Intrinsic value of Bio-Rad Laboratories, Inc. - BIO

Previous Close

$305.59

  Intrinsic Value

$58.70

stock screener

  Rating & Target

str. sell

-81%

Previous close

$305.59

 
Intrinsic value

$58.70

 
Up/down potential

-81%

 
Rating

str. sell

We calculate the intrinsic value of BIO 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 9.2

 

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, %
  2.10
  2.39
  2.65
  2.89
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
Revenue, $m
  2,205
  2,258
  2,318
  2,385
  2,459
  2,540
  2,627
  2,722
  2,824
  2,934
  3,051
  3,176
  3,308
  3,450
  3,599
  3,758
  3,925
  4,103
  4,290
  4,487
  4,696
  4,916
  5,148
  5,392
  5,649
  5,920
  6,205
  6,504
  6,820
  7,151
Variable operating expenses, $m
  684
  699
  716
  735
  755
  778
  802
  829
  857
  888
  853
  888
  925
  964
  1,006
  1,050
  1,097
  1,147
  1,199
  1,254
  1,313
  1,374
  1,439
  1,507
  1,579
  1,655
  1,734
  1,818
  1,906
  1,999
Fixed operating expenses, $m
  1,434
  1,465
  1,498
  1,531
  1,564
  1,599
  1,634
  1,670
  1,707
  1,744
  1,782
  1,822
  1,862
  1,903
  1,945
  1,987
  2,031
  2,076
  2,121
  2,168
  2,216
  2,265
  2,314
  2,365
  2,417
  2,470
  2,525
  2,580
  2,637
  2,695
Total operating expenses, $m
  2,118
  2,164
  2,214
  2,266
  2,319
  2,377
  2,436
  2,499
  2,564
  2,632
  2,635
  2,710
  2,787
  2,867
  2,951
  3,037
  3,128
  3,223
  3,320
  3,422
  3,529
  3,639
  3,753
  3,872
  3,996
  4,125
  4,259
  4,398
  4,543
  4,694
Operating income, $m
  87
  93
  104
  120
  139
  163
  191
  224
  260
  302
  416
  466
  522
  583
  649
  720
  797
  880
  969
  1,065
  1,168
  1,277
  1,394
  1,519
  1,653
  1,795
  1,945
  2,106
  2,276
  2,457
EBITDA, $m
  323
  333
  349
  369
  394
  424
  459
  498
  543
  593
  648
  708
  773
  845
  922
  1,006
  1,095
  1,192
  1,295
  1,406
  1,525
  1,651
  1,786
  1,929
  2,082
  2,244
  2,417
  2,600
  2,795
  3,001
Interest expense (income), $m
  -21
  23
  25
  27
  29
  31
  33
  36
  39
  42
  46
  49
  53
  57
  62
  67
  72
  77
  83
  89
  95
  101
  108
  116
  124
  132
  140
  149
  159
  169
  180
Earnings before tax, $m
  64
  69
  78
  91
  108
  130
  155
  184
  218
  256
  366
  413
  464
  521
  582
  648
  720
  797
  881
  970
  1,066
  1,169
  1,279
  1,396
  1,521
  1,654
  1,796
  1,947
  2,107
  2,278
Tax expense, $m
  17
  19
  21
  25
  29
  35
  42
  50
  59
  69
  99
  112
  125
  141
  157
  175
  194
  215
  238
  262
  288
  316
  345
  377
  411
  447
  485
  526
  569
  615
Net income, $m
  46
  50
  57
  66
  79
  95
  113
  135
  159
  187
  267
  302
  339
  380
  425
  473
  526
  582
  643
  708
  778
  853
  933
  1,019
  1,110
  1,208
  1,311
  1,421
  1,538
  1,663

