Intrinsic value of Bioanalytical Systems, Inc. - BASI

Previous Close

$1.89

  Intrinsic Value

$10.28

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  Rating & Target

str. buy

+444%

Previous close

$1.89

 
Intrinsic value

$10.28

 
Up/down potential

+444%

 
Rating

str. buy

We calculate the intrinsic value of BASI 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 0.0

 

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
  42
  64
  96
  139
  197
  271
  363
  477
  613
  775
  962
  1,176
  1,418
  1,687
  1,984
  2,308
  2,658
  3,035
  3,437
  3,864
  4,316
  4,791
  5,291
  5,813
  6,359
  6,928
  7,520
  8,137
  8,778
  9,444
Variable operating expenses, $m
  39
  59
  88
  127
  178
  244
  327
  429
  552
  696
  863
  1,055
  1,271
  1,513
  1,779
  2,069
  2,383
  2,721
  3,082
  3,465
  3,870
  4,296
  4,744
  5,212
  5,701
  6,211
  6,743
  7,296
  7,870
  8,468
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
  39
  59
  88
  127
  178
  244
  327
  429
  552
  696
  863
  1,055
  1,271
  1,513
  1,779
  2,069
  2,383
  2,721
  3,082
  3,465
  3,870
  4,296
  4,744
  5,212
  5,701
  6,211
  6,743
  7,296
  7,870
  8,468
Operating income, $m
  3
  5
  8
  13
  19
  26
  36
  48
  62
  78
  99
  122
  147
  174
  205
  239
  275
  314
  355
  400
  446
  495
  547
  601
  657
  716
  777
  841
  907
  976
EBITDA, $m
  7
  11
  16
  24
  33
  46
  62
  81
  104
  131
  163
  200
  241
  286
  336
  391
  451
  515
  583
  655
  732
  813
  897
  986
  1,079
  1,175
  1,276
  1,380
  1,489
  1,602
Interest expense (income), $m
  0
  1
  1
  2
  3
  5
  8
  11
  15
  20
  25
  32
  40
  49
  59
  71
  83
  97
  112
  128
  145
  163
  182
  202
  223
  245
  268
  293
  318
  344
  371
Earnings before tax, $m
  2
  4
  6
  9
  13
  19
  25
  33
  42
  53
  67
  81
  97
  115
  134
  155
  178
  202
  228
  255
  283
  313
  345
  378
  412
  448
  485
  524
  564
  606
Tax expense, $m
  1
  1
  2
  2
  4
  5
  7
  9
  11
  14
  18
  22
  26
  31
  36
  42
  48
  55
  61
  69
  76
  85
  93
  102
  111
  121
  131
  141
  152
  163
Net income, $m
  2
  3
  4
  7
  10
  14
  18
  24
  31
  39
  49
  59
  71
  84
  98
  113
  130
  147
  166
  186
  207
  229
  252
  276
  301
  327
  354
  382
  412
  442

