Intrinsic value of argenx SE - ARGX

Previous Close

$124.51

  Intrinsic Value

$9.75

stock screener

  Rating & Target

str. sell

-92%

Previous close

$124.51

 
Intrinsic value

$9.75

 
Up/down potential

-92%

 
Rating

str. sell

We calculate the intrinsic value of ARGX 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 4.5

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  70
  109
  163
  236
  333
  458
  614
  807
  1,038
  1,311
  1,628
  1,991
  2,400
  2,855
  3,357
  3,905
  4,498
  5,136
  5,817
  6,540
  7,304
  8,109
  8,953
  9,837
  10,761
  11,724
  12,727
  13,770
  14,855
  15,982
Variable operating expenses, $m
  82
  126
  188
  273
  385
  530
  711
  933
  1,201
  1,517
  1,884
  2,303
  2,776
  3,303
  3,883
  4,517
  5,203
  5,941
  6,728
  7,565
  8,449
  9,380
  10,356
  11,379
  12,447
  13,561
  14,721
  15,928
  17,183
  18,487
Fixed operating expenses, $m
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  27
  27
  28
  28
  29
  30
  30
  31
  32
  32
  33
  34
  34
  35
  36
  37
  38
  38
Total operating expenses, $m
  102
  147
  209
  295
  407
  553
  734
  957
  1,225
  1,542
  1,909
  2,329
  2,803
  3,330
  3,911
  4,545
  5,232
  5,971
  6,758
  7,596
  8,481
  9,412
  10,389
  11,413
  12,481
  13,596
  14,757
  15,965
  17,221
  18,525
Operating income, $m
  -32
  -38
  -47
  -59
  -75
  -95
  -120
  -150
  -187
  -230
  -281
  -338
  -403
  -475
  -554
  -640
  -734
  -835
  -942
  -1,056
  -1,176
  -1,303
  -1,436
  -1,576
  -1,721
  -1,873
  -2,031
  -2,195
  -2,366
  -2,543
EBITDA, $m
  -31
  -38
  -46
  -58
  -73
  -93
  -117
  -147
  -183
  -225
  -274
  -330
  -394
  -464
  -541
  -626
  -717
  -815
  -920
  -1,031
  -1,149
  -1,272
  -1,402
  -1,538
  -1,680
  -1,828
  -1,982
  -2,143
  -2,309
  -2,483
Interest expense (income), $m
  0
  0
  1
  2
  5
  7
  11
  16
  22
  29
  38
  48
  61
  74
  90
  108
  127
  148
  170
  195
  221
  249
  278
  309
  341
  375
  410
  447
  485
  525
  567
Earnings before tax, $m
  -32
  -39
  -49
  -63
  -82
  -106
  -136
  -172
  -216
  -269
  -329
  -399
  -477
  -565
  -661
  -767
  -882
  -1,005
  -1,137
  -1,277
  -1,425
  -1,581
  -1,745
  -1,916
  -2,096
  -2,283
  -2,477
  -2,680
  -2,891
  -3,110
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
Net income, $m
  -32
  -39
  -49
  -63
  -82
  -106
  -136
  -172
  -216
  -269
  -329
  -399
  -477
  -565
  -661
  -767
  -882
  -1,005
  -1,137
  -1,277
  -1,425
  -1,581
  -1,745
  -1,916
  -2,096
  -2,283
  -2,477
  -2,680
  -2,891
  -3,110