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
  4,099
  4,197
  4,308
  4,433
  4,570
  4,720
  4,884
  5,060
  5,250
  5,453
  5,671
  5,903
  6,150
  6,412
  6,690
  6,984
  7,296
  7,626
  7,974
  8,341
  8,729
  9,137
  9,568
  10,022
  10,500
  11,003
  11,533
  12,090
  12,676
  13,292
Adjusted assets (=assets-cash), $m
  4,099
  4,197
  4,308
  4,433
  4,570
  4,720
  4,884
  5,060
  5,250
  5,453
  5,671
  5,903
  6,150
  6,412
  6,690
  6,984
  7,296
  7,626
  7,974
  8,341
  8,729
  9,137
  9,568
  10,022
  10,500
  11,003
  11,533
  12,090
  12,676
  13,292
Revenue / Adjusted assets
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
Average production assets, $m
  838
  858
  881
  906
  934
  965
  998
  1,034
  1,073
  1,115
  1,159
  1,207
  1,257
  1,311
  1,368
  1,428
  1,492
  1,559
  1,630
  1,705
  1,784
  1,868
  1,956
  2,049
  2,147
  2,249
  2,358
  2,472
  2,591
  2,718
Working capital, $m
  728
  745
  765
  787
  811
  838
  867
  898
  932
  968
  1,007
  1,048
  1,092
  1,138
  1,188
  1,240
  1,295
  1,354
  1,416
  1,481
  1,550
  1,622
  1,699
  1,779
  1,864
  1,953
  2,048
  2,146
  2,250
  2,360
Total debt, $m
  462
  495
  532
  573
  619
  669
  724
  783
  846
  914
  987
  1,064
  1,147
  1,234
  1,327
  1,425
  1,530
  1,640
  1,756
  1,879
  2,008
  2,145
  2,288
  2,440
  2,600
  2,768
  2,945
  3,131
  3,326
  3,532
Total liabilities, $m
  1,369
  1,402
  1,439
  1,481
  1,526
  1,577
  1,631
  1,690
  1,753
  1,821
  1,894
  1,972
  2,054
  2,142
  2,234
  2,333
  2,437
  2,547
  2,663
  2,786
  2,915
  3,052
  3,196
  3,347
  3,507
  3,675
  3,852
  4,038
  4,234
  4,440
Total equity, $m
  2,730
  2,795
  2,869
  2,952
  3,044
  3,144
  3,252
  3,370
  3,496
  3,632
  3,777
  3,931
  4,096
  4,270
  4,455
  4,652
  4,859
  5,079
  5,310
  5,555
  5,813
  6,086
  6,372
  6,675
  6,993
  7,328
  7,681
  8,052
  8,442
  8,853
Total liabilities and equity, $m
  4,099
  4,197
  4,308
  4,433
  4,570
  4,721
  4,883
  5,060
  5,249
  5,453
  5,671
  5,903
  6,150
  6,412
  6,689
  6,985
  7,296
  7,626
  7,973
  8,341
  8,728
  9,138
  9,568
  10,022
  10,500
  11,003
  11,533
  12,090
  12,676
  13,293
Debt-to-equity ratio
  0.170
  0.180
  0.190
  0.190
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.260
  0.270
  0.280
  0.290
  0.300
  0.310
  0.310
  0.320
  0.330
  0.340
  0.350
  0.350
  0.360
  0.370
  0.370
  0.380
  0.380
  0.390
  0.390
  0.400
Adjusted equity ratio
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666
  0.666

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  46
  50
  57
  66
  79
  95
  113
  135
  159
  187
  267
  302
  339
  380
  425
  473
  526
  582
  643
  708
  778
  853
  933
  1,019
  1,110
  1,208
  1,311
  1,421
  1,538
  1,663
Depreciation, amort., depletion, $m
  236
  240
  244
  249
  255
  261
  268
  275
  283
  291
  232
  241
  251
  262
  274
  286
  298
  312
  326
  341
  357
  374
  391
  410
  429
  450
  472
  494
  518
  544
Funds from operations, $m
  282
  290
  301
  316
  334
  356
  381
  410
  442
  478
  499
  543
  591
  642
  698
  759
  824
  894
  969
  1,049
  1,135
  1,227
  1,325
  1,429
  1,540
  1,657
  1,783
  1,916
  2,057
  2,206
Change in working capital, $m
  15
  17
  20
  22
  24
  27
  29
  31
  34
  36
  39
  41
  44
  47
  49
  52
  55
  59
  62
  65
  69
  73
  76
  81
  85
  89
  94
  99
  104
  109
Cash from operations, $m
  267
  272
  281
  294
  309
  329
  352
  378
  408
  442
  461
  502
  547
  596
  649
  707
  769
  835
  907
  984
  1,066
  1,154
  1,248
  1,348
  1,455
  1,568
  1,689
  1,817
  1,953
  2,097
Maintenance CAPEX, $m
  -164
  -168
  -172
  -176
  -181
  -187
  -193
  -200
  -207
  -215
  -223
  -232
  -241
  -251
  -262
  -274
  -286
  -298
  -312
  -326
  -341
  -357
  -374
  -391
  -410
  -429
  -450
  -472
  -494
  -518
New CAPEX, $m
  -17
  -20
  -23
  -25
  -28
  -31
  -33
  -36
  -39
  -42
  -44
  -47
  -50
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -120
  -126
Cash from investing activities, $m
  -181
  -188
  -195
  -201
  -209
  -218
  -226
  -236
  -246
  -257
  -267
  -279
  -291
  -305
  -319
  -334
  -350
  -365
  -383
  -401
  -420
  -441
  -462
  -484
  -508
  -532
  -558
  -586
  -614
  -644
Free cash flow, $m
  86
  85
  87
  92
  100
  111
  125
  142
  162
  186
  193
  222
  255
  291
  330
  373
  419
  470
  524
  583
  646
  714
  786
  864
  947
  1,036
  1,130
  1,231
  1,338
  1,452
Issuance/(repayment) of debt, $m
  27
  33
  37
  42
  46
  50
  55
  59
  63
  68
  73
  77
  82
  88
  93
  98
  104
  110
  116
  123
  129
  137
  144
  152
  160
  168
  177
  186
  196
  206
Issuance/(repurchase) of shares, $m
  11
  15
  17
  16
  12
  5
  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 from financing (excl. dividends), $m  
  38
  48
  54
  58
  58
  55
  55
  59
  63
  68
  73
  77
  82
  88
  93
  98
  104
  110
  116
  123
  129
  137
  144
  152
  160
  168
  177
  186
  196
  206
Total cash flow (excl. dividends), $m
  124
  133
  141
  150
  158
  167
  180
  201
  226
  253
  266
  300
  337
  378
  423
  471
  523
  580
  641
  706
  776
  850
  930
  1,016
  1,107
  1,204
  1,307
  1,417
  1,534
  1,658
Retained Cash Flow (-), $m
  -58
  -65
  -74
  -83
  -91
  -100
  -109
  -118
  -126
  -136
  -145
  -154
  -164
  -175
  -185
  -196
  -208
  -219
  -232
  -245
  -258
  -272
  -287
  -302
  -318
  -335
  -353
  -371
  -390
  -411
Prev. year cash balance distribution, $m
  258
  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
  324
  67
  67
  67
  67
  67
  71
  84
  99
  118
  121
  145
  173
  204
  238
  275
  316
  360
  409
  461
  517
  578
  643
  714
  789
  869
  955
  1,046
  1,144
  1,248
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
  311
  62
  58
  55
  52
  49
  48
  52
  57
  62
  57
  62
  66
  68
  70
  70
  69
  66
  63
  59
  54
  48
  42
  36
  31
  25
  20
  16
  12
  9
Current shareholders' claim on cash, %
  99.9
  99.7
  99.5
  99.3
  99.2
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1

