Intrinsic value of Natus Medical Incorporated - BABY

Previous Close

$27.02

  Intrinsic Value

$4.23

stock screener

  Rating & Target

str. sell

-84%

Previous close

$27.02

 
Intrinsic value

$4.23

 
Up/down potential

-84%

 
Rating

str. sell

We calculate the intrinsic value of BABY 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 0.9

 

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, %
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.17
  5.15
  5.13
  5.12
  5.11
Revenue, $m
  570
  610
  652
  695
  741
  788
  837
  888
  941
  996
  1,054
  1,115
  1,178
  1,243
  1,312
  1,384
  1,459
  1,538
  1,620
  1,706
  1,796
  1,890
  1,989
  2,092
  2,201
  2,315
  2,434
  2,559
  2,690
  2,827
Variable operating expenses, $m
  558
  595
  634
  675
  717
  761
  806
  853
  903
  954
  979
  1,035
  1,094
  1,155
  1,219
  1,286
  1,355
  1,428
  1,505
  1,585
  1,668
  1,756
  1,848
  1,944
  2,044
  2,150
  2,261
  2,377
  2,499
  2,626
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
  558
  595
  634
  675
  717
  761
  806
  853
  903
  954
  979
  1,035
  1,094
  1,155
  1,219
  1,286
  1,355
  1,428
  1,505
  1,585
  1,668
  1,756
  1,848
  1,944
  2,044
  2,150
  2,261
  2,377
  2,499
  2,626
Operating income, $m
  12
  15
  18
  21
  24
  27
  31
  34
  38
  42
  75
  79
  84
  88
  93
  98
  104
  109
  115
  121
  128
  134
  141
  149
  156
  164
  173
  182
  191
  201
EBITDA, $m
  60
  64
  68
  73
  78
  83
  88
  93
  99
  105
  111
  117
  124
  131
  138
  145
  153
  162
  170
  179
  189
  199
  209
  220
  231
  243
  256
  269
  283
  297
Interest expense (income), $m
  0
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
  21
  23
  25
  26
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  55
  58
Earnings before tax, $m
  6
  8
  10
  12
  14
  16
  19
  21
  24
  26
  58
  61
  64
  67
  70
  74
  77
  81
  85
  89
  93
  98
  102
  107
  113
  118
  124
  130
  136
  143
Tax expense, $m
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  38
Net income, $m
  4
  6
  7
  9
  10
  12
  14
  16
  17
  19
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
  86
  90
  95
  99
  104

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
  685
  733
  784
  836
  890
  947
  1,006
  1,067
  1,131
  1,198
  1,267
  1,340
  1,415
  1,494
  1,577
  1,663
  1,754
  1,848
  1,947
  2,050
  2,158
  2,272
  2,390
  2,515
  2,645
  2,782
  2,925
  3,075
  3,233
  3,398
Adjusted assets (=assets-cash), $m
  685
  733
  784
  836
  890
  947
  1,006
  1,067
  1,131
  1,198
  1,267
  1,340
  1,415
  1,494
  1,577
  1,663
  1,754
  1,848
  1,947
  2,050
  2,158
  2,272
  2,390
  2,515
  2,645
  2,782
  2,925
  3,075
  3,233
  3,398
Revenue / Adjusted assets
  0.832
  0.832
  0.832
  0.831
  0.833
  0.832
  0.832
  0.832
  0.832
  0.831
  0.832
  0.832
  0.833
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
  0.832
Average production assets, $m
  194
  207
  222
  236
  252
  268
  285
  302
  320
  339
  358
  379
  400
  423
  446
  471
  496
  523
  551
  580
  611
  643
  676
  711
  748
  787
  827
  870
  914
  961
Working capital, $m
  141
  151
  161
  172
  183
  195
  207
  219
  232
  246
  260
  275
  291
  307
  324
  342
  360
  380
  400
  421
  444
  467
  491
  517
  544
  572
  601
  632
  664
  698
Total debt, $m
  122
  140
  159
  179
  200
  221
  243
  266
  290
  315
  341
  369
  397
  427
  458
  490
  524
  560
  597
  636
  676
  719
  764
  810
  859
  911
  965
  1,021
  1,080
  1,142
Total liabilities, $m
  257
  276
  295
  314
  335
  356
  378
  401
  425
  450
  476
  504
  532
  562
  593
  625
  659
  695
  732
  771
  812
  854
  899
  946
  995
  1,046
  1,100
  1,156
  1,216
  1,278
Total equity, $m
  427
  458
  489
  522
  556
  591
  628
  666
  706
  747
  791
  836
  883
  933
  984
  1,038
  1,094
  1,153
  1,215
  1,279
  1,347
  1,418
  1,492
  1,569
  1,651
  1,736
  1,825
  1,919
  2,017
  2,120
Total liabilities and equity, $m
  684
  734
  784
  836
  891
  947
  1,006
  1,067
  1,131
  1,197
  1,267
  1,340
  1,415
  1,495
  1,577
  1,663
  1,753
  1,848
  1,947
  2,050
  2,159
  2,272
  2,391
  2,515
  2,646
  2,782
  2,925
  3,075
  3,233
  3,398
Debt-to-equity ratio
  0.290
  0.310
  0.330
  0.340
  0.360
  0.370
  0.390
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.470
  0.480
  0.490
  0.490
  0.500
  0.500
  0.510
  0.510
  0.520
  0.520
  0.520
  0.530
  0.530
  0.540
  0.540
Adjusted equity ratio
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  6
  7
  9
  10
  12
  14
  16
  17
  19
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
  86
  90
  95
  99
  104
Depreciation, amort., depletion, $m
  48
  49
  51
  52
  54
  55
  57
  59
  61
  63
  36
  38
  40
  42
  45
  47
  50
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91
  96
Funds from operations, $m
  53
  55
  58
  61
  64
  68
  71
  74
  78
  82
  78
  82
  87
  91
  96
  101
  106
  111
  117
  123
  129
  136
  142
  150
  157
  165
  173
  182
  191
  200
Change in working capital, $m
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  26
  27
  28
  29
  31
  32
  34
Cash from operations, $m
  43
  45
  48
  50
  53
  56
  59
  62
  65
  68
  64
  67
  71
  75
  79
  83
  87
  92
  97
  102
  107
  112
  118
  124
  130
  137
  144
  151
  158
  166
Maintenance CAPEX, $m
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -87
  -91
New CAPEX, $m
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -42
  -45
  -47
Cash from investing activities, $m
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -45
  -48
  -51
  -54
  -57
  -59
  -62
  -65
  -69
  -73
  -77
  -80
  -84
  -89
  -93
  -98
  -103
  -108
  -114
  -120
  -125
  -132
  -138
Free cash flow, $m
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
Issuance/(repayment) of debt, $m
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
Issuance/(repurchase) of shares, $m
  24
  24
  24
  24
  24
  23
  23
  23
  23
  22
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  42
  42
  43
  44
  44
  44
  45
  46
  47
  47
  27
  28
  29
  30
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
Total cash flow (excl. dividends), $m
  54
  55
  56
  57
  58
  59
  61
  62
  63
  65
  38
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
  86
  90
Retained Cash Flow (-), $m
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -52
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -94
  -98
  -103
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
  25
  25
  24
  24
  24
  24
  24
  24
  23
  23
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
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
  24
  23
  21
  20
  19
  17
  16
  15
  13
  12
  -3
  -3
  -2
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  97.4
  95.0
  92.9
  91.0
  89.2
  87.6
  86.1
  84.8
  83.6
  82.4
  82.4
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3
  82.3

