Intrinsic value of arGEN-X ADR - ARGX

Previous Close

$92.41

  Intrinsic Value

$9.52

stock screener

  Rating & Target

str. sell

-90%

Previous close

$92.41

 
Intrinsic value

$9.52

 
Up/down potential

-90%

 
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 3.0

 

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
  108
  162
  234
  331
  455
  610
  802
  1,031
  1,303
  1,618
  1,978
  2,384
  2,837
  3,335
  3,880
  4,469
  5,103
  5,779
  6,497
  7,257
  8,056
  8,895
  9,774
  10,691
  11,648
  12,644
  13,681
  14,759
  15,879
Variable operating expenses, $m
  81
  125
  187
  272
  383
  527
  708
  929
  1,195
  1,510
  1,875
  2,292
  2,763
  3,288
  3,866
  4,497
  5,180
  5,914
  6,698
  7,530
  8,410
  9,337
  10,309
  11,327
  12,391
  13,500
  14,654
  15,856
  17,105
  18,403
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
  101
  146
  208
  294
  405
  550
  731
  953
  1,219
  1,535
  1,900
  2,318
  2,790
  3,315
  3,894
  4,525
  5,209
  5,944
  6,728
  7,561
  8,442
  9,369
  10,342
  11,361
  12,425
  13,535
  14,690
  15,893
  17,143
  18,441
Operating income, $m
  -32
  -38
  -47
  -59
  -75
  -95
  -120
  -151
  -188
  -232
  -283
  -340
  -406
  -478
  -558
  -645
  -739
  -841
  -949
  -1,064
  -1,185
  -1,313
  -1,447
  -1,587
  -1,734
  -1,887
  -2,046
  -2,212
  -2,384
  -2,563
EBITDA, $m
  -31
  -38
  -46
  -58
  -74
  -93
  -118
  -148
  -184
  -227
  -276
  -333
  -396
  -467
  -545
  -630
  -722
  -821
  -927
  -1,039
  -1,158
  -1,282
  -1,413
  -1,550
  -1,693
  -1,843
  -1,998
  -2,160
  -2,328
  -2,502
Interest expense (income), $m
  0
  0
  1
  2
  4
  7
  11
  16
  22
  29
  38
  48
  60
  74
  90
  107
  126
  147
  169
  194
  219
  247
  276
  307
  339
  372
  407
  444
  482
  522
  563
Earnings before tax, $m
  -32
  -39
  -49
  -64
  -82
  -106
  -136
  -173
  -217
  -270
  -331
  -401
  -480
  -568
  -665
  -771
  -886
  -1,010
  -1,142
  -1,283
  -1,432
  -1,589
  -1,754
  -1,926
  -2,106
  -2,294
  -2,490
  -2,694
  -2,905
  -3,126
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
  -64
  -82
  -106
  -136
  -173
  -217
  -270
  -331
  -401
  -480
  -568
  -665
  -771
  -886
  -1,010
  -1,142
  -1,283
  -1,432
  -1,589
  -1,754
  -1,926
  -2,106
  -2,294
  -2,490
  -2,694
  -2,905
  -3,126

