Intrinsic value of AtriCure, Inc. - ATRC

Previous Close

$31.15

  Intrinsic Value

$5.13

stock screener

  Rating & Target

str. sell

-84%

Previous close

$31.15

 
Intrinsic value

$5.13

 
Up/down potential

-84%

 
Rating

str. sell

We calculate the intrinsic value of ATRC 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 1.2

 

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, %
  14.80
  13.82
  12.94
  12.14
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
  6.07
  5.97
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
Revenue, $m
  232
  264
  298
  334
  373
  413
  455
  499
  545
  593
  643
  695
  749
  805
  863
  923
  986
  1,052
  1,120
  1,191
  1,264
  1,341
  1,421
  1,505
  1,592
  1,682
  1,777
  1,876
  1,980
  2,088
Variable operating expenses, $m
  161
  183
  207
  232
  258
  285
  314
  344
  376
  409
  440
  476
  512
  551
  591
  632
  675
  720
  767
  815
  866
  918
  973
  1,030
  1,090
  1,152
  1,217
  1,284
  1,355
  1,429
Fixed operating expenses, $m
  82
  84
  85
  87
  89
  91
  93
  95
  97
  99
  102
  104
  106
  108
  111
  113
  116
  118
  121
  124
  126
  129
  132
  135
  138
  141
  144
  147
  150
  154
Total operating expenses, $m
  243
  267
  292
  319
  347
  376
  407
  439
  473
  508
  542
  580
  618
  659
  702
  745
  791
  838
  888
  939
  992
  1,047
  1,105
  1,165
  1,228
  1,293
  1,361
  1,431
  1,505
  1,583
Operating income, $m
  -11
  -3
  6
  15
  26
  36
  48
  59
  72
  85
  101
  115
  130
  145
  161
  178
  195
  213
  232
  252
  272
  294
  316
  340
  364
  390
  416
  445
  474
  505
EBITDA, $m
  -3
  6
  16
  27
  38
  49
  62
  75
  88
  102
  117
  133
  149
  165
  183
  201
  220
  240
  260
  282
  304
  327
  352
  377
  404
  432
  461
  491
  523
  557
Interest expense (income), $m
  2
  5
  7
  9
  11
  13
  15
  17
  20
  22
  25
  28
  31
  34
  37
  40
  44
  47
  51
  54
  58
  63
  67
  71
  76
  81
  86
  91
  96
  102
  108
Earnings before tax, $m
  -17
  -10
  -3
  5
  13
  21
  30
  40
  49
  60
  73
  84
  96
  108
  121
  134
  148
  163
  178
  193
  210
  227
  245
  264
  283
  304
  325
  348
  372
  396
Tax expense, $m
  0
  0
  0
  1
  3
  6
  8
  11
  13
  16
  20
  23
  26
  29
  33
  36
  40
  44
  48
  52
  57
  61
  66
  71
  77
  82
  88
  94
  100
  107
Net income, $m
  -17
  -10
  -3
  3
  9
  15
  22
  29
  36
  44
  53
  62
  70
  79
  88
  98
  108
  119
  130
  141
  153
  166
  179
  193
  207
  222
  238
  254
  271
  289