Natus Medical Incorporated is a provider of newborn care and neurology healthcare products and services used for the screening, diagnosis, detection, treatment, monitoring and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, sleep disorders, neuromuscular diseases and balance and mobility disorders. The Company's product offerings include computerized neurodiagnostic systems for audiology, neurology, polysomnography, and neonatology, as well as newborn care products, such as hearing screening systems, phototherapy devices for the treatment of newborn jaundice, head-cooling products for the treatment of brain injury in newborns, incubators to control the newborn's environment, and software systems for managing and tracking disorders and diseases for public health laboratories. The Company is organized into three strategic business units: Neurology, Newborn Care and Otometrics.

FINANCIAL RATIOS  of  Natus Medical Incorporated (BABY)

Valuation Ratios
P/E Ratio 20.7
Price to Sales 2.3
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow 12.7
Growth Rates
Sales Growth Rate 1.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -40%
Cap. Spend. - 3 Yr. Gr. Rate -5.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 33.6%
Total Debt to Equity 33.6%
Interest Coverage 0
Management Effectiveness
Return On Assets 7.6%
Ret/ On Assets - 3 Yr. Avg. 7.8%
Return On Total Capital 9.1%
Ret/ On T. Cap. - 3 Yr. Avg. 9.5%
Return On Equity 10.6%
Return On Equity - 3 Yr. Avg. 10.2%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 61.5%
Gross Margin - 3 Yr. Avg. 60.8%
EBITDA Margin 18.8%
EBITDA Margin - 3 Yr. Avg. 17.7%
Operating Margin 14.4%
Oper. Margin - 3 Yr. Avg. 13.9%
Pre-Tax Margin 14.4%
Pre-Tax Margin - 3 Yr. Avg. 13.7%
Net Profit Margin 11.3%
Net Profit Margin - 3 Yr. Avg. 10.1%
Effective Tax Rate 21.8%
Eff/ Tax Rate - 3 Yr. Avg. 26.4%
Payout Ratio 0%

BABY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BABY stock intrinsic value calculation we used $531 million for the last fiscal year's total revenue generated by Natus Medical Incorporated. The default revenue input number comes from 0001 income statement of Natus Medical Incorporated. 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 BABY stock valuation model: a) initial revenue growth rate of 7.3% 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 BABY is calculated based on our internal credit rating of Natus Medical Incorporated, 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 Natus Medical Incorporated.
    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 BABY stock the variable cost ratio is equal to 98.3%.

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 BABY 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 Natus Medical Incorporated.

Corporate tax rate of 27% is the nominal tax rate for Natus Medical Incorporated. 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 BABY 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 BABY are equal to 34%.

Life of production assets of 10 years is the average useful life of capital assets used in Natus Medical Incorporated 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 BABY is equal to 24.7%. 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 - $398.444 million for Natus Medical Incorporated - 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 33.777 million for Natus Medical Incorporated 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 Natus Medical Incorporated at the current share price and the inputted number of shares is $0.9 billion.

RELATED COMPANIES Price Int.Val. Rating
NURO NeuroMetrix, I 1.06 0.20  str.sell
CASM CAS Medical Sy 2.46 1.45  sell
MASI Masimo Corpora 132.26 57.20  str.sell
HOLX Hologic, Inc. 47.18 28.02  sell
BDX Becton, Dickin 244.67 396.45  str.buy
PHG Koninklijke Ph 40.82 33.28  hold

CONTACT US       ASSET ALLOCATION

About X-FIN       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2019. All rigths reserved.