m
  538
  398
  407
  417
  429
  442
  456
  472
  489
  507
  526
  547
  570
  594
  619
  645
  674
  703
  735
  769
  804
  841
  880
  921
  965
  1,011
  1,059
  1,110
  1,164
  1,220
  1,280
Debt-to-equity ratio
  0.000
  0.000
  0.010
  0.020
  0.020
  0.030
  0.040
  0.040
  0.050
  0.060
  0.060
  0.070
  0.080
  0.090
  0.090
  0.100
  0.110
  0.110
  0.120
  0.120
  0.130
  0.130
  0.140
  0.140
  0.150
  0.150
  0.160
  0.160
  0.170
  0.170
  0.170
Adjusted equity ratio
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -74
  18
  18
  19
  19
  20
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
  46
  49
  51
  53
Depreciation, amort., depletion, $m
  25
  20
  21
  21
  22
  23
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
Funds from operations, $m
  98
  38
  39
  40
  41
  42
  43
  45
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
  118
Change in working capital, $m
  23
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  23
  24
Cash from operations, $m
  75
  35
  35
  36
  36
  37
  38
  39
  40
  41
  42
  43
  45
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
Maintenance CAPEX, $m
  0
  -20
  -20
  -21
  -21
  -22
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
New CAPEX, $m
  -9
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
Cash from investing activities, $m
  -54
  -23
  -23
  -25
  -25
  -27
  -27
  -29
  -30
  -32
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -68
  -72
  -75
  -79
  -83
Free cash flow, $m
  21
  12
  12
  11
  11
  10
  10
  10
  10
  9
  9
  9
  9
  9
  9
  9
  9
  9
  9
  9
  9
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
Issuance/(repayment) of debt, $m
  0
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
Issuance/(repurchase) of shares, $m
  -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
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -5
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
Total cash flow (excl. dividends), $m
  16
  14
  14
  13
  13
  13
  13
  13
  13
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  18
  18
  19
  20
  21
  21
  22
  23
Retained Cash Flow (-), $m
  71
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
Prev. year cash balance distribution, $m
 
  148
  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
 
  156
  6
  5
  4
  3
  2
  1
  0
  -1
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -22
  -23
  -24
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
 
  149
  6
  4
  3
  2
  1
  0
  0
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
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Analogic Corporation designs, manufactures and commercializes guidance, diagnostic imaging and threat detection technologies. The Company operates through three segments: Medical Imaging, Ultrasound, and Security and Detection. The Company's Medical Imaging segment provides medical imaging systems and subsystems for computed tomography (CT), magnetic resonance imaging (MRI) and high-resolution digital mammography. The Company's Ultrasound business segment provides ultrasound procedure guidance systems for the urology and surgery markets. The Company's Security and Detection segment designs and manufactures automated threat detection systems for aviation baggage inspection applications utilizing medical CT technology and systems used for deoxyribonucleic acid (DNA) analysis for law enforcement and government agencies.

FINANCIAL RATIOS  of  Analogic (ALOG)

Valuation Ratios
P/E Ratio -13.6
Price to Sales 2.1
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 13.4
Price to Free Cash Flow 15.3
Growth Rates
Sales Growth Rate -4.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -30.8%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
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 -12.6%
Ret/ On Assets - 3 Yr. Avg. -1.8%
Return On Total Capital -14.9%
Ret/ On T. Cap. - 3 Yr. Avg. -2.1%
Return On Equity -14.9%
Return On Equity - 3 Yr. Avg. -2.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 40.9%
Gross Margin - 3 Yr. Avg. 42.7%
EBITDA Margin -8.4%
EBITDA Margin - 3 Yr. Avg. 4%
Operating Margin -13.8%
Oper. Margin - 3 Yr. Avg. -0.5%
Pre-Tax Margin -13.6%
Pre-Tax Margin - 3 Yr. Avg. -0.7%
Net Profit Margin -15.2%
Net Profit Margin - 3 Yr. Avg. -2.3%
Effective Tax Rate -12.1%
Eff/ Tax Rate - 3 Yr. Avg. 15.8%
Payout Ratio -6.8%

ALOG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALOG stock intrinsic value calculation we used $486 million for the last fiscal year's total revenue generated by Analogic. The default revenue input number comes from 2017 income statement of Analogic. 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 ALOG 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 4.3%, whose default value for ALOG is calculated based on our internal credit rating of Analogic, 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 Analogic.
    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 ALOG stock the variable cost ratio is equal to 95.1%.

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 ALOG 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 Analogic.

Corporate tax rate of 27% is the nominal tax rate for Analogic. 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 ALOG 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 ALOG are equal to 28.9%.

Life of production assets of 7.1 years is the average useful life of capital assets used in Analogic 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 ALOG is equal to 32.1%. 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 - $460 million for Analogic - 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 12.5 million for Analogic 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 Analogic at the current share price and the inputted number of shares is $1.0 billion.

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COMPANY NEWS

▶ ETFs with exposure to Analogic Corp. : October 18, 2017   [Oct-18-17 09:35AM  Capital Cube]
▶ Analogic Appoints Joseph Whitters to Board of Directors   [Oct-13-17 05:03PM  GlobeNewswire]
▶ ETFs with exposure to Analogic Corp. : September 29, 2017   [Sep-29-17 10:21AM  Capital Cube]
▶ Analogic reports 4Q loss   [Sep-19-17 10:03PM  Associated Press]
▶ Analogic Appoints New Chief Financial Officer   [Jul-13-17 04:05PM  GlobeNewswire]
▶ ETFs with exposure to Analogic Corp. : July 3, 2017   [Jul-03-17 02:48PM  Capital Cube]
▶ [$$] American Airlines to Test 3-D Bag Screening Equipment   [Jun-27-17 06:18PM  The Wall Street Journal]
▶ ETFs with exposure to Analogic Corp. : June 19, 2017   [Jun-19-17 02:53PM  Capital Cube]
▶ ETFs with exposure to Analogic Corp. : June 9, 2017   [Jun-09-17 01:15PM  Capital Cube]
▶ Analogic reports 3Q loss   [Jun-06-17 04:29PM  Associated Press]
▶ ETFs with exposure to Analogic Corp. : April 19, 2017   [Apr-19-17 02:08PM  Capital Cube]
▶ Analogic posts 2Q profit   [04:22PM  Associated Press]
▶ Analogic Corporation to Webcast Annual Stockholders Meeting   [Jan-12-17 03:15PM  GlobeNewswire]
▶ Analogic to Present at Upcoming Investor Conferences   [Dec-28-16 01:00PM  GlobeNewswire]
Financial statements of ALOG
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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