Intrinsic value of Brooks Automation, Inc. - BRKS

Previous Close

$35.04

  Intrinsic Value

$3.87

stock screener

  Rating & Target

str. sell

-89%

Previous close

$35.04

 
Intrinsic value

$3.87

 
Up/down potential

-89%

 
Rating

str. sell

We calculate the intrinsic value of BRKS 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 2.5

 

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, %
  25.80
  23.72
  21.85
  20.16
  18.65
  17.28
  16.05
  14.95
  13.95
  13.06
  12.25
  11.53
  10.87
  10.29
  9.76
  9.28
  8.85
  8.47
  8.12
  7.81
  7.53
  7.28
  7.05
  6.84
  6.66
  6.49
  6.34
  6.21
  6.09
  5.98
Revenue, $m
  795
  984
  1,199
  1,440
  1,709
  2,004
  2,326
  2,673
  3,047
  3,444
  3,866
  4,312
  4,781
  5,273
  5,787
  6,325
  6,885
  7,468
  8,074
  8,705
  9,360
  10,041
  10,749
  11,484
  12,249
  13,045
  13,872
  14,734
  15,631
  16,565
Variable operating expenses, $m
  660
  815
  992
  1,191
  1,411
  1,654
  1,919
  2,205
  2,512
  2,839
  3,180
  3,547
  3,932
  4,337
  4,760
  5,202
  5,663
  6,142
  6,641
  7,160
  7,699
  8,259
  8,841
  9,446
  10,075
  10,729
  11,410
  12,118
  12,856
  13,625
Fixed operating expenses, $m
  78
  79
  81
  83
  85
  87
  89
  90
  92
  94
  97
  99
  101
  103
  105
  108
  110
  112
  115
  117
  120
  123
  125
  128
  131
  134
  137
  140
  143
  146
Total operating expenses, $m
  738
  894
  1,073
  1,274
  1,496
  1,741
  2,008
  2,295
  2,604
  2,933
  3,277
  3,646
  4,033
  4,440
  4,865
  5,310
  5,773
  6,254
  6,756
  7,277
  7,819
  8,382
  8,966
  9,574
  10,206
  10,863
  11,547
  12,258
  12,999
  13,771
Operating income, $m
  57
  89
  126
  167
  213
  263
  318
  378
  442
  511
  590
  667
  748
  833
  922
  1,015
  1,112
  1,213
  1,318
  1,428
  1,541
  1,660
  1,782
  1,910
  2,043
  2,182
  2,325
  2,475
  2,631
  2,794
EBITDA, $m
  91
  129
  172
  222
  277
  337
  404
  475
  552
  634
  722
  814
  911
  1,013
  1,119
  1,231
  1,347
  1,468
  1,594
  1,725
  1,861
  2,002
  2,149
  2,302
  2,461
  2,627
  2,799
  2,978
  3,165
  3,359
Interest expense (income), $m
  0
  19
  28
  39
  52
  66
  81
  98
  117
  137
  158
  181
  205
  231
  258
  286
  316
  347
  379
  413
  448
  484
  522
  561
  602
  644
  688
  734
  782
  831
  883
Earnings before tax, $m
  38
  61
  86
  115
  147
  182
  220
  261
  306
  353
  409
  461
  517
  575
  636
  699
  765
  834
  905
  980
  1,057
  1,138
  1,221
  1,308
  1,399
  1,493
  1,591
  1,694
  1,800
  1,911
Tax expense, $m
  10
  16
  23
  31
  40
  49
  59
  71
  83
  95
  110
  125
  140
  155
  172
  189
  207
  225
  244
  265
  285
  307
  330
  353
  378
  403
  430
  457
  486
  516
Net income, $m
  28
  44
  63
  84
  107
  133
  161
  191
  223
  258
  298
  337
  377
  420
  464
  510
  558
  609
  661
  715
  772
  831
  892
  955
  1,021
  1,090
  1,162
  1,236
  1,314
  1,395

