Intrinsic value of CryoLife, Inc. - CRY

Previous Close

$27.55

  Intrinsic Value

$3.88

stock screener

  Rating & Target

str. sell

-86%

Previous close

$27.55

 
Intrinsic value

$3.88

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of CRY 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 1.0

 

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, %
  28.30
  25.97
  23.87
  21.99
  20.29
  18.76
  17.38
  16.14
  15.03
  14.03
  13.12
  12.31
  11.58
  10.92
  10.33
  9.80
  9.32
  8.89
  8.50
  8.15
  7.83
  7.55
  7.29
  7.07
  6.86
  6.67
  6.51
  6.35
  6.22
  6.10
Revenue, $m
  337
  425
  527
  642
  773
  918
  1,077
  1,251
  1,439
  1,641
  1,856
  2,085
  2,326
  2,580
  2,847
  3,125
  3,417
  3,720
  4,036
  4,365
  4,707
  5,063
  5,432
  5,816
  6,214
  6,629
  7,060
  7,509
  7,976
  8,462
Variable operating expenses, $m
  313
  386
  469
  565
  673
  792
  924
  1,067
  1,222
  1,389
  1,532
  1,720
  1,920
  2,129
  2,349
  2,579
  2,820
  3,070
  3,331
  3,603
  3,885
  4,178
  4,483
  4,800
  5,129
  5,471
  5,827
  6,197
  6,583
  6,984
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
  313
  386
  469
  565
  673
  792
  924
  1,067
  1,222
  1,389
  1,532
  1,720
  1,920
  2,129
  2,349
  2,579
  2,820
  3,070
  3,331
  3,603
  3,885
  4,178
  4,483
  4,800
  5,129
  5,471
  5,827
  6,197
  6,583
  6,984
Operating income, $m
  24
  39
  57
  77
  100
  125
  153
  184
  216
  252
  324
  364
  406
  451
  497
  546
  597
  650
  705
  763
  822
  884
  949
  1,016
  1,086
  1,158
  1,233
  1,312
  1,393
  1,478
EBITDA, $m
  72
  90
  112
  136
  164
  194
  228
  265
  305
  348
  393
  442
  493
  547
  603
  662
  724
  788
  855
  925
  998
  1,073
  1,151
  1,232
  1,317
  1,405
  1,496
  1,591
  1,690
  1,793
Interest expense (income), $m
  2
  16
  22
  28
  36
  45
  56
  67
  79
  93
  108
  124
  141
  158
  177
  197
  218
  240
  263
  287
  311
  337
  364
  392
  421
  451
  482
  515
  548
  584
  620
Earnings before tax, $m
  8
  18
  29
  41
  55
  70
  86
  104
  123
  144
  201
  224
  248
  273
  300
  328
  357
  387
  419
  451
  485
  520
  557
  595
  635
  676
  719
  763
  810
  858
Tax expense, $m
  2
  5
  8
  11
  15
  19
  23
  28
  33
  39
  54
  60
  67
  74
  81
  89
  96
  105
  113
  122
  131
  141
  150
  161
  171
  183
  194
  206
  219
  232
Net income, $m
  6
  13
  21
  30
  40
  51
  63
  76
  90
  105
  146
  163
  181
  200
  219
  239
  261
  283
  306
  329
  354
  380
  407
  434
  463
  493
  525
  557
  591
  626