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
  313
  356
  402
  451
  503
  557
  614
  673
  735
  800
  867
  937
  1,010
  1,086
  1,164
  1,246
  1,331
  1,419
  1,511
  1,607
  1,706
  1,810
  1,918
  2,031
  2,148
  2,270
  2,398
  2,532
  2,671
  2,817
Adjusted assets (=assets-cash), $m
  313
  356
  402
  451
  503
  557
  614
  673
  735
  800
  867
  937
  1,010
  1,086
  1,164
  1,246
  1,331
  1,419
  1,511
  1,607
  1,706
  1,810
  1,918
  2,031
  2,148
  2,270
  2,398
  2,532
  2,671
  2,817
Revenue / Adjusted assets
  0.741
  0.742
  0.741
  0.741
  0.742
  0.741
  0.741
  0.741
  0.741
  0.741
  0.742
  0.742
  0.742
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
  0.741
Average production assets, $m
  121
  138
  156
  175
  195
  216
  238
  261
  285
  310
  336
  363
  391
  421
  451
  483
  516
  550
  586
  623
  661
  701
  743
  787
  832
  880
  929
  981
  1,035
  1,092
Working capital, $m
  12
  13
  15
  17
  19
  21
  23
  25
  27
  30
  32
  35
  37
  40
  43
  46
  49
  53
  56
  60
  63
  67
  71
  75
  80
  84
  89
  94
  99
  104
Total debt, $m
  64
  81
  99
  118
  138
  160
  182
  206
  230
  256
  282
  310
  338
  368
  399
  431
  465
  500
  536
  573
  613
  653
  696
  740
  787
  835
  885
  938
  993
  1,050
Total liabilities, $m
  123
  140
  159
  178
  198
  219
  242
  265
  290
  315
  342
  369
  398
  428
  459
  491
  524
  559
  595
  633
  672
  713
  756
  800
  846
  895
  945
  998
  1,053
  1,110
Total equity, $m
  190
  216
  244
  273
  305
  337
  372
  408
  446
  485
  526
  568
  612
  658
  706
  755
  807
  860
  916
  974
  1,034
  1,097
  1,162
  1,230
  1,302
  1,376
  1,453
  1,534
  1,619
  1,707
Total liabilities and equity, $m
  313
  356
  403
  451
  503
  556
  614
  673
  736
  800
  868
  937
  1,010
  1,086
  1,165
  1,246
  1,331
  1,419
  1,511
  1,607
  1,706
  1,810
  1,918
  2,030
  2,148
  2,271
  2,398
  2,532
  2,672
  2,817
Debt-to-equity ratio
  0.340
  0.370
  0.410
  0.430
  0.450
  0.470
  0.490
  0.500
  0.520
  0.530
  0.540
  0.550
  0.550
  0.560
  0.570
  0.570
  0.580
  0.580
  0.590
  0.590
  0.590
  0.600
  0.600
  0.600
  0.600
  0.610
  0.610
  0.610
  0.610
  0.620
Adjusted equity ratio
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606
  0.606

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -17
  -10
  -3
  3
  9
  15
  22
  29
  36
  44
  53
  62
  70
  79
  88
  98
  108
  119
  130
  141
  153
  166
  179
  193
  207
  222
  238
  254
  271
  289
Depreciation, amort., depletion, $m
  9
  9
  10
  11
  12
  13
  14
  15
  16
  18
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  50
  52
Funds from operations, $m
  -8
  -1
  7
  14
  21
  29
  36
  44
  52
  61
  70
  79
  89
  99
  110
  121
  133
  145
  158
  171
  185
  199
  214
  230
  247
  264
  282
  301
  321
  342
Change in working capital, $m
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
Cash from operations, $m
  -10
  -2
  6
  13
  19
  26
  34
  42
  50
  59
  67
  76
  86
  96
  107
  118
  130
  142
  154
  167
  181
  195
  210
  226
  242
  259
  277
  296
  316
  336
Maintenance CAPEX, $m
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -14
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -50
New CAPEX, $m
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -50
  -52
  -54
  -57
Cash from investing activities, $m
  -21
  -23
  -25
  -26
  -28
  -30
  -32
  -34
  -36
  -39
  -41
  -43
  -45
  -48
  -50
  -54
  -56
  -59
  -62
  -65
  -69
  -72
  -76
  -80
  -83
  -87
  -92
  -96
  -101
  -107
Free cash flow, $m
  -30
  -25
  -19
  -14
  -9
  -4
  2
  7
  14
  20
  26
  33
  41
  48
  56
  65
  74
  83
  92
  102
  113
  124
  135
  147
  159
  172
  186
  200
  215
  230
Issuance/(repayment) of debt, $m
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
  53
  55
  57
Issuance/(repurchase) of shares, $m
  41
  36
  31
  26
  22
  17
  12
  7
  2
  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  
  57
  53
  49
  45
  42
  38
  34
  30
  26
  25
  27
  28
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
  53
  55
  57
Total cash flow (excl. dividends), $m
  27
  28
  30
  32
  33
  35
  36
  38
  40
  46
  53
  61
  69
  78
  87
  97
  107
  118
  129
  140
  152
  165
  178
  191
  205
  220
  236
  252
  270
  288
Retained Cash Flow (-), $m
  -41
  -36
  -31
  -30
  -31
  -33
  -34
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -51
  -54
  -56
  -58
  -60
  -63
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -88
Prev. year cash balance distribution, $m
  84
  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
  70
  -8
  -1
  2
  2
  2
  2
  2
  2
  6
  12
  18
  25
  32
  40
  48
  56
  64
  73
  82
  92
  102
  112
  123
  134
  146
  159
  172
  185
  199
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
  67
  -7
  -1
  2
  2
  1
  1
  1
  1
  3
  6
  8
  10
  11
  12
  12
  12
  12
  11
  10
  9
  8
  7
  6
  5
  4
  3
  3
  2
  2
Current shareholders' claim on cash, %
  95.1
  91.5
  88.8
  86.9
  85.5
  84.5
  83.8
  83.5
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4
  83.4