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
  68
  105
  157
  228
  321
  442
  593
  779
  1,002
  1,266
  1,572
  1,922
  2,316
  2,756
  3,240
  3,769
  4,342
  4,957
  5,615
  6,312
  7,050
  7,827
  8,642
  9,496
  10,387
  11,316
  12,284
  13,291
  14,339
  15,427
Adjusted assets (=assets-cash), $m
  68
  105
  157
  228
  321
  442
  593
  779
  1,002
  1,266
  1,572
  1,922
  2,316
  2,756
  3,240
  3,769
  4,342
  4,957
  5,615
  6,312
  7,050
  7,827
  8,642
  9,496
  10,387
  11,316
  12,284
  13,291
  14,339
  15,427
Revenue / Adjusted assets
  1.029
  1.038
  1.038
  1.035
  1.037
  1.036
  1.035
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
  1.036
Average production assets, $m
  1
  2
  3
  4
  6
  9
  12
  15
  20
  25
  31
  38
  46
  54
  64
  74
  85
  98
  111
  124
  139
  154
  170
  187
  204
  223
  242
  262
  282
  304
Working capital, $m
  -40
  -61
  -91
  -133
  -187
  -257
  -345
  -453
  -583
  -737
  -915
  -1,119
  -1,349
  -1,605
  -1,887
  -2,195
  -2,528
  -2,886
  -3,269
  -3,675
  -4,105
  -4,557
  -5,032
  -5,529
  -6,048
  -6,589
  -7,152
  -7,739
  -8,348
  -8,982
Total debt, $m
  19
  46
  84
  136
  205
  293
  404
  540
  704
  898
  1,123
  1,379
  1,669
  1,992
  2,347
  2,736
  3,156
  3,608
  4,090
  4,602
  5,144
  5,714
  6,312
  6,939
  7,593
  8,275
  8,986
  9,725
  10,493
  11,292
Total liabilities, $m
  50
  77
  115
  167
  236
  324
  435
  572
  736
  929
  1,154
  1,411
  1,700
  2,023
  2,378
  2,767
  3,187
  3,639
  4,121
  4,633
  5,175
  5,745
  6,343
  6,970
  7,624
  8,306
  9,017
  9,756
  10,525
  11,323
Total equity, $m
  18
  28
  42
  61
  85
  118
  158
  207
  267
  337
  418
  511
  616
  733
  862
  1,003
  1,155
  1,319
  1,493
  1,679
  1,875
  2,082
  2,299
  2,526
  2,763
  3,010
  3,268
  3,536
  3,814
  4,104
Total liabilities and equity, $m
  68
  105
  157
  228
  321
  442
  593
  779
  1,003
  1,266
  1,572
  1,922
  2,316
  2,756
  3,240
  3,770
  4,342
  4,958
  5,614
  6,312
  7,050
  7,827
  8,642
  9,496
  10,387
  11,316
  12,285
  13,292
  14,339
  15,427
Debt-to-equity ratio
  1.030
  1.640
  2.010
  2.240
  2.390
  2.490
  2.560
  2.610
  2.640
  2.670
  2.680
  2.700
  2.710
  2.720
  2.720
  2.730
  2.730
  2.740
  2.740
  2.740
  2.740
  2.740
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
  2.750
Adjusted equity ratio
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266
  0.266

