Intrinsic value of Amarin ADR - AMRN

Previous Close

$16.12

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$16.12

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of AMRN 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 0001), $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 4.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.40
  15.26
  14.23
  13.31
  12.48
  11.73
  11.06
  10.45
  9.91
  9.42
  8.97
  8.58
  8.22
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
Revenue, $m
  211
  243
  278
  315
  354
  395
  439
  485
  533
  583
  635
  690
  747
  806
  867
  931
  997
  1,066
  1,137
  1,211
  1,289
  1,369
  1,453
  1,540
  1,631
  1,726
  1,825
  1,929
  2,037
  2,149
Variable operating expenses, $m
  128
  147
  168
  191
  214
  239
  266
  293
  322
  353
  383
  416
  451
  486
  523
  562
  602
  643
  686
  731
  778
  826
  877
  930
  985
  1,042
  1,102
  1,164
  1,229
  1,297
Fixed operating expenses, $m
  123
  125
  128
  131
  134
  137
  140
  143
  146
  149
  152
  156
  159
  163
  166
  170
  174
  178
  181
  185
  190
  194
  198
  202
  207
  211
  216
  221
  226
  231
Total operating expenses, $m
  251
  272
  296
  322
  348
  376
  406
  436
  468
  502
  535
  572
  610
  649
  689
  732
  776
  821
  867
  916
  968
  1,020
  1,075
  1,132
  1,192
  1,253
  1,318
  1,385
  1,455
  1,528
Operating income, $m
  -40
  -30
  -19
  -7
  6
  19
  33
  49
  65
  81
  99
  118
  137
  157
  177
  199
  221
  245
  269
  295
  321
  349
  378
  408
  440
  473
  508
  544
  582
  622
EBITDA, $m
  -39
  -29
  -17
  -6
  7
  21
  35
  50
  66
  83
  101
  119
  138
  158
  179
  201
  223
  247
  272
  297
  324
  352
  381
  412
  443
  477
  511
  548
  586
  626
Interest expense (income), $m
  17
  10
  5
  7
  10
  12
  15
  18
  20
  23
  27
  30
  33
  37
  41
  45
  49
  53
  57
  62
  66
  71
  76
  82
  87
  93
  99
  105
  112
  119
  126
Earnings before tax, $m
  -50
  -35
  -26
  -17
  -7
  4
  16
  28
  41
  55
  70
  84
  100
  116
  133
  150
  169
  188
  208
  228
  250
  273
  296
  321
  347
  374
  403
  432
  463
  496
Tax expense, $m
  0
  0
  0
  0
  0
  1
  4
  8
  11
  15
  19
  23
  27
  31
  36
  41
  46
  51
  56
  62
  68
  74
  80
  87
  94
  101
  109
  117
  125
  134
Net income, $m
  -50
  -35
  -26
  -17
  -7
  3
  12
  21
  30
  40
  51
  62
  73
  85
  97
  110
  123
  137
  152
  167
  183
  199
  216
  234
  253
  273
  294
  316
  338
  362