AtriCure, Inc. is an atrial fibrillation (Afib) solutions company. The Company develops, manufactures, and sells devices designed primarily for the surgical ablation of cardiac tissue and systems designed for the exclusion of the left atrial appendage. It has various product lines for the ablation of cardiac tissue, including its Isolator Synergy Ablation System, for the treatment of persistent and longstanding persistent forms of Afib in patients undergoing certain open concomitant procedures. It has two primary product lines for cardiac tissue ablation, which include Radio Frequency Ablation Devices and cryoICE Cryoablation System, and a product line for left atrial appendage exclusion. The Company also sells Lumitip dissectors and the Estech line of reusable cardiac surgery (valve) instruments. Its cryoICE cryosurgery product line offers various cryoablation devices. Its AtriClip Left Atrial Appendage Exclusion System is designed to occlude the heart's left atrial appendage (LAA).

FINANCIAL RATIOS  of  AtriCure, Inc. (ATRC)

Valuation Ratios
P/E Ratio -31.5
Price to Sales 6.7
Price to Book 6.2
Price to Tangible Book
Price to Cash Flow -69.2
Price to Free Cash Flow -45.2
Growth Rates
Sales Growth Rate 19.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -38.5%
Cap. Spend. - 3 Yr. Gr. Rate 21.7%
Financial Strength
Quick Ratio 22
Current Ratio 0.1
LT Debt to Equity 22%
Total Debt to Equity 23.2%
Interest Coverage -16
Management Effectiveness
Return On Assets -11.3%
Ret/ On Assets - 3 Yr. Avg. -11.9%
Return On Total Capital -16.2%
Ret/ On T. Cap. - 3 Yr. Avg. -15.7%
Return On Equity -18.6%
Return On Equity - 3 Yr. Avg. -17%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 71.6%
Gross Margin - 3 Yr. Avg. 71.4%
EBITDA Margin -13.5%
EBITDA Margin - 3 Yr. Avg. -13.6%
Operating Margin -20%
Oper. Margin - 3 Yr. Avg. -18.6%
Pre-Tax Margin -21.3%
Pre-Tax Margin - 3 Yr. Avg. -19%
Net Profit Margin -21.3%
Net Profit Margin - 3 Yr. Avg. -19%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

ATRC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATRC stock intrinsic value calculation we used $202 million for the last fiscal year's total revenue generated by AtriCure, Inc.. The default revenue input number comes from 0001 income statement of AtriCure, Inc.. 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 ATRC stock valuation model: a) initial revenue growth rate of 14.8% 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 ATRC is calculated based on our internal credit rating of AtriCure, Inc., 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 AtriCure, Inc..
    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 ATRC stock the variable cost ratio is equal to 69.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $80 million in the base year in the intrinsic value calculation for ATRC 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 10.9% for AtriCure, Inc..

Corporate tax rate of 27% is the nominal tax rate for AtriCure, Inc.. 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 ATRC 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 ATRC are equal to 52.3%.

Life of production assets of 20.9 years is the average useful life of capital assets used in AtriCure, Inc. 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 ATRC is equal to 5%. 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 - $249.381 million for AtriCure, Inc. - 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 38.567 million for AtriCure, Inc. 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 AtriCure, Inc. at the current share price and the inputted number of shares is $1.2 billion.

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