Intrinsic value of Corcept Therapeutics Incorporated - CORT

Previous Close

$12.69

  Intrinsic Value

$30.63

stock screener

  Rating & Target

str. buy

+141%

Previous close

$12.69

 
Intrinsic value

$30.63

 
Up/down potential

+141%

 
Rating

str. buy

We calculate the intrinsic value of CORT 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 1.5

 

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, %
  25.40
  23.36
  21.52
  19.87
  18.38
  17.05
  15.84
  14.76
  13.78
  12.90
  12.11
  11.40
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
Revenue, $m
  315
  388
  472
  566
  670
  784
  908
  1,042
  1,185
  1,338
  1,501
  1,672
  1,852
  2,040
  2,237
  2,443
  2,658
  2,881
  3,113
  3,355
  3,606
  3,866
  4,137
  4,419
  4,712
  5,017
  5,334
  5,663
  6,007
  6,365
Variable operating expenses, $m
  189
  234
  284
  340
  403
  472
  546
  627
  713
  805
  903
  1,006
  1,114
  1,227
  1,346
  1,470
  1,599
  1,733
  1,873
  2,018
  2,169
  2,326
  2,489
  2,659
  2,835
  3,018
  3,209
  3,407
  3,614
  3,829
Fixed operating expenses, $m
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  18
  18
  18
  19
  19
Total operating expenses, $m
  199
  244
  295
  351
  414
  483
  558
  639
  725
  817
  916
  1,019
  1,127
  1,241
  1,360
  1,484
  1,613
  1,748
  1,888
  2,033
  2,185
  2,342
  2,505
  2,676
  2,852
  3,036
  3,227
  3,425
  3,633
  3,848
Operating income, $m
  115
  144
  177
  214
  256
  301
  350
  403
  460
  521
  585
  653
  724
  799
  877
  959
  1,044
  1,133
  1,225
  1,321
  1,421
  1,524
  1,632
  1,744
  1,860
  1,981
  2,107
  2,238
  2,374
  2,517
EBITDA, $m
  115
  144
  178
  215
  256
  301
  350
  404
  461
  521
  586
  654
  725
  800
  878
  960
  1,045
  1,134
  1,226
  1,322
  1,422
  1,526
  1,634
  1,745
  1,862
  1,983
  2,109
  2,240
  2,377
  2,519
Interest expense (income), $m
  0
  0
  0
  1
  2
  2
  3
  4
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  42
  44
Earnings before tax, $m
  115
  144
  176
  213
  253
  298
  346
  398
  454
  513
  577
  643
  713
  787
  864
  944
  1,027
  1,114
  1,205
  1,299
  1,397
  1,498
  1,604
  1,714
  1,828
  1,947
  2,070
  2,199
  2,333
  2,472
Tax expense, $m
  31
  39
  48
  57
  68
  80
  93
  107
  123
  139
  156
  174
  193
  212
  233
  255
  277
  301
  325
  351
  377
  405
  433
  463
  494
  526
  559
  594
  630
  668
Net income, $m
  84
  105
  129
  155
  185
  217
  252
  291
  331
  375
  421
  470
  521
  574
  631
  689
  750
  814
  880
  948
  1,020
  1,094
  1,171
  1,251
  1,334
  1,421
  1,511
  1,605
  1,703
  1,805