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
  721
  908
  1,125
  1,372
  1,651
  1,961
  2,301
  2,673
  3,075
  3,506
  3,966
  4,454
  4,970
  5,513
  6,082
  6,678
  7,301
  7,949
  8,625
  9,327
  10,058
  10,817
  11,606
  12,426
  13,279
  14,165
  15,086
  16,045
  17,043
  18,082
Adjusted assets (=assets-cash), $m
  721
  908
  1,125
  1,372
  1,651
  1,961
  2,301
  2,673
  3,075
  3,506
  3,966
  4,454
  4,970
  5,513
  6,082
  6,678
  7,301
  7,949
  8,625
  9,327
  10,058
  10,817
  11,606
  12,426
  13,279
  14,165
  15,086
  16,045
  17,043
  18,082
Revenue / Adjusted assets
  0.467
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
  0.468
Average production assets, $m
  271
  342
  423
  516
  621
  738
  866
  1,006
  1,157
  1,319
  1,492
  1,676
  1,870
  2,074
  2,289
  2,513
  2,747
  2,991
  3,245
  3,510
  3,785
  4,070
  4,367
  4,676
  4,996
  5,330
  5,677
  6,037
  6,413
  6,804
Working capital, $m
  134
  169
  209
  255
  307
  364
  428
  497
  571
  651
  737
  828
  923
  1,024
  1,130
  1,241
  1,356
  1,477
  1,602
  1,733
  1,869
  2,010
  2,156
  2,309
  2,467
  2,632
  2,803
  2,981
  3,167
  3,360
Total debt, $m
  307
  405
  519
  649
  794
  957
  1,135
  1,330
  1,540
  1,766
  2,008
  2,263
  2,534
  2,818
  3,117
  3,429
  3,755
  4,095
  4,449
  4,817
  5,200
  5,598
  6,011
  6,441
  6,887
  7,352
  7,835
  8,337
  8,860
  9,404
Total liabilities, $m
  378
  476
  590
  719
  865
  1,027
  1,206
  1,401
  1,611
  1,837
  2,078
  2,334
  2,604
  2,889
  3,187
  3,499
  3,826
  4,165
  4,519
  4,888
  5,270
  5,668
  6,082
  6,511
  6,958
  7,422
  7,905
  8,408
  8,930
  9,475
Total equity, $m
  343
  432
  536
  653
  786
  933
  1,095
  1,272
  1,463
  1,669
  1,888
  2,120
  2,366
  2,624
  2,895
  3,179
  3,475
  3,784
  4,105
  4,440
  4,788
  5,149
  5,525
  5,915
  6,321
  6,742
  7,181
  7,637
  8,112
  8,607
Total liabilities and equity, $m
  721
  908
  1,126
  1,372
  1,651
  1,960
  2,301
  2,673
  3,074
  3,506
  3,966
  4,454
  4,970
  5,513
  6,082
  6,678
  7,301
  7,949
  8,624
  9,328
  10,058
  10,817
  11,607
  12,426
  13,279
  14,164
  15,086
  16,045
  17,042
  18,082
Debt-to-equity ratio
  0.900
  0.940
  0.970
  0.990
  1.010
  1.030
  1.040
  1.050
  1.050
  1.060
  1.060
  1.070
  1.070
  1.070
  1.080
  1.080
  1.080
  1.080
  1.080
  1.080
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
Adjusted equity ratio
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476
  0.476

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  13
  21
  30
  40
  51
  63
  76
  90
  105
  146
  163
  181
  200
  219
  239
  261
  283
  306
  329
  354
  380
  407
  434
  463
  493
  525
  557
  591
  626
Depreciation, amort., depletion, $m
  47
  51
  54
  59
  64
  69
  75
  81
  88
  96
  69
  78
  87
  96
  106
  116
  127
  138
  150
  162
  175
  188
  202
  216
  231
  247
  263
  280
  297
  315
Funds from operations, $m
  54
  64
  75
  89
  104
  120
  138
  157
  179
  201
  216
  241
  268
  296
  325
  356
  388
  421
  456
  492
  529
  568
  609
  651
  695
  740
  788
  837
  888
  941
Change in working capital, $m
  30
  35
  40
  46
  52
  58
  63
  69
  75
  80
  85
  91
  96
  101
  106
  111
  116
  121
  125
  131
  136
  141
  147
  152
  158
  165
  171
  178
  185
  193
Cash from operations, $m
  24
  29
  35
  43
  52
  62
  75
  88
  104
  121
  130
  150
  172
  195
  219
  245
  272
  301
  330
  361
  394
  427
  462
  499
  536
  576
  616
  659
  703
  748
Maintenance CAPEX, $m
  -10
  -13
  -16
  -20
  -24
  -29
  -34
  -40
  -47
  -54
  -61
  -69
  -78
  -87
  -96
  -106
  -116
  -127
  -138
  -150
  -162
  -175
  -188
  -202
  -216
  -231
  -247
  -263
  -280
  -297
New CAPEX, $m
  -60
  -70
  -82
  -93
  -105
  -117
  -128
  -140
  -151
  -162
  -173
  -184
  -194
  -204
  -214
  -224
  -234
  -244
  -254
  -264
  -275
  -286
  -297
  -309
  -321
  -333
  -347
  -361
  -375
  -391
Cash from investing activities, $m
  -70
  -83
  -98
  -113
  -129
  -146
  -162
  -180
  -198
  -216
  -234
  -253
  -272
  -291
  -310
  -330
  -350
  -371
  -392
  -414
  -437
  -461
  -485
  -511
  -537
  -564
  -594
  -624
  -655
  -688
Free cash flow, $m
  -46
  -54
  -62
  -70
  -77
  -83
  -88
  -91
  -94
  -95
  -104
  -103
  -100
  -96
  -91
  -85
  -78
  -71
  -62
  -53
  -44
  -34
  -23
  -12
  -1
  11
  23
  35
  48
  60
Issuance/(repayment) of debt, $m
  84
  98
  114
  130
  146
  162
  179
  195
  211
  226
  241
  256
  270
  284
  298
  312
  326
  340
  354
  368
  383
  398
  413
  430
  447
  464
  483
  502
  523
  545
Issuance/(repurchase) of shares, $m
  70
  76
  82
  88
  93
  96
  99
  101
  101
  100
  73
  69
  65
  59
  52
  44
  36
  26
  16
  5
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  154
  174
  196
  218
  239
  258
  278
  296
  312
  326
  314
  325
  335
  343
  350
  356
  362
  366
  370
  373
  383
  398
  413
  430
  447
  464
  483
  502
  523
  545
Total cash flow (excl. dividends), $m
  108
  120
  134
  148
  162
  176
  190
  204
  218
  231
  210
  222
  235
  247
  259
  271
  283
  295
  308
  320
  339
  364
  390
  418
  446
  475
  506
  537
  571
  605
Retained Cash Flow (-), $m
  -76
  -89
  -103
  -118
  -133
  -147
  -162
  -177
  -191
  -205
  -219
  -232
  -246
  -258
  -271
  -284
  -296
  -309
  -322
  -334
  -348
  -361
  -376
  -390
  -406
  -422
  -439
  -456
  -475
  -495
Prev. year cash balance distribution, $m
  8
  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
  40
  31
  30
  30
  29
  29
  28
  27
  27
  26
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -9
  3
  15
  27
  40
  53
  67
  81
  96
  110
Discount rate, %
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
  37
  27
  24
  21
  19
  16
  14
  12
  10
  8
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  93.4
  88.2
  83.9
  80.3
  77.3
  74.9
  72.8
  71.0
  69.5
  68.3
  67.5
  66.8
  66.3
  65.8
  65.5
  65.2
  65.0
  64.9
  64.8
  64.8
  64.8
  64.8
  64.8
  64.8
  64.8
  64.8
  64.8
  64.8
  64.8
  64.8