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
  104
  156
  226
  319
  439
  589
  774
  996
  1,258
  1,562
  1,909
  2,301
  2,738
  3,219
  3,745
  4,314
  4,925
  5,578
  6,272
  7,005
  7,776
  8,586
  9,434
  10,320
  11,243
  12,205
  13,205
  14,246
  15,327
Adjusted assets (=assets-cash), $m
  68
  104
  156
  226
  319
  439
  589
  774
  996
  1,258
  1,562
  1,909
  2,301
  2,738
  3,219
  3,745
  4,314
  4,925
  5,578
  6,272
  7,005
  7,776
  8,586
  9,434
  10,320
  11,243
  12,205
  13,205
  14,246
  15,327
Revenue / Adjusted assets
  1.029
  1.038
  1.038
  1.035
  1.038
  1.036
  1.036
  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
Average production assets, $m
  1
  2
  3
  4
  6
  9
  12
  15
  20
  25
  31
  38
  45
  54
  63
  74
  85
  97
  110
  123
  138
  153
  169
  186
  203
  221
  240
  260
  280
  302
Working capital, $m
  -39
  -61
  -91
  -132
  -186
  -256
  -343
  -451
  -580
  -732
  -909
  -1,112
  -1,340
  -1,594
  -1,874
  -2,180
  -2,512
  -2,868
  -3,248
  -3,652
  -4,078
  -4,528
  -4,999
  -5,493
  -6,008
  -6,546
  -7,106
  -7,689
  -8,294
  -8,924
Total debt, $m
  18
  45
  83
  135
  203
  291
  401
  537
  700
  892
  1,115
  1,370
  1,658
  1,979
  2,332
  2,718
  3,135
  3,584
  4,063
  4,572
  5,110
  5,677
  6,271
  6,893
  7,543
  8,221
  8,927
  9,662
  10,425
  11,219
Total liabilities, $m
  50
  77
  115
  166
  234
  322
  433
  568
  731
  923
  1,146
  1,401
  1,689
  2,010
  2,363
  2,749
  3,166
  3,615
  4,094
  4,603
  5,141
  5,708
  6,302
  6,925
  7,575
  8,252
  8,958
  9,693
  10,456
  11,250
Total equity, $m
  18
  28
  41
  60
  85
  117
  157
  206
  265
  335
  415
  508
  612
  728
  856
  996
  1,148
  1,310
  1,484
  1,668
  1,863
  2,068
  2,284
  2,509
  2,745
  2,991
  3,246
  3,513
  3,789
  4,077
Total liabilities and equity, $m
  68
  105
  156
  226
  319
  439
  590
  774
  996
  1,258
  1,561
  1,909
  2,301
  2,738
  3,219
  3,745
  4,314
  4,925
  5,578
  6,271
  7,004
  7,776
  8,586
  9,434
  10,320
  11,243
  12,204
  13,206
  14,245
  15,327
Debt-to-equity ratio
  1.020
  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
  -64
  -82
  -106
  -136
  -173
  -217
  -270
  -331
  -401
  -480
  -568
  -665
  -771
  -886
  -1,010
  -1,142
  -1,283
  -1,432
  -1,589
  -1,754
  -1,926
  -2,106
  -2,294
  -2,490
  -2,694
  -2,905
  -3,126
Depreciation, amort., depletion, $m
  0
  0
  1
  1
  1
  2
  2
  3
  4
  5
  6
  8
  9
  11
  13
  15
  17
  19
  22
  25
  28
  31
  34
  37
  41
  44
  48
  52
  56
  60
Funds from operations, $m
  -31
  -39
  -49
  -63
  -81
  -104
  -134
  -170
  -213
  -265
  -325
  -393
  -470
  -557
  -652
  -756
  -869
  -991
  -1,120
  -1,258
  -1,404
  -1,558
  -1,720
  -1,889
  -2,066
  -2,250
  -2,442
  -2,642
  -2,849
  -3,065
Change in working capital, $m
  -15
  -21
  -30
  -41
  -54
  -70
  -87
  -107
  -129
  -153
  -177
  -202
  -228
  -254
  -280
  -306
  -331
  -356
  -380
  -404
  -427
  -449
  -472
  -494
  -516
  -538
  -560
  -583
  -606
  -630
Cash from operations, $m
  -17
  -17
  -19
  -22
  -27
  -35
  -46
  -62
  -84
  -112
  -148
  -191
  -242
  -302
  -372
  -450
  -538
  -635
  -740
  -855
  -978
  -1,109
  -1,248
  -1,395
  -1,550
  -1,712
  -1,882
  -2,059
  -2,244
  -2,436
Maintenance CAPEX, $m
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -8
  -9
  -11
  -13
  -15
  -17
  -19
  -22
  -25
  -28
  -31
  -34
  -37
  -41
  -44
  -48
  -52
  -56
New CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
Cash from investing activities, $m
  -1
  -1
  -1
  -2
  -3
  -3
  -5
  -6
  -7
  -9
  -11
  -13
  -16
  -18
  -20
  -23
  -26
  -29
  -32
  -36
  -39
  -43
  -47
  -51
  -54
  -59
  -63
  -68
  -72
  -77
Free cash flow, $m
  -17
  -18
  -20
  -24
  -29
  -38
  -51
  -68
  -92
  -121
  -159
  -204
  -257
  -320
  -392
  -473
  -564
  -664
  -773
  -890
  -1,017
  -1,152
  -1,295
  -1,446
  -1,605
  -1,771
  -1,945
  -2,127
  -2,316
  -2,513
Issuance/(repayment) of debt, $m
  18
  27
  38
  52
  68
  88
  110
  135
  163
  192
  223
  255
  288
  321
  353
  386
  418
  449
  479
  509
  538
  566
  595
  622
  650
  678
  706
  734
  764
  794
Issuance/(repurchase) of shares, $m
  38
  49
  63
  82
  107
  138
  176
  222
  276
  339
  412
  493
  584
  684
  793
  911
  1,037
  1,173
  1,316
  1,468
  1,627
  1,794
  1,969
  2,152
  2,342
  2,540
  2,746
  2,960
  3,182
  3,413
Cash from financing (excl. dividends), $m  
  56
  76
  101
  134
  175
  226
  286
  357
  439
  531
  635
  748
  872
  1,005
  1,146
  1,297
  1,455
  1,622
  1,795
  1,977
  2,165
  2,360
  2,564
  2,774
  2,992
  3,218
  3,452
  3,694
  3,946
  4,207
Total cash flow (excl. dividends), $m
  39
  58
  81
  110
  146
  187
  235
  289
  348
  410
  476
  545
  614
  684
  754
  823
  891
  958
  1,023
  1,086
  1,148
  1,209
  1,269
  1,328
  1,387
  1,447
  1,506
  1,567
  1,630
  1,694
Retained Cash Flow (-), $m
  -38
  -49
  -63
  -82
  -107
  -138
  -176
  -222
  -276
  -339
  -412
  -493
  -584
  -684
  -793
  -911
  -1,037
  -1,173
  -1,316
  -1,468
  -1,627
  -1,794
  -1,969
  -2,152
  -2,342
  -2,540
  -2,746
  -2,960
  -3,182
  -3,413
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
  28
  39
  50
  59
  67
  71
  71
  65
  51
  30
  0
  -39
  -88
  -146
  -215
  -293
  -381
  -479
  -585
  -700
  -823
  -955
  -1,093
  -1,239
  -1,392
  -1,552
  -1,719
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
  387
  8
  15
  23
  30
  36
  40
  42
  41
  37
  31
  22
  12
  0
  -11
  -22
  -32
  -40
  -45
  -48
  -50
  -49
  -46
  -42
  -37
  -32
  -27
  -22
  -17
  -13
Current shareholders' claim on cash, %
  68.2
  49.6
  37.7
  29.6
  23.8
  19.4
  16.1
  13.4
  11.3
  9.6
  8.2
  7.1
  6.1
  5.3
  4.6
  4.0
  3.5
  3.1
  2.7
  2.4
  2.1
  1.8
  1.6
  1.4
  1.3
  1.1
  1.0
  0.9
  0.8
  0.7