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
  176
  217
  264
  317
  375
  439
  508
  583
  664
  749
  840
  936
  1,037
  1,142
  1,253
  1,368
  1,488
  1,613
  1,743
  1,878
  2,019
  2,165
  2,317
  2,474
  2,638
  2,809
  2,986
  3,171
  3,363
  3,564
Adjusted assets (=assets-cash), $m
  176
  217
  264
  317
  375
  439
  508
  583
  664
  749
  840
  936
  1,037
  1,142
  1,253
  1,368
  1,488
  1,613
  1,743
  1,878
  2,019
  2,165
  2,317
  2,474
  2,638
  2,809
  2,986
  3,171
  3,363
  3,564
Revenue / Adjusted assets
  1.790
  1.788
  1.788
  1.785
  1.787
  1.786
  1.787
  1.787
  1.785
  1.786
  1.787
  1.786
  1.786
  1.786
  1.785
  1.786
  1.786
  1.786
  1.786
  1.786
  1.786
  1.786
  1.785
  1.786
  1.786
  1.786
  1.786
  1.786
  1.786
  1.786
Average production assets, $m
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
Working capital, $m
  -7
  -9
  -10
  -12
  -15
  -17
  -20
  -23
  -26
  -29
  -33
  -37
  -41
  -45
  -49
  -54
  -58
  -63
  -68
  -74
  -79
  -85
  -91
  -97
  -104
  -110
  -117
  -125
  -132
  -140
Total debt, $m
  9
  20
  32
  45
  60
  76
  94
  113
  133
  155
  178
  203
  229
  255
  284
  313
  344
  376
  409
  443
  479
  516
  555
  595
  637
  680
  726
  773
  822
  873
Total liabilities, $m
  45
  55
  67
  81
  96
  112
  130
  149
  169
  191
  214
  239
  264
  291
  319
  349
  379
  411
  445
  479
  515
  552
  591
  631
  673
  716
  762
  809
  858
  909
Total equity, $m
  131
  162
  197
  236
  279
  327
  379
  435
  494
  558
  626
  697
  772
  851
  933
  1,019
  1,109
  1,202
  1,299
  1,399
  1,504
  1,613
  1,726
  1,843
  1,966
  2,093
  2,225
  2,362
  2,506
  2,655
Total liabilities and equity, $m
  176
  217
  264
  317
  375
  439
  509
  584
  663
  749
  840
  936
  1,036
  1,142
  1,252
  1,368
  1,488
  1,613
  1,744
  1,878
  2,019
  2,165
  2,317
  2,474
  2,639
  2,809
  2,987
  3,171
  3,364
  3,564
Debt-to-equity ratio
  0.070
  0.120
  0.160
  0.190
  0.210
  0.230
  0.250
  0.260
  0.270
  0.280
  0.290
  0.290
  0.300
  0.300
  0.300
  0.310
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.330
  0.330
  0.330
  0.330
  0.330
Adjusted equity ratio
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745
  0.745

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  84
  105
  129
  155
  185
  217
  252
  291
  331
  375
  421
  470
  521
  574
  631
  689
  750
  814
  880
  948
  1,020
  1,094
  1,171
  1,251
  1,334
  1,421
  1,511
  1,605
  1,703
  1,805
Depreciation, amort., depletion, $m
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
Funds from operations, $m
  84
  105
  129
  156
  185
  218
  253
  291
  332
  375
  422
  470
  522
  575
  631
  690
  751
  815
  881
  950
  1,021
  1,095
  1,173
  1,253
  1,336
  1,423
  1,513
  1,607
  1,705
  1,807
Change in working capital, $m
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
Cash from operations, $m
  86
  107
  131
  158
  187
  220
  256
  294
  335
  379
  425
  474
  526
  579
  636
  695
  756
  820
  886
  955
  1,027
  1,101
  1,179
  1,259
  1,343
  1,430
  1,520
  1,615
  1,713
  1,815
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
New CAPEX, $m
  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
  -1
  -1
  -1
Cash from investing activities, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
Free cash flow, $m
  85
  106
  130
  157
  187
  220
  255
  293
  334
  378
  424
  473
  524
  578
  635
  693
  754
  818
  884
  953
  1,025
  1,099
  1,176
  1,257
  1,340
  1,427
  1,518
  1,612
  1,710
  1,812
Issuance/(repayment) of debt, $m
  9
  10
  12
  13
  15
  16
  18
  19
  21
  22
  23
  24
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
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  
  9
  10
  12
  13
  15
  16
  18
  19
  21
  22
  23
  24
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
Total cash flow (excl. dividends), $m
  95
  117
  142
  171
  202
  236
  273
  313
  355
  400
  447
  498
  550
  605
  663
  723
  785
  850
  917
  988
  1,061
  1,136
  1,215
  1,297
  1,382
  1,471
  1,563
  1,659
  1,759
  1,863
Retained Cash Flow (-), $m
  -27
  -31
  -35
  -39
  -43
  -48
  -52
  -56
  -60
  -64
  -68
  -71
  -75
  -79
  -82
  -86
  -89
  -93
  -97
  -101
  -105
  -109
  -113
  -117
  -122
  -127
  -132
  -138
  -143
  -149
Prev. year cash balance distribution, $m
  171
  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
  239
  86
  107
  132
  158
  188
  221
  257
  295
  336
  380
  426
  475
  527
  580
  637
  696
  757
  821
  887
  956
  1,028
  1,102
  1,180
  1,260
  1,344
  1,431
  1,521
  1,616
  1,714
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
  229
  79
  94
  108
  123
  137
  149
  160
  169
  176
  180
  182
  181
  177
  170
  162
  151
  139
  126
  113
  99
  85
  72
  60
  49
  39
  31
  24
  18
  13
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