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
  1,276
  1,579
  1,924
  2,312
  2,743
  3,217
  3,733
  4,291
  4,890
  5,529
  6,206
  6,921
  7,674
  8,464
  9,290
  10,152
  11,051
  11,987
  12,960
  13,972
  15,024
  16,117
  17,253
  18,434
  19,662
  20,938
  22,267
  23,649
  25,089
  26,589
Adjusted assets (=assets-cash), $m
  1,276
  1,579
  1,924
  2,312
  2,743
  3,217
  3,733
  4,291
  4,890
  5,529
  6,206
  6,921
  7,674
  8,464
  9,290
  10,152
  11,051
  11,987
  12,960
  13,972
  15,024
  16,117
  17,253
  18,434
  19,662
  20,938
  22,267
  23,649
  25,089
  26,589
Revenue / Adjusted assets
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
  0.623
Average production assets, $m
  277
  342
  417
  501
  595
  697
  809
  930
  1,060
  1,199
  1,346
  1,501
  1,664
  1,835
  2,014
  2,201
  2,396
  2,599
  2,810
  3,029
  3,257
  3,494
  3,741
  3,997
  4,263
  4,540
  4,827
  5,127
  5,439
  5,765
Working capital, $m
  198
  245
  298
  359
  425
  499
  579
  666
  759
  858
  963
  1,074
  1,190
  1,313
  1,441
  1,575
  1,714
  1,859
  2,010
  2,167
  2,331
  2,500
  2,676
  2,860
  3,050
  3,248
  3,454
  3,669
  3,892
  4,125
Total debt, $m
  293
  405
  532
  676
  835
  1,011
  1,202
  1,408
  1,630
  1,866
  2,117
  2,382
  2,660
  2,952
  3,258
  3,577
  3,909
  4,256
  4,616
  4,990
  5,380
  5,784
  6,204
  6,641
  7,095
  7,568
  8,059
  8,571
  9,104
  9,659
Total liabilities, $m
  472
  584
  712
  855
  1,015
  1,190
  1,381
  1,588
  1,809
  2,046
  2,296
  2,561
  2,839
  3,132
  3,437
  3,756
  4,089
  4,435
  4,795
  5,170
  5,559
  5,963
  6,384
  6,821
  7,275
  7,747
  8,239
  8,750
  9,283
  9,838
Total equity, $m
  804
  995
  1,212
  1,456
  1,728
  2,027
  2,352
  2,704
  3,081
  3,483
  3,910
  4,361
  4,835
  5,332
  5,852
  6,396
  6,962
  7,552
  8,165
  8,803
  9,465
  10,154
  10,870
  11,613
  12,387
  13,191
  14,028
  14,899
  15,806
  16,751
Total liabilities and equity, $m
  1,276
  1,579
  1,924
  2,311
  2,743
  3,217
  3,733
  4,292
  4,890
  5,529
  6,206
  6,922
  7,674
  8,464
  9,289
  10,152
  11,051
  11,987
  12,960
  13,973
  15,024
  16,117
  17,254
  18,434
  19,662
  20,938
  22,267
  23,649
  25,089
  26,589
Debt-to-equity ratio
  0.360
  0.410
  0.440
  0.460
  0.480
  0.500
  0.510
  0.520
  0.530
  0.540
  0.540
  0.550
  0.550
  0.550
  0.560
  0.560
  0.560
  0.560
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.580
  0.580
  0.580
Adjusted equity ratio
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  28
  44
  63
  84
  107
  133
  161
  191
  223
  258
  298
  337
  377
  420
  464
  510
  558
  609
  661
  715
  772
  831
  892
  955
  1,021
  1,090
  1,162
  1,236
  1,314
  1,395
Depreciation, amort., depletion, $m
  33
  40
  47
  55
  64
  74
  85
  97
  110
  124
  132
  147
  163
  180
  197
  216
  235
  255
  275
  297
  319
  343
  367
  392
  418
  445
  473
  503
  533
  565
Funds from operations, $m
  61
  84
  110
  139
  172
  207
  246
  288
  333
  381
  430
  484
  540
  599
  661
  726
  793
  863
  936
  1,012
  1,091
  1,173
  1,258
  1,347
  1,439
  1,535
  1,635
  1,739
  1,847
  1,960
Change in working capital, $m
  41
  47
  54
  60
  67
  74
  80
  87
  93
  99
  105
  111
  117
  122
  128
  134
  139
  145
  151
  157
  163
  170
  176
  183
  190
  198
  206
  214
  223
  233
Cash from operations, $m
  21
  37
  56
  79
  105
  134
  166
  202
  240
  282
  325
  373
  424
  477
  533
  592
  654
  718
  785
  855
  928
  1,004
  1,082
  1,164
  1,249
  1,337
  1,429
  1,524
  1,624
  1,728
Maintenance CAPEX, $m
  -22
  -27
  -34
  -41
  -49
  -58
  -68
  -79
  -91
  -104
  -118
  -132
  -147
  -163
  -180
  -197
  -216
  -235
  -255
  -275
  -297
  -319
  -343
  -367
  -392
  -418
  -445
  -473
  -503
  -533
New CAPEX, $m
  -57
  -66
  -75
  -84
  -93
  -103
  -112
  -121
  -130
  -138
  -147
  -155
  -163
  -171
  -179
  -187
  -195
  -203
  -211
  -219
  -228
  -237
  -246
  -256
  -266
  -277
  -288
  -300
  -312
  -325
Cash from investing activities, $m
  -79
  -93
  -109
  -125
  -142
  -161
  -180
  -200
  -221
  -242
  -265
  -287
  -310
  -334
  -359
  -384
  -411
  -438
  -466
  -494
  -525
  -556
  -589
  -623
  -658
  -695
  -733
  -773
  -815
  -858
Free cash flow, $m
  -58
  -56
  -52
  -46
  -38
  -27
  -14
  1
  19
  40
  61
  86
  113
  143
  174
  208
  243
  280
  320
  360
  403
  447
  493
  541
  591
  642
  696
  751
  809
  869
Issuance/(repayment) of debt, $m
  97
  112
  128
  144
  159
  175
  191
  206
  222
  236
  251
  265
  278
  292
  306
  319
  333
  346
  360
  374
  389
  404
  420
  437
  454
  472
  491
  512
  533
  555
Issuance/(repurchase) of shares, $m
  137
  146
  154
  160
  164
  166
  165
  161
  154
  145
  128
  114
  97
  78
  56
  33
  8
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  234
  258
  282
  304
  323
  341
  356
  367
  376
  381
  379
  379
  375
  370
  362
  352
  341
  346
  360
  374
  389
  404
  420
  437
  454
  472
  491
  512
  533
  555
Total cash flow (excl. dividends), $m
  177
  203
  230
  258
  286
  314
  341
  368
  395
  421
  440
  465
  489
  513
  536
  560
  584
  627
  680
  735
  792
  852
  914
  978
  1,045
  1,115
  1,187
  1,263
  1,342
  1,424
Retained Cash Flow (-), $m
  -166
  -191
  -217
  -244
  -272
  -299
  -325
  -352
  -377
  -402
  -427
  -451
  -474
  -497
  -520
  -543
  -566
  -590
  -613
  -638
  -663
  -689
  -716
  -744
  -773
  -804
  -837
  -871
  -907
  -945
Prev. year cash balance distribution, $m
  79
  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
  91
  12
  13
  13
  14
  15
  16
  17
  18
  18
  13
  14
  15
  15
  16
  17
  17
  37
  66
  97
  129
  163
  198
  234
  272
  310
  351
  392
  435
  479
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
  87
  11
  11
  11
  11
  11
  11
  10
  10
  10
  6
  6
  6
  5
  5
  4
  4
  7
  10
  12
  13
  14
  13
  12
  11
  9
  8
  6
  5
  4
Current shareholders' claim on cash, %
  94.1
  89.4
  85.6
  82.4
  79.8
  77.7
  75.9
  74.4
  73.2
  72.2
  71.5
  70.9
  70.4
  70.1
  69.9
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8
  69.8

