Intrinsic value of Bio-Rad Laboratories Cl A - BIO

Previous Close

$305.44

  Intrinsic Value

$51.35

stock screener

  Rating & Target

str. sell

-83%

Previous close

$305.44

 
Intrinsic value

$51.35

 
Up/down potential

-83%

 
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 2016), $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 8.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.40
  2.66
  2.89
  3.10
  3.29
  3.46
  3.62
  3.76
  3.88
  3.99
  4.09
  4.18
  4.27
  4.34
  4.41
  4.46
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
Revenue, $m
  2,118
  2,174
  2,237
  2,306
  2,382
  2,465
  2,554
  2,650
  2,753
  2,863
  2,980
  3,105
  3,237
  3,377
  3,526
  3,684
  3,850
  4,026
  4,212
  4,407
  4,614
  4,831
  5,060
  5,302
  5,556
  5,823
  6,105
  6,401
  6,712
  7,039
Variable operating expenses, $m
  1,940
  1,990
  2,046
  2,108
  2,175
  2,248
  2,327
  2,412
  2,503
  2,601
  2,640
  2,751
  2,868
  2,993
  3,125
  3,264
  3,412
  3,567
  3,732
  3,905
  4,088
  4,281
  4,484
  4,698
  4,923
  5,160
  5,409
  5,672
  5,948
  6,238
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
  1,940
  1,990
  2,046
  2,108
  2,175
  2,248
  2,327
  2,412
  2,503
  2,601
  2,640
  2,751
  2,868
  2,993
  3,125
  3,264
  3,412
  3,567
  3,732
  3,905
  4,088
  4,281
  4,484
  4,698
  4,923
  5,160
  5,409
  5,672
  5,948
  6,238
Operating income, $m
  177
  184
  191
  199
  207
  217
  227
  238
  250
  262
  339
  354
  369
  385
  402
  420
  439
  459
  480
  502
  526
  550
  576
  604
  633
  663
  695
  729
  765
  802
EBITDA, $m
  358
  367
  378
  390
  402
  416
  431
  448
  465
  484
  503
  524
  547
  570
  596
  622
  650
  680
  711
  744
  779
  816
  855
  895
  938
  984
  1,031
  1,081
  1,134
  1,189
Interest expense (income), $m
  -21
  23
  25
  27
  29
  31
  34
  36
  39
  43
  46
  50
  53
  58
  62
  67
  71
  77
  82
  88
  94
  100
  107
  114
  122
  130
  138
  147
  156
  166
  176
Earnings before tax, $m
  154
  159
  164
  170
  176
  183
  191
  199
  207
  216
  290
  300
  311
  323
  335
  348
  362
  376
  392
  408
  425
  443
  462
  482
  503
  525
  548
  573
  598
  625
Tax expense, $m
  42
  43
  44
  46
  48
  49
  51
  54
  56
  58
  78
  81
  84
  87
  90
  94
  98
  102
  106
  110
  115
  120
  125
  130
  136
  142
  148
  155
  162
  169
Net income, $m
  112
  116
  120
  124
  129
  134
  139
  145
  151
  158
  212
  219
  227
  236
  245
  254
  264
  275
  286
  298
  310
  323
  337
  352
  367
  383
  400
  418
  437
  457