Corcept Therapeutics Incorporated is a pharmaceutical company engaged in the discovery, development and commercialization of drugs for the treatment of severe metabolic, psychiatric and oncologic disorders. The Company is developing mifepristone, a compound that modulates the effects of cortisol by acting as a competitive antagonist at the glucocorticoid receptor (GR). As of December 31, 2016, it had discovered three structurally distinct series of selective cortisol modulators, all of which share mifepristone's affinity for GR but, unlike mifepristone, do not bind to the progesterone receptor. It is conducting two clinical trials of its selective cortisol modulator, CORT125134. One trial is investigating CORT125134 as a treatment for patients with Cushing syndrome. The second trial is investigating the combination of CORT125134 and nab-paclitaxel (Celgene Corporation's Abraxane) to treat patients with solid-tumor cancers.

FINANCIAL RATIOS  of  Corcept Therapeutics Incorporated (CORT)

Valuation Ratios
P/E Ratio 178.8
Price to Sales 17.7
Price to Book 34.9
Price to Tangible Book
Price to Cash Flow 79.5
Price to Free Cash Flow 79.5
Growth Rates
Sales Growth Rate 62%
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 3
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 36.6%
Interest Coverage 0
Management Effectiveness
Return On Assets 13.2%
Ret/ On Assets - 3 Yr. Avg. -21.3%
Return On Total Capital 15.7%
Ret/ On T. Cap. - 3 Yr. Avg. -23.7%
Return On Equity 26.7%
Return On Equity - 3 Yr. Avg. -130.9%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 97.5%
Gross Margin - 3 Yr. Avg. 97.3%
EBITDA Margin 9.9%
EBITDA Margin - 3 Yr. Avg. -39%
Operating Margin 12.3%
Oper. Margin - 3 Yr. Avg. -31.9%
Pre-Tax Margin 9.9%
Pre-Tax Margin - 3 Yr. Avg. -39%
Net Profit Margin 9.9%
Net Profit Margin - 3 Yr. Avg. -39%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CORT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CORT stock intrinsic value calculation we used $251 million for the last fiscal year's total revenue generated by Corcept Therapeutics Incorporated. The default revenue input number comes from 0001 income statement of Corcept Therapeutics Incorporated. 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 CORT stock valuation model: a) initial revenue growth rate of 25.4% 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 CORT is calculated based on our internal credit rating of Corcept Therapeutics Incorporated, 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 Corcept Therapeutics Incorporated.
    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 CORT stock the variable cost ratio is equal to 60.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $10 million in the base year in the intrinsic value calculation for CORT 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 Corcept Therapeutics Incorporated.

Corporate tax rate of 27% is the nominal tax rate for Corcept Therapeutics Incorporated. 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 CORT 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 CORT are equal to 0.2%.

Life of production assets of 2.5 years is the average useful life of capital assets used in Corcept Therapeutics Incorporated 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 CORT is equal to -2.2%. 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 - $275.882 million for Corcept Therapeutics Incorporated - 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 115.037 million for Corcept Therapeutics Incorporated 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 Corcept Therapeutics Incorporated at the current share price and the inputted number of shares is $1.5 billion.

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