CryoLife, Inc. (CryoLife) is a medical device manufacturer and processor, and is engaged in the distribution of medical devices and implantable human tissues used in cardiac surgical procedures. The Company operates through two segments: Medical Devices and Preservation Services. The Medical Devices segment includes medical devices, such as BioGlue Surgical Adhesive, BioFoam Surgical Matrix, On-X Life Technologies Holdings, Inc. valves and surgical products, CardioGenesis cardiac laser therapy product line, PerClot and PhotoFix. PhotoFix is a pericardial patch stabilized using a dye-mediated photo-fixation process that requires no glutaraldehyde. The Preservation Services segment includes external services, such as preservation of cardiac and vascular tissues. The cardiac and vascular human tissues distributed by CryoLife include the CryoValve SG pulmonary heart valve and the CryoPatch SG pulmonary cardiac patch, both of which are processed using CryoLife's SynerGraft technology.

FINANCIAL RATIOS  of  CryoLife, Inc. (CRY)

Valuation Ratios
P/E Ratio 82.3
Price to Sales 5
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow 45.3
Price to Free Cash Flow 64.7
Growth Rates
Sales Growth Rate 23.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate 8.4%
Financial Strength
Quick Ratio 11
Current Ratio 1
LT Debt to Equity 32.1%
Total Debt to Equity 34.4%
Interest Coverage 10
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 5%
Ret/ On T. Cap. - 3 Yr. Avg. 4.1%
Return On Equity 6%
Return On Equity - 3 Yr. Avg. 4.5%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 66.1%
Gross Margin - 3 Yr. Avg. 63.7%
EBITDA Margin 15.6%
EBITDA Margin - 3 Yr. Avg. 11.4%
Operating Margin 11.7%
Oper. Margin - 3 Yr. Avg. 7.1%
Pre-Tax Margin 10%
Pre-Tax Margin - 3 Yr. Avg. 6.8%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 4.6%
Effective Tax Rate 38.9%
Eff/ Tax Rate - 3 Yr. Avg. 31.5%
Payout Ratio 0%

CRY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRY stock intrinsic value calculation we used $263 million for the last fiscal year's total revenue generated by CryoLife, Inc.. The default revenue input number comes from 0001 income statement of CryoLife, 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 CRY stock valuation model: a) initial revenue growth rate of 28.3% 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 7.8%, whose default value for CRY is calculated based on our internal credit rating of CryoLife, 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 CryoLife, 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 CRY stock the variable cost ratio is equal to 95.8%.

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 CRY 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 7% for CryoLife, Inc..

Corporate tax rate of 27% is the nominal tax rate for CryoLife, 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 CRY 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 CRY are equal to 80.4%.

Life of production assets of 21.6 years is the average useful life of capital assets used in CryoLife, 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 CRY is equal to 39.7%. 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 - $275.067 million for CryoLife, 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 37.013 million for CryoLife, 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 CryoLife, Inc. at the current share price and the inputted number of shares is $1.0 billion.

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