FINANCIAL RATIOS  of  arGEN-X ADR (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 $43.7154861945 million for the last fiscal year's total revenue generated by arGEN-X ADR. The default revenue input number comes from 0001 income statement of arGEN-X 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 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 arGEN-X 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 arGEN-X 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 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 arGEN-X ADR.

Corporate tax rate of 27% is the nominal tax rate for arGEN-X 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 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 arGEN-X 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 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 arGEN-X 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 32.451 million for arGEN-X 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 arGEN-X ADR at the current share price and the inputted number of shares is $3.0 billion.

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COMPANY NEWS

▶ Is argenx SEs (EBR:ARGX) Liquidity Good Enough?   [Oct-25-18 02:04AM  Simply Wall St.]
▶ argenx selected for BEL 20 Index   [Jun-05-18 04:01PM  GlobeNewswire]
▶ Is argenx SE (EBR:ARGX) A Financially Strong Company?   [May-28-18 05:51AM  Simply Wall St.]
▶ argenx to Present at Upcoming Investor Conferences   [May-17-18 01:01AM  GlobeNewswire]
▶ Five Stocks To Buy According To Top Biotech-Focused Funds   [May-01-18 10:27AM  Insider Monkey]
▶ argenx appoints Keith Woods as Chief Operating Officer   [Apr-09-18 01:01AM  GlobeNewswire]
▶ 3 Biotech Stocks Hitting New Highs   [Apr-02-18 09:22AM  Investopedia]
▶ argenx SEs (EBR:ARGX) Profit Outlook   [Mar-12-18 02:04AM  Simply Wall St.]
▶ argenx to Present at Upcoming Investor Conferences   [Nov-13-17 01:02AM  GlobeNewswire]

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