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
  50
  77
  116
  168
  236
  325
  436
  573
  737
  931
  1,157
  1,414
  1,704
  2,028
  2,384
  2,774
  3,195
  3,648
  4,131
  4,645
  5,187
  5,759
  6,359
  6,987
  7,643
  8,327
  9,039
  9,780
  10,550
  11,351
Adjusted assets (=assets-cash), $m
  50
  77
  116
  168
  236
  325
  436
  573
  737
  931
  1,157
  1,414
  1,704
  2,028
  2,384
  2,774
  3,195
  3,648
  4,131
  4,645
  5,187
  5,759
  6,359
  6,987
  7,643
  8,327
  9,039
  9,780
  10,550
  11,351
Revenue / Adjusted assets
  0.840
  0.831
  0.828
  0.827
  0.835
  0.834
  0.833
  0.832
  0.832
  0.832
  0.831
  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
  0.832
  0.832
Average production assets, $m
  28
  43
  64
  93
  132
  181
  243
  319
  410
  518
  644
  787
  949
  1,129
  1,327
  1,544
  1,778
  2,030
  2,299
  2,585
  2,887
  3,205
  3,539
  3,889
  4,254
  4,635
  5,031
  5,443
  5,872
  6,318
Working capital, $m
  -6
  -9
  -13
  -19
  -27
  -37
  -49
  -64
  -83
  -105
  -130
  -159
  -191
  -228
  -268
  -312
  -359
  -410
  -464
  -522
  -583
  -647
  -714
  -785
  -858
  -935
  -1,015
  -1,098
  -1,185
  -1,275
Total debt, $m
  22
  40
  65
  98
  143
  201
  274
  363
  470
  596
  743
  911
  1,100
  1,311
  1,544
  1,798
  2,072
  2,367
  2,683
  3,017
  3,371
  3,744
  4,135
  4,545
  4,972
  5,418
  5,882
  6,366
  6,868
  7,390
Total liabilities, $m
  33
  50
  75
  109
  154
  212
  285
  374
  481
  607
  754
  922
  1,111
  1,322
  1,555
  1,808
  2,083
  2,378
  2,694
  3,028
  3,382
  3,755
  4,146
  4,555
  4,983
  5,429
  5,893
  6,376
  6,879
  7,401
Total equity, $m
  17
  27
  40
  58
  82
  113
  152
  199
  257
  324
  402
  492
  593
  706
  830
  965
  1,112
  1,269
  1,438
  1,616
  1,805
  2,004
  2,213
  2,431
  2,660
  2,898
  3,145
  3,403
  3,671
  3,950
Total liabilities and equity, $m
  50
  77
  115
  167
  236
  325
  437
  573
  738
  931
  1,156
  1,414
  1,704
  2,028
  2,385
  2,773
  3,195
  3,647
  4,132
  4,644
  5,187
  5,759
  6,359
  6,986
  7,643
  8,327
  9,038
  9,779
  10,550
  11,351
Debt-to-equity ratio
  1.250
  1.470
  1.600
  1.690
  1.740
  1.780
  1.800
  1.820
  1.830
  1.840
  1.850
  1.850
  1.860
  1.860
  1.860
  1.860
  1.860
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
Adjusted equity ratio
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348
  0.348

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2
  3
  4
  7
  10
  14
  18
  24
  31
  39
  49
  59
  71
  84
  98
  113
  130
  147
  166
  186
  207
  229
  252
  276
  301
  327
  354
  382
  412
  442
Depreciation, amort., depletion, $m
  4
  6
  8
  11
  15
  20
  26
  33
  42
  53
  64
  78
  94
  112
  131
  153
  176
  201
  228
  256
  286
  317
  350
  385
  421
  459
  498
  539
  581
  626
Funds from operations, $m
  6
  9
  13
  18
  24
  33
  44
  57
  73
  92
  113
  137
  165
  196
  229
  266
  306
  348
  394
  442
  493
  546
  602
  661
  722
  786
  852
  921
  993
  1,068
Change in working capital, $m
  -2
  -3
  -4
  -6
  -8
  -10
  -12
  -15
  -18
  -22
  -25
  -29
  -33
  -36
  -40
  -44
  -47
  -51
  -54
  -58
  -61
  -64
  -67
  -71
  -74
  -77
  -80
  -83
  -87
  -90
Cash from operations, $m
  8
  12
  17
  24
  32
  43
  56
  73
  92
  114
  138
  166
  198
  232
  269
  310
  353
  399
  448
  500
  554
  610
  670
  731
  796
  863
  932
  1,004
  1,079
  1,158
Maintenance CAPEX, $m
  -2
  -3
  -4
  -6
  -9
  -13
  -18
  -24
  -32
  -41
  -51
  -64
  -78
  -94
  -112
  -131
  -153
  -176
  -201
  -228
  -256
  -286
  -317
  -350
  -385
  -421
  -459
  -498
  -539
  -581
New CAPEX, $m
  -10
  -15
  -21
  -29
  -38
  -49
  -62
  -76
  -91
  -108
  -125
  -143
  -162
  -180
  -198
  -217
  -235
  -252
  -269
  -286
  -302
  -318
  -334
  -350
  -365
  -381
  -396
  -412
  -429
  -446
Cash from investing activities, $m
  -12
  -18
  -25
  -35
  -47
  -62
  -80
  -100
  -123
  -149
  -176
  -207
  -240
  -274
  -310
  -348
  -388
  -428
  -470
  -514
  -558
  -604
  -651
  -700
  -750
  -802
  -855
  -910
  -968
  -1,027
Free cash flow, $m
  -4
  -6
  -9
  -12
  -15
  -19
  -23
  -28
  -31
  -35
  -39
  -41
  -42
  -42
  -41
  -38
  -34
  -29
  -22
  -14
  -4
  6
  18
  31
  46
  61
  77
  94
  112
  130
Issuance/(repayment) of debt, $m
  12
  18
  25
  34
  45
  58
  73
  89
  107
  126
  147
  168
  189
  211
  232
  254
  275
  295
  315
  335
  354
  373
  391
  409
  428
  446
  464
  483
  502
  522
Issuance/(repurchase) of shares, $m
  5
  7
  9
  11
  14
  17
  20
  24
  26
  29
  29
  30
  30
  29
  26
  22
  17
  10
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  17
  25
  34
  45
  59
  75
  93
  113
  133
  155
  176
  198
  219
  240
  258
  276
  292
  305
  317
  335
  354
  373
  391
  409
  428
  446
  464
  483
  502
  522
Total cash flow (excl. dividends), $m
  13
  18
  25
  34
  44
  56
  70
  85
  102
  120
  138
  157
  177
  198
  218
  238
  257
  277
  295
  321
  349
  379
  409
  441
  473
  507
  541
  577
  614
  652
Retained Cash Flow (-), $m
  -7
  -9
  -13
  -18
  -24
  -31
  -39
  -48
  -57
  -68
  -78
  -90
  -101
  -113
  -124
  -135
  -147
  -158
  -168
  -179
  -189
  -199
  -209
  -219
  -228
  -238
  -248
  -258
  -268
  -279
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
  7
  9
  12
  15
  20
  25
  31
  38
  45
  53
  59
  68
  76
  85
  94
  102
  111
  119
  127
  142
  161
  180
  201
  222
  245
  269
  293
  319
  346
  374
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  6
  8
  10
  12
  14
  16
  18
  20
  21
  22
  22
  22
  21
  20
  18
  17
  15
  13
  11
  9
  8
  7
  5
  4
  3
  3
  2
  1
  1
  1
Current shareholders' claim on cash, %
  79.6
  65.4
  55.2
  47.7
  41.9
  37.5
  34.1
  31.3
  29.2
  27.5
  26.1
  25.1
  24.3
  23.6
  23.1
  22.8
  22.6
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5
  22.5