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -32
  -39
  -49
  -63
  -82
  -106
  -136
  -172
  -216
  -269
  -329
  -399
  -477
  -565
  -661
  -767
  -882
  -1,005
  -1,137
  -1,277
  -1,425
  -1,581
  -1,745
  -1,916
  -2,096
  -2,283
  -2,477
  -2,680
  -2,891
  -3,110
Depreciation, amort., depletion, $m
  0
  1
  1
  1
  1
  2
  2
  3
  4
  5
  6
  8
  9
  11
  13
  15
  17
  20
  22
  25
  28
  31
  34
  37
  41
  45
  48
  52
  56
  61
Funds from operations, $m
  -31
  -39
  -49
  -62
  -81
  -104
  -133
  -169
  -212
  -263
  -323
  -391
  -468
  -554
  -649
  -752
  -865
  -985
  -1,115
  -1,252
  -1,397
  -1,550
  -1,711
  -1,879
  -2,055
  -2,238
  -2,429
  -2,628
  -2,834
  -3,049
Change in working capital, $m
  -15
  -22
  -30
  -41
  -54
  -70
  -88
  -108
  -130
  -153
  -178
  -204
  -230
  -256
  -282
  -308
  -333
  -358
  -383
  -406
  -430
  -452
  -475
  -497
  -519
  -541
  -564
  -586
  -610
  -634
Cash from operations, $m
  -16
  -17
  -18
  -21
  -26
  -34
  -45
  -61
  -82
  -110
  -145
  -187
  -238
  -298
  -367
  -444
  -531
  -627
  -732
  -846
  -968
  -1,098
  -1,236
  -1,382
  -1,536
  -1,697
  -1,866
  -2,041
  -2,225
  -2,416
Maintenance CAPEX, $m
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -8
  -9
  -11
  -13
  -15
  -17
  -20
  -22
  -25
  -28
  -31
  -34
  -37
  -41
  -45
  -48
  -52
  -56
New CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
Cash from investing activities, $m
  -1
  -1
  -1
  -2
  -3
  -3
  -5
  -6
  -7
  -9
  -11
  -13
  -16
  -18
  -21
  -23
  -26
  -29
  -33
  -36
  -40
  -43
  -47
  -51
  -55
  -59
  -64
  -68
  -73
  -77
Free cash flow, $m
  -17
  -18
  -20
  -23
  -29
  -37
  -50
  -67
  -90
  -119
  -156
  -200
  -254
  -316
  -387
  -467
  -557
  -656
  -764
  -881
  -1,007
  -1,141
  -1,283
  -1,433
  -1,591
  -1,756
  -1,929
  -2,110
  -2,298
  -2,493
Issuance/(repayment) of debt, $m
  19
  27
  38
  52
  69
  88
  111
  136
  164
  194
  225
  257
  290
  323
  356
  388
  420
  452
  482
  512
  541
  570
  598
  626
  654
  682
  710
  739
  769
  799
Issuance/(repurchase) of shares, $m
  38
  49
  63
  82
  107
  138
  176
  222
  276
  339
  411
  492
  582
  682
  790
  908
  1,034
  1,169
  1,311
  1,462
  1,621
  1,788
  1,962
  2,143
  2,333
  2,530
  2,735
  2,948
  3,169
  3,399
Cash from financing (excl. dividends), $m  
  57
  76
  101
  134
  176
  226
  287
  358
  440
  533
  636
  749
  872
  1,005
  1,146
  1,296
  1,454
  1,621
  1,793
  1,974
  2,162
  2,358
  2,560
  2,769
  2,987
  3,212
  3,445
  3,687
  3,938
  4,198
Total cash flow (excl. dividends), $m
  40
  58
  82
  111
  147
  189
  237
  291
  350
  413
  479
  548
  618
  689
  759
  829
  897
  964
  1,029
  1,093
  1,156
  1,217
  1,277
  1,337
  1,396
  1,456
  1,516
  1,578
  1,640
  1,705
Retained Cash Flow (-), $m
  -38
  -49
  -63
  -82
  -107
  -138
  -176
  -222
  -276
  -339
  -411
  -492
  -582
  -682
  -790
  -908
  -1,034
  -1,169
  -1,311
  -1,462
  -1,621
  -1,788
  -1,962
  -2,143
  -2,333
  -2,530
  -2,735
  -2,948
  -3,169
  -3,399
Prev. year cash balance distribution, $m
  403
  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
  404
  9
  18
  29
  40
  51
  61
  69
  74
  74
  69
  56
  36
  7
  -31
  -79
  -137
  -205
  -282
  -369
  -465
  -571
  -685
  -807
  -936
  -1,074
  -1,219
  -1,370
  -1,529
  -1,695
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
  388
  8
  16
  24
  31
  37
  41
  43
  43
  39
  33
  24
  14
  2
  -9
  -20
  -30
  -38
  -43
  -47
  -48
  -47
  -45
  -41
  -36
  -31
  -26
  -21
  -17
  -13
Current shareholders' claim on cash, %
  74.7
  58.8
  47.9
  40.0
  34.0
  29.3
  25.5
  22.4
  19.7
  17.5
  15.6
  14.0
  12.5
  11.3
  10.2
  9.2
  8.4
  7.6
  6.9
  6.3
  5.7
  5.2
  4.8
  4.4
  4.0
  3.7
  3.4
  3.1
  2.8
  2.6

FINANCIAL RATIOS  of  argenx SE (ARGX)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
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 NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

ARGX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ARGX stock intrinsic value calculation we used $44 million for the last fiscal year's total revenue generated by argenx SE. The default revenue input number comes from 0001 income statement of argenx SE. 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 ARGX stock valuation model: a) initial revenue growth rate of 60% 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 ARGX is calculated based on our internal credit rating of argenx SE, 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 argenx SE.
    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 ARGX stock the variable cost ratio is equal to 115.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $20 million in the base year in the intrinsic value calculation for ARGX 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 5.4% for argenx SE.

Corporate tax rate of 27% is the nominal tax rate for argenx SE. 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 ARGX 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 ARGX are equal to 1.9%.

Life of production assets of 1.6 years is the average useful life of capital assets used in argenx SE 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 ARGX is equal to -56.2%. 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 - $414.082833133 million for argenx SE - 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 35.911 million for argenx SE 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 argenx SE at the current share price and the inputted number of shares is $4.5 billion.

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