Intrinsic value of Cara Therapeutics, Inc. - CARA

Previous Close

$20.64

  Intrinsic Value

$0.84

stock screener

  Rating & Target

str. sell

-96%

Previous close

$20.64

 
Intrinsic value

$0.84

 
Up/down potential

-96%

 
Rating

str. sell

We calculate the intrinsic value of CARA 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 0.8

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  13
  14
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
Variable operating expenses, $m
  175
  179
  184
  189
  195
  201
  208
  216
  224
  232
  241
  251
  261
  272
  284
  297
  310
  324
  339
  354
  371
  388
  406
  425
  446
  467
  489
  513
  538
  564
Fixed operating expenses, $m
  50
  51
  52
  53
  55
  56
  57
  58
  60
  61
  62
  64
  65
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  83
  84
  86
  88
  90
  92
  94
Total operating expenses, $m
  225
  230
  236
  242
  250
  257
  265
  274
  284
  293
  303
  315
  326
  338
  352
  366
  381
  396
  413
  430
  448
  467
  487
  508
  530
  553
  577
  603
  630
  658
Operating income, $m
  -212
  -217
  -222
  -228
  -235
  -242
  -249
  -258
  -266
  -275
  -285
  -296
  -307
  -318
  -331
  -344
  -357
  -372
  -387
  -403
  -420
  -438
  -456
  -476
  -496
  -518
  -540
  -564
  -589
  -615
EBITDA, $m
  -212
  -217
  -222
  -228
  -235
  -242
  -249
  -257
  -266
  -275
  -285
  -295
  -306
  -318
  -330
  -343
  -357
  -371
  -387
  -403
  -419
  -437
  -456
  -475
  -496
  -517
  -540
  -564
  -589
  -615
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
Earnings before tax, $m
  -212
  -217
  -223
  -229
  -235
  -242
  -250
  -258
  -267
  -276
  -286
  -297
  -308
  -320
  -332
  -346
  -360
  -374
  -390
  -406
  -423
  -441
  -460
  -480
  -501
  -523
  -546
  -570
  -595
  -622
Tax expense, $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
Net income, $m
  -212
  -217
  -223
  -229
  -235
  -242
  -250
  -258
  -267
  -276
  -286
  -297
  -308
  -320
  -332
  -346
  -360
  -374
  -390
  -406
  -423
  -441
  -460
  -480
  -501
  -523
  -546
  -570
  -595
  -622