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
  3,559
  3,654
  3,759
  3,876
  4,004
  4,143
  4,292
  4,454
  4,627
  4,811
  5,008
  5,218
  5,440
  5,676
  5,926
  6,191
  6,471
  6,766
  7,078
  7,407
  7,754
  8,120
  8,505
  8,911
  9,338
  9,787
  10,260
  10,758
  11,281
  11,831
Adjusted assets (=assets-cash), $m
  3,559
  3,654
  3,759
  3,876
  4,004
  4,143
  4,292
  4,454
  4,627
  4,811
  5,008
  5,218
  5,440
  5,676
  5,926
  6,191
  6,471
  6,766
  7,078
  7,407
  7,754
  8,120
  8,505
  8,911
  9,338
  9,787
  10,260
  10,758
  11,281
  11,831
Revenue / Adjusted assets
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
Average production assets, $m
  1,165
  1,196
  1,230
  1,268
  1,310
  1,356
  1,405
  1,457
  1,514
  1,574
  1,639
  1,708
  1,780
  1,858
  1,939
  2,026
  2,118
  2,214
  2,316
  2,424
  2,538
  2,657
  2,783
  2,916
  3,056
  3,203
  3,358
  3,520
  3,692
  3,872
Working capital, $m
  233
  239
  246
  254
  262
  271
  281
  291
  303
  315
  328
  342
  356
  372
  388
  405
  424
  443
  463
  485
  508
  531
  557
  583
  611
  641
  672
  704
  738
  774
Total debt, $m
  463
  497
  536
  578
  624
  675
  729
  788
  850
  918
  989
  1,065
  1,146
  1,232
  1,322
  1,418
  1,520
  1,627
  1,740
  1,860
  1,986
  2,119
  2,258
  2,406
  2,561
  2,724
  2,895
  3,076
  3,266
  3,466
Total liabilities, $m
  1,292
  1,326
  1,365
  1,407
  1,453
  1,504
  1,558
  1,617
  1,679
  1,746
  1,818
  1,894
  1,975
  2,061
  2,151
  2,247
  2,349
  2,456
  2,569
  2,689
  2,815
  2,947
  3,087
  3,235
  3,390
  3,553
  3,724
  3,905
  4,095
  4,295
Total equity, $m
  2,267
  2,327
  2,395
  2,469
  2,550
  2,639
  2,734
  2,837
  2,947
  3,065
  3,190
  3,324
  3,465
  3,616
  3,775
  3,944
  4,122
  4,310
  4,509
  4,718
  4,939
  5,172
  5,418
  5,676
  5,948
  6,234
  6,536
  6,853
  7,186
  7,536
Total liabilities and equity, $m
  3,559
  3,653
  3,760
  3,876
  4,003
  4,143
  4,292
  4,454
  4,626
  4,811
  5,008
  5,218
  5,440
  5,677
  5,926
  6,191
  6,471
  6,766
  7,078
  7,407
  7,754
  8,119
  8,505
  8,911
  9,338
  9,787
  10,260
  10,758
  11,281
  11,831
Debt-to-equity ratio
  0.200
  0.210
  0.220
  0.230
  0.240
  0.260
  0.270
  0.280
  0.290
  0.300
  0.310
  0.320
  0.330
  0.340
  0.350
  0.360
  0.370
  0.380
  0.390
  0.390
  0.400
  0.410
  0.420
  0.420
  0.430
  0.440
  0.440
  0.450
  0.450
  0.460
Adjusted equity ratio
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637
  0.637