Brooks Automation, Inc. is a provider of automation and cryogenic solutions for various applications and markets. The Company operates through two segments: Brooks Semiconductor Solutions Group and Brooks Life Science Systems. The Brooks Semiconductor Solutions Group segment offers critical automated transport, vacuum and contamination controls solutions and services. Its product offerings include robots and integrated automation systems for handling of substrates. It is also a provider of cryogenic components to create vacuum and thermal stability within critical operating environments in the manufacturing process. It also offers equipment for automated contamination control, conditioning and metrology solutions for wafer and reticle carriers. The Brooks Life Science Systems segment offers sample life cycle management solutions that provide life science and bioscience customers with a range of sample management solutions for scientific research and support drug development.

FINANCIAL RATIOS  of  Brooks Automation, Inc. (BRKS)

Valuation Ratios
P/E Ratio 38.8
Price to Sales 3.5
Price to Book 4
Price to Tangible Book
Price to Cash Flow 25.5
Price to Free Cash Flow 29.5
Growth Rates
Sales Growth Rate 23.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 16.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 8.7%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 10.8%
Ret/ On T. Cap. - 3 Yr. Avg. 0.5%
Return On Equity 10.8%
Return On Equity - 3 Yr. Avg. 0.5%
Asset Turnover 1
Profitability Ratios
Gross Margin 38.5%
Gross Margin - 3 Yr. Avg. 36%
EBITDA Margin 13.4%
EBITDA Margin - 3 Yr. Avg. 9%
Operating Margin 9.2%
Oper. Margin - 3 Yr. Avg. 4.3%
Pre-Tax Margin 9.4%
Pre-Tax Margin - 3 Yr. Avg. 4.4%
Net Profit Margin 9.1%
Net Profit Margin - 3 Yr. Avg. -0.2%
Effective Tax Rate 18.5%
Eff/ Tax Rate - 3 Yr. Avg. 646.9%
Payout Ratio 44.4%

BRKS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BRKS stock intrinsic value calculation we used $632 million for the last fiscal year's total revenue generated by Brooks Automation, Inc.. The default revenue input number comes from 0001 income statement of Brooks Automation, 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 BRKS stock valuation model: a) initial revenue growth rate of 25.8% 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 BRKS is calculated based on our internal credit rating of Brooks Automation, 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 Brooks Automation, 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 BRKS stock the variable cost ratio is equal to 83.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $76 million in the base year in the intrinsic value calculation for BRKS 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 9.7% for Brooks Automation, Inc..

Corporate tax rate of 27% is the nominal tax rate for Brooks Automation, 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 BRKS 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 BRKS are equal to 34.8%.

Life of production assets of 10.2 years is the average useful life of capital assets used in Brooks Automation, 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 BRKS is equal to 24.9%. 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 - $717.832 million for Brooks Automation, 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 70.869 million for Brooks Automation, 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 Brooks Automation, Inc. at the current share price and the inputted number of shares is $2.5 billion.

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