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  188
  217
  248
  281
  316
  353
  392
  433
  476
  521
  567
  616
  667
  719
  774
  831
  890
  951
  1,015
  1,082
  1,151
  1,223
  1,297
  1,375
  1,457
  1,541
  1,630
  1,722
  1,818
  1,919
Adjusted assets (=assets-cash), $m
  188
  217
  248
  281
  316
  353
  392
  433
  476
  521
  567
  616
  667
  719
  774
  831
  890
  951
  1,015
  1,082
  1,151
  1,223
  1,297
  1,375
  1,457
  1,541
  1,630
  1,722
  1,818
  1,919
Revenue / Adjusted assets
  1.122
  1.120
  1.121
  1.121
  1.120
  1.119
  1.120
  1.120
  1.120
  1.119
  1.120
  1.120
  1.120
  1.121
  1.120
  1.120
  1.120
  1.121
  1.120
  1.119
  1.120
  1.119
  1.120
  1.120
  1.119
  1.120
  1.120
  1.120
  1.120
  1.120
Average production assets, $m
  5
  6
  7
  8
  8
  9
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  52
Working capital, $m
  -8
  -9
  -10
  -12
  -13
  -15
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -32
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -60
  -64
  -68
  -71
  -75
  -80
Total debt, $m
  65
  91
  119
  149
  180
  214
  249
  286
  324
  364
  407
  450
  496
  543
  593
  644
  697
  752
  810
  869
  932
  996
  1,064
  1,134
  1,207
  1,283
  1,363
  1,446
  1,533
  1,623
Total liabilities, $m
  169
  195
  223
  253
  284
  318
  353
  390
  428
  469
  511
  554
  600
  647
  697
  748
  801
  856
  914
  973
  1,036
  1,100
  1,168
  1,238
  1,311
  1,387
  1,467
  1,550
  1,637
  1,727
Total equity, $m
  19
  22
  25
  28
  32
  35
  39
  43
  48
  52
  57
  62
  67
  72
  77
  83
  89
  95
  102
  108
  115
  122
  130
  138
  146
  154
  163
  172
  182
  192
Total liabilities and equity, $m
  188
  217
  248
  281
  316
  353
  392
  433
  476
  521
  568
  616
  667
  719
  774
  831
  890
  951
  1,016
  1,081
  1,151
  1,222
  1,298
  1,376
  1,457
  1,541
  1,630
  1,722
  1,819
  1,919
Debt-to-equity ratio
  3.470
  4.200
  4.800
  5.290
  5.710
  6.050
  6.350
  6.600
  6.810
  7.000
  7.170
  7.310
  7.440
  7.550
  7.660
  7.750
  7.830
  7.910
  7.980
  8.040
  8.100
  8.150
  8.200
  8.240
  8.290
  8.330
  8.360
  8.400
  8.430
  8.460
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -50
  -35
  -26
  -17
  -7
  3
  12
  21
  30
  40
  51
  62
  73
  85
  97
  110
  123
  137
  152
  167
  183
  199
  216
  234
  253
  273
  294
  316
  338
  362
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
Funds from operations, $m
  -49
  -34
  -25
  -15
  -5
  5
  13
  22
  32
  42
  52
  63
  74
  86
  99
  112
  125
  139
  154
  169
  185
  202
  219
  238
  257
  277
  298
  319
  342
  366
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
Cash from operations, $m
  -48
  -33
  -24
  -14
  -4
  6
  15
  24
  34
  44
  54
  65
  76
  88
  101
  114
  128
  142
  157
  172
  188
  205
  222
  241
  260
  280
  301
  323
  346
  371
Maintenance CAPEX, $m
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
Cash from investing activities, $m
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -7
  -7
Free cash flow, $m
  -49
  -34
  -25
  -15
  -5
  5
  13
  22
  32
  41
  52
  62
  74
  86
  98
  111
  124
  138
  153
  168
  184
  200
  218
  236
  255
  275
  295
  317
  340
  364
Issuance/(repayment) of debt, $m
  -57
  26
  28
  30
  32
  33
  35
  37
  39
  40
  42
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  76
  80
  83
  87
  91
Issuance/(repurchase) of shares, $m
  134
  38
  29
  20
  10
  1
  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  
  77
  64
  57
  50
  42
  34
  35
  37
  39
  40
  42
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  76
  80
  83
  87
  91
Total cash flow (excl. dividends), $m
  28
  30
  32
  34
  36
  38
  48
  59
  70
  82
  94
  106
  119
  133
  147
  162
  177
  193
  210
  228
  246
  265
  285
  306
  328
  351
  375
  400
  427
  454
Retained Cash Flow (-), $m
  -134
  -38
  -29
  -20
  -10
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
Prev. year cash balance distribution, $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 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
  -106
  -8
  3
  14
  26
  35
  44
  55
  66
  77
  89
  101
  114
  128
  142
  156
  171
  187
  204
  221
  239
  258
  278
  298
  320
  342
  366
  391
  417
  444
Discount rate, %
  13.50
  14.18
  14.88
  15.63
  16.41
  17.23
  18.09
  19.00
  19.95
  20.94
  21.99
  23.09
  24.24
  25.46
  26.73
  28.07
  29.47
  30.94
  32.49
  34.11
  35.82
  37.61
  39.49
  41.47
  43.54
  45.72
  48.00
  50.40
  52.92
  55.57
PV of cash for distribution, $m
  -93
  -6
  2
  8
  12
  13
  14
  14
  13
  12
  10
  8
  7
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  16.5
  7.0
  3.9
  2.9
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8
  2.8