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  112
  116
  120
  124
  129
  134
  139
  145
  151
  158
  212
  219
  227
  236
  245
  254
  264
  275
  286
  298
  310
  323
  337
  352
  367
  383
  400
  418
  437
  457
Depreciation, amort., depletion, $m
  180
  183
  187
  191
  195
  199
  204
  210
  215
  221
  164
  171
  178
  186
  194
  203
  212
  221
  232
  242
  254
  266
  278
  292
  306
  320
  336
  352
  369
  387
Funds from operations, $m
  293
  299
  307
  315
  324
  333
  343
  355
  366
  379
  375
  390
  405
  421
  439
  457
  476
  496
  518
  540
  564
  589
  616
  643
  673
  704
  736
  770
  806
  844
Change in working capital, $m
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  29
  31
  33
  34
  36
Cash from operations, $m
  287
  293
  300
  307
  315
  324
  334
  344
  355
  367
  363
  376
  391
  406
  422
  439
  458
  477
  497
  519
  541
  565
  590
  617
  645
  674
  705
  738
  772
  808
Maintenance CAPEX, $m
  -114
  -116
  -120
  -123
  -127
  -131
  -136
  -140
  -146
  -151
  -157
  -164
  -171
  -178
  -186
  -194
  -203
  -212
  -221
  -232
  -242
  -254
  -266
  -278
  -292
  -306
  -320
  -336
  -352
  -369
New CAPEX, $m
  -27
  -31
  -35
  -38
  -42
  -45
  -49
  -53
  -57
  -60
  -64
  -69
  -73
  -77
  -82
  -87
  -92
  -97
  -102
  -108
  -114
  -120
  -126
  -133
  -140
  -147
  -155
  -163
  -171
  -180
Cash from investing activities, $m
  -141
  -147
  -155
  -161
  -169
  -176
  -185
  -193
  -203
  -211
  -221
  -233
  -244
  -255
  -268
  -281
  -295
  -309
  -323
  -340
  -356
  -374
  -392
  -411
  -432
  -453
  -475
  -499
  -523
  -549
Free cash flow, $m
  146
  146
  146
  146
  147
  148
  149
  151
  153
  155
  141
  144
  147
  151
  155
  159
  164
  168
  174
  179
  185
  192
  199
  206
  213
  221
  230
  239
  248
  258
Issuance/(repayment) of debt, $m
  29
  34
  38
  42
  46
  50
  54
  59
  63
  67
  71
  76
  81
  86
  91
  96
  102
  107
  113
  119
  126
  133
  140
  147
  155
  163
  172
  181
  190
  200
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  29
  34
  38
  42
  46
  50
  54
  59
  63
  67
  71
  76
  81
  86
  91
  96
  102
  107
  113
  119
  126
  133
  140
  147
  155
  163
  172
  181
  190
  200
Total cash flow (excl. dividends), $m
  175
  180
  184
  188
  193
  198
  203
  209
  216
  222
  212
  220
  228
  236
  245
  255
  265
  276
  287
  299
  311
  325
  338
  353
  368
  385
  402
  420
  438
  458
Retained Cash Flow (-), $m
  -52
  -60
  -67
  -74
  -81
  -88
  -95
  -103
  -110
  -118
  -125
  -133
  -142
  -150
  -159
  -169
  -178
  -188
  -199
  -210
  -221
  -233
  -245
  -258
  -272
  -286
  -301
  -317
  -333
  -350
Prev. year cash balance distribution, $m
  372
  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
  -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
  -6
  -6
  -6
  -6
  -7
Cash available for distribution, $m
  495
  120
  117
  114
  112
  110
  108
  107
  106
  105
  87
  86
  86
  86
  86
  86
  87
  87
  88
  89
  90
  92
  93
  95
  96
  98
  100
  103
  105
  108
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
  475
  110
  101
  94
  87
  80
  73
  67
  61
  55
  41
  37
  33
  29
  25
  22
  19
  16
  14
  11
  9
  8
  6
  5
  4
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

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 Cl A (BIO)

Valuation Ratios
P/E Ratio 322.7
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 122.1
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 $2068 million for the last fiscal year's total revenue generated by Bio-Rad Laboratories Cl A. The default revenue input number comes from 2016 income statement of Bio-Rad Laboratories Cl A. 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 2.4% 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 Cl A, 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 Cl A.
    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 91.7%.

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 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 Cl A.

Corporate tax rate of 27% is the nominal tax rate for Bio-Rad Laboratories Cl A. 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 -0.1%.

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 55%.

Life of production assets of 10 years is the average useful life of capital assets used in Bio-Rad Laboratories Cl A 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 11%. 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 - $2587 million for Bio-Rad Laboratories Cl A - 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 million for Bio-Rad Laboratories Cl A 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 Cl A at the current share price and the inputted number of shares is $8.9 billion.

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COMPANY NEWS

▶ Bio-Rad: 1Q Earnings Snapshot   [May-08-18 07:56PM  Associated Press]
▶ Bio-Rad to Report First-Quarter 2018 Financial Results   [Apr-18-18 04:24PM  Business Wire]
▶ Bio-Rad posts 4Q profit   [Feb-28-18 05:03AM  Associated Press]
▶ Bio-Rad tops Street 4Q forecasts   [05:03AM  Associated Press]
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