Bio-Rad Laboratories, Inc. (Bio-Rad) is a manufacturer and distributor of its life science research and clinical diagnostics products. The Company operates through two segments: Life Science and Clinical Diagnostics. It manufactures and supplies the life science research, healthcare, analytical chemistry and other markets with a range of products and systems used to separate complex chemical and biological materials and to identify, analyze and purify their components. The Life Science segment develops, manufactures, sells and services reagents, apparatus and instruments used for biological research. The Clinical Diagnostics segment develops, manufactures, sells and services automated test systems, informatics systems, test kits and specialized quality controls for the healthcare market. As of December 31, 2016, Bio-Rad sold more than 8,000 products and services to a client base, including scientific research, healthcare, education and government customers around the world.

FINANCIAL RATIOS  of  Bio-Rad Laboratories, Inc. (BIO)

Valuation Ratios
P/E Ratio 322.8
Price to Sales 4.4
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 41.8
Price to Free Cash Flow 122.2
Growth Rates
Sales Growth Rate 2.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 25.7%
Cap. Spend. - 3 Yr. Gr. Rate 4.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 16.8%
Total Debt to Equity 16.8%
Interest Coverage -1
Management Effectiveness
Return On Assets 0.4%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 2.8%
Return On Equity 1.1%
Return On Equity - 3 Yr. Avg. 3.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 55.1%
Gross Margin - 3 Yr. Avg. 55%
EBITDA Margin 1%
EBITDA Margin - 3 Yr. Avg. 4.1%
Operating Margin 2.5%
Oper. Margin - 3 Yr. Avg. 5.9%
Pre-Tax Margin 2%
Pre-Tax Margin - 3 Yr. Avg. 5.1%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 29.5%
Payout Ratio 0%

BIO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BIO stock intrinsic value calculation we used $2160 million for the last fiscal year's total revenue generated by Bio-Rad Laboratories, Inc.. The default revenue input number comes from 0001 income statement of Bio-Rad Laboratories, 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 BIO stock valuation model: a) initial revenue growth rate of 2.1% 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 BIO is calculated based on our internal credit rating of Bio-Rad Laboratories, 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 Bio-Rad Laboratories, 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 BIO stock the variable cost ratio is equal to 31.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1403 million in the base year in the intrinsic value calculation for BIO 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 Bio-Rad Laboratories, Inc..

Corporate tax rate of 27% is the nominal tax rate for Bio-Rad Laboratories, 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 BIO 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 BIO are equal to 38%.

Life of production assets of 0 years is the average useful life of capital assets used in Bio-Rad Laboratories, 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 BIO is equal to 33%. 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 - $2930.25 million for Bio-Rad Laboratories, 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 29.968 million for Bio-Rad Laboratories, 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 Bio-Rad Laboratories, Inc. at the current share price and the inputted number of shares is $9.2 billion.

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