Bioanalytical systems, Inc. is an international contract research company providing drug discovery and development services and analytical instruments. The Company operates in two segments: contract research services and research products. The contract research services segment provides research and development support on a contract basis to pharmaceutical companies. The research products segment provides liquid chromatography, electrochemical and physiological monitoring products to pharmaceutical companies, universities, government research centers, and medical research institutions. The Company supports the preclinical and clinical development needs of researchers and clinicians for small molecule and large biomolecule drug candidates. The contract research services segment provides screening and pharmacological testing, preclinical safety testing, formulation development, regulatory compliance and quality control testing.

FINANCIAL RATIOS  of  Bioanalytical Systems, Inc. (BASI)

Valuation Ratios
P/E Ratio 15.6
Price to Sales 0.6
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 15.6
Price to Free Cash Flow 15.6
Growth Rates
Sales Growth Rate 20%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 62.5%
Total Debt to Equity 62.5%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. -1.4%
Return On Total Capital 8%
Ret/ On T. Cap. - 3 Yr. Avg. -2.4%
Return On Equity 13.3%
Return On Equity - 3 Yr. Avg. -3.5%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 33.3%
Gross Margin - 3 Yr. Avg. 27.9%
EBITDA Margin 12.5%
EBITDA Margin - 3 Yr. Avg. 5.4%
Operating Margin 4.2%
Oper. Margin - 3 Yr. Avg. -2.2%
Pre-Tax Margin 4.2%
Pre-Tax Margin - 3 Yr. Avg. -2.2%
Net Profit Margin 4.2%
Net Profit Margin - 3 Yr. Avg. -2.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BASI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BASI stock intrinsic value calculation we used $26 million for the last fiscal year's total revenue generated by Bioanalytical Systems, Inc.. The default revenue input number comes from 0001 income statement of Bioanalytical Systems, 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 BASI 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 5.8%, whose default value for BASI is calculated based on our internal credit rating of Bioanalytical Systems, 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 Bioanalytical Systems, 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 BASI stock the variable cost ratio is equal to 96.2%.

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 BASI 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 Bioanalytical Systems, Inc..

Corporate tax rate of 27% is the nominal tax rate for Bioanalytical Systems, 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 BASI 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 BASI are equal to 66.9%.

Life of production assets of 10.1 years is the average useful life of capital assets used in Bioanalytical Systems, 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 BASI is equal to -13.5%. 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 - $10.884 million for Bioanalytical Systems, 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 10.289 million for Bioanalytical Systems, 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 Bioanalytical Systems, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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