Amarin Corporation plc is a biopharmaceutical company with operations in lipid science focused on the commercialization and development of therapeutics for cardiovascular health. The Company operates through the development and commercialization of Vascepa segment. The Company's lead product, Vascepa (icosapent ethyl) capsule, is approved by the United States Food and Drug Administration (FDA) for use as an adjunct to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia. This indication for Vascepa, known as the MARINE indication, is based primarily on the results from the MARINE study of Vascepa in this approved patient population. The Company sells Vascepa principally to wholesalers, as well as selected regional wholesalers and specialty pharmacy providers, or collectively, its distributors, which in turn resell Vascepa to retail pharmacies for resale to patients and healthcare providers.

FINANCIAL RATIOS  of  Amarin ADR (AMRN)

Valuation Ratios
P/E Ratio -50.5
Price to Sales 33.4
Price to Book -482.5
Price to Tangible Book
Price to Cash Flow -60.3
Price to Free Cash Flow -60.3
Growth Rates
Sales Growth Rate 58.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity -944.4%
Total Debt to Equity -1288.9%
Interest Coverage -3
Management Effectiveness
Return On Assets -39.3%
Ret/ On Assets - 3 Yr. Avg. -40.3%
Return On Total Capital -74.8%
Ret/ On T. Cap. - 3 Yr. Avg. -63.4%
Return On Equity 125.5%
Return On Equity - 3 Yr. Avg. 107.9%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 73.8%
Gross Margin - 3 Yr. Avg. 67.6%
EBITDA Margin -44.6%
EBITDA Margin - 3 Yr. Avg. -86.8%
Operating Margin -50.8%
Oper. Margin - 3 Yr. Avg. -92.2%
Pre-Tax Margin -58.5%
Pre-Tax Margin - 3 Yr. Avg. -103.9%
Net Profit Margin -66.2%
Net Profit Margin - 3 Yr. Avg. -103.4%
Effective Tax Rate -13.2%
Eff/ Tax Rate - 3 Yr. Avg. -1.8%
Payout Ratio 0%

AMRN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMRN stock intrinsic value calculation we used $181.104 million for the last fiscal year's total revenue generated by Amarin ADR. The default revenue input number comes from 0001 income statement of Amarin ADR. 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 AMRN stock valuation model: a) initial revenue growth rate of 16.4% 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 13.5%, whose default value for AMRN is calculated based on our internal credit rating of Amarin ADR, 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 Amarin ADR.
    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 AMRN stock the variable cost ratio is equal to 60.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $120 million in the base year in the intrinsic value calculation for AMRN 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 8.2% for Amarin ADR.

Corporate tax rate of 27% is the nominal tax rate for Amarin ADR. 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 AMRN 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 AMRN are equal to 2.4%.

Life of production assets of 12 years is the average useful life of capital assets used in Amarin ADR 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 AMRN is equal to -3.7%. 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 - $-65.1 million for Amarin ADR - 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 296.349 million for Amarin ADR 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 Amarin ADR at the current share price and the inputted number of shares is $4.8 billion.

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COMPANY NEWS

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