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
  71
  72
  74
  76
  78
  81
  84
  87
  90
  93
  97
  101
  105
  110
  114
  119
  125
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
  206
  216
  227
Adjusted assets (=assets-cash), $m
  71
  72
  74
  76
  78
  81
  84
  87
  90
  93
  97
  101
  105
  110
  114
  119
  125
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
  206
  216
  227
Revenue / Adjusted assets
  0.183
  0.194
  0.189
  0.184
  0.192
  0.185
  0.190
  0.184
  0.189
  0.194
  0.186
  0.188
  0.190
  0.191
  0.184
  0.185
  0.184
  0.185
  0.191
  0.190
  0.188
  0.186
  0.190
  0.187
  0.190
  0.186
  0.188
  0.189
  0.190
  0.189
Average production assets, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
Working capital, $m
  -35
  -36
  -37
  -38
  -39
  -40
  -42
  -43
  -45
  -47
  -48
  -50
  -52
  -55
  -57
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -94
  -98
  -103
  -108
  -113
Total debt, $m
  1
  2
  4
  6
  8
  10
  12
  14
  17
  20
  23
  26
  30
  33
  37
  42
  46
  51
  55
  61
  66
  72
  78
  84
  91
  98
  106
  113
  122
  130
Total liabilities, $m
  58
  60
  61
  63
  65
  67
  69
  72
  74
  77
  80
  83
  87
  91
  95
  99
  103
  108
  113
  118
  123
  129
  135
  141
  148
  155
  163
  171
  179
  188
Total equity, $m
  12
  12
  13
  13
  14
  14
  14
  15
  16
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  36
  37
  39
Total liabilities and equity, $m
  70
  72
  74
  76
  79
  81
  83
  87
  90
  93
  97
  100
  105
  110
  115
  120
  125
  131
  137
  143
  149
  156
  163
  171
  179
  187
  197
  207
  216
  227
Debt-to-equity ratio
  0.090
  0.200
  0.310
  0.440
  0.560
  0.700
  0.830
  0.970
  1.100
  1.240
  1.370
  1.510
  1.640
  1.760
  1.890
  2.010
  2.130
  2.240
  2.350
  2.460
  2.560
  2.660
  2.760
  2.850
  2.940
  3.020
  3.100
  3.180
  3.250
  3.320
Adjusted equity ratio
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -212
  -217
  -223
  -229
  -235
  -242
  -250
  -258
  -267
  -276
  -286
  -297
  -308
  -320
  -332
  -346
  -360
  -374
  -390
  -406
  -423
  -441
  -460
  -480
  -501
  -523
  -546
  -570
  -595
  -622
Depreciation, amort., depletion, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
Funds from operations, $m
  -212
  -217
  -222
  -228
  -235
  -242
  -250
  -258
  -267
  -276
  -286
  -297
  -308
  -320
  -332
  -345
  -359
  -374
  -389
  -406
  -423
  -441
  -460
  -479
  -500
  -522
  -545
  -569
  -595
  -621
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
Cash from operations, $m
  -211
  -216
  -221
  -227
  -234
  -241
  -248
  -256
  -265
  -274
  -284
  -295
  -306
  -317
  -330
  -343
  -357
  -371
  -386
  -403
  -419
  -437
  -456
  -476
  -496
  -518
  -541
  -565
  -590
  -616
Maintenance CAPEX, $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
  -1
  -1
  -1
  -1
  -1
  -1
New CAPEX, $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 investing activities, $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
  -1
  -1
  -1
  -1
  -1
  -1
Free cash flow, $m
  -211
  -216
  -222
  -228
  -234
  -241
  -249
  -257
  -265
  -275
  -284
  -295
  -306
  -318
  -330
  -343
  -357
  -372
  -387
  -403
  -420
  -438
  -457
  -476
  -497
  -519
  -541
  -565
  -590
  -617
Issuance/(repayment) of debt, $m
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
Issuance/(repurchase) of shares, $m
  213
  217
  223
  229
  236
  243
  250
  259
  268
  277
  287
  298
  309
  321
  333
  347
  361
  375
  391
  407
  424
  442
  461
  481
  502
  524
  547
  572
  597
  624
Cash from financing (excl. dividends), $m  
  214
  218
  225
  231
  238
  245
  252
  261
  271
  280
  290
  301
  312
  325
  337
  351
  365
  380
  396
  412
  429
  448
  467
  487
  509
  531
  554
  580
  605
  633
Total cash flow (excl. dividends), $m
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
Retained Cash Flow (-), $m
  -213
  -217
  -223
  -229
  -236
  -243
  -250
  -259
  -268
  -277
  -287
  -298
  -309
  -321
  -333
  -347
  -361
  -375
  -391
  -407
  -424
  -442
  -461
  -481
  -502
  -524
  -547
  -572
  -597
  -624
Prev. year cash balance distribution, $m
  122
  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
  -89
  -215
  -220
  -226
  -232
  -239
  -246
  -254
  -263
  -272
  -281
  -292
  -303
  -314
  -326
  -339
  -353
  -367
  -382
  -398
  -414
  -432
  -450
  -470
  -490
  -511
  -534
  -557
  -582
  -608
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
  -85
  -197
  -192
  -186
  -180
  -173
  -166
  -159
  -151
  -142
  -134
  -124
  -115
  -105
  -96
  -86
  -77
  -68
  -59
  -51
  -43
  -36
  -30
  -24
  -19
  -15
  -11
  -9
  -6
  -5
Current shareholders' claim on cash, %
  25.5
  6.5
  1.7
  0.4
  0.1
  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
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Cara Therapeutics, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on developing and commercializing chemical entities designed to alleviate pain and pruritus by focusing on kappa opioid receptors. It is developing a class of product candidates that target the body's peripheral nervous system. The Company operates through the activities related to the discovery and development of therapeutics to treat serious medical conditions, including pain and pruritus. Its product candidate pipeline includes I.V. CR845 for acute pain; I.V. CR845 for uremic pruritus; Oral CR845 for acute and chronic pain, and CR701 for neuropathic and inflammatory pain. I.V. CR845 is an injectable version of peripheral kappa opioid receptor agonist, which is intended for the treatment of acute pain in an acute care setting. CR845 has exhibited anti-pruritic, or anti-itch, potency in standard preclinical models.

FINANCIAL RATIOS  of  Cara Therapeutics, Inc. (CARA)

Valuation Ratios
P/E Ratio -9.9
Price to Sales 0
Price to Book 11
Price to Tangible Book
Price to Cash Flow -12
Price to Free Cash Flow -11.7
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 3.9%
Total Debt to Equity 3.9%
Interest Coverage 0
Management Effectiveness
Return On Assets -65.1%
Ret/ On Assets - 3 Yr. Avg. -47.9%
Return On Total Capital -71.7%
Ret/ On T. Cap. - 3 Yr. Avg. -52.6%
Return On Equity -73.1%
Return On Equity - 3 Yr. Avg. -53.7%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. -388.9%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. -408.3%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. -408.3%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. -408.3%
Effective Tax Rate 1.7%
Eff/ Tax Rate - 3 Yr. Avg. 0.6%
Payout Ratio 0%

CARA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CARA stock intrinsic value calculation we used $13 million for the last fiscal year's total revenue generated by Cara Therapeutics, Inc.. The default revenue input number comes from 0001 income statement of Cara Therapeutics, 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 CARA stock valuation model: a) initial revenue growth rate of 2% 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 CARA is calculated based on our internal credit rating of Cara Therapeutics, 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 Cara Therapeutics, 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 CARA stock the variable cost ratio is equal to 1323.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $49 million in the base year in the intrinsic value calculation for CARA 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 Cara Therapeutics, Inc..

Corporate tax rate of 27% is the nominal tax rate for Cara Therapeutics, 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 CARA 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 CARA are equal to 7.9%.

Life of production assets of 2.8 years is the average useful life of capital assets used in Cara Therapeutics, 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 CARA is equal to -265.1%. 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 - $133.63 million for Cara Therapeutics, 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 39.548 million for Cara Therapeutics, 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 Cara Therapeutics, Inc. at the current share price and the inputted number of shares is $0.8 billion.

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