Intrinsic value of Champions Oncology - CSBR

Previous Close

$3.20

  Intrinsic Value

$3.43

stock screener

  Rating & Target

hold

+7%

  Value-price divergence*

0%

Previous close

$3.20

 
Intrinsic value

$3.43

 
Up/down potential

+7%

 
Rating

hold

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CSBR 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 2017), $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 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  36.36
  33.30
  30.47
  27.92
  25.63
  23.57
  21.71
  20.04
  18.54
  17.18
  15.96
  14.87
  13.88
  12.99
  12.19
  11.47
  10.83
  10.24
  9.72
  9.25
  8.82
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
Revenue, $m
  15
  20
  26
  33
  42
  52
  63
  76
  90
  105
  122
  140
  159
  180
  202
  225
  250
  275
  302
  330
  359
  390
  421
  454
  488
  523
  560
  598
  638
  679
  723
Variable operating expenses, $m
 
  8
  10
  13
  17
  20
  25
  30
  35
  41
  48
  55
  63
  71
  80
  89
  98
  108
  119
  130
  141
  153
  166
  179
  192
  206
  220
  235
  251
  267
  284
Fixed operating expenses, $m
 
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  24
  24
  25
  25
  26
  27
  27
  28
  29
  29
  30
  31
  32
  33
  33
  34
  35
  36
  37
  38
Total operating expenses, $m
  22
  26
  29
  32
  37
  40
  46
  51
  57
  63
  71
  79
  87
  96
  105
  115
  125
  135
  147
  159
  170
  183
  197
  211
  225
  239
  254
  270
  287
  304
  322
Operating income, $m
  -7
  -6
  -3
  1
  5
  11
  17
  24
  32
  41
  51
  61
  73
  85
  97
  111
  125
  140
  155
  171
  188
  206
  224
  244
  263
  284
  306
  328
  351
  375
  401
EBITDA, $m
  -7
  -6
  -3
  1
  6
  11
  17
  25
  32
  41
  51
  61
  73
  85
  97
  111
  125
  140
  155
  171
  188
  206
  224
  244
  263
  284
  306
  328
  351
  375
  401
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
  7
Earnings before tax, $m
  -7
  -6
  -3
  1
  5
  11
  17
  24
  32
  41
  50
  60
  71
  83
  96
  109
  123
  137
  153
  169
  185
  203
  221
  239
  259
  279
  300
  322
  345
  369
  394
Tax expense, $m
  0
  0
  0
  0
  1
  3
  5
  6
  9
  11
  13
  16
  19
  22
  26
  29
  33
  37
  41
  46
  50
  55
  60
  65
  70
  75
  81
  87
  93
  100
  106
Net income, $m
  -7
  -6
  -3
  1
  4
  8
  12
  18
  23
  30
  36
  44
  52
  61
  70
  79
  90
  100
  111
  123
  135
  148
  161
  175
  189
  204
  219
  235
  252
  269
  287

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3
  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
  8
  7
  9
  11
  14
  17
  21
  25
  30
  35
  41
  47
  53
  60
  67
  75
  83
  92
  101
  110
  120
  130
  140
  151
  163
  174
  187
  199
  213
  226
  241
Adjusted assets (=assets-cash), $m
  5
  7
  9
  11
  14
  17
  21
  25
  30
  35
  41
  47
  53
  60
  67
  75
  83
  92
  101
  110
  120
  130
  140
  151
  163
  174
  187
  199
  213
  226
  241
Revenue / Adjusted assets
  3.000
  2.857
  2.889
  3.000
  3.000
  3.059
  3.000
  3.040
  3.000
  3.000
  2.976
  2.979
  3.000
  3.000
  3.015
  3.000
  3.012
  2.989
  2.990
  3.000
  2.992
  3.000
  3.007
  3.007
  2.994
  3.006
  2.995
  3.005
  2.995
  3.004
  3.000
Average production assets, $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
  0
Working capital, $m
  -1
  -5
  -7
  -9
  -11
  -14
  -17
  -20
  -24
  -28
  -33
  -37
  -43
  -48
  -54
  -60
  -67
  -74
  -81
  -88
  -96
  -104
  -112
  -121
  -130
  -140
  -150
  -160
  -170
  -181
  -193
Total debt, $m
  0
  -2
  0
  2
  5
  8
  11
  15
  19
  24
  29
  34
  40
  46
  53
  60
  67
  75
  83
  91
  100
  109
  118
  128
  138
  149
  160
  172
  183
  196
  209
Total liabilities, $m
  8
  6
  8
  10
  13
  16
  19
  23
  27
  32
  37
  42
  48
  54
  61
  68
  75
  83
  91
  99
  108
  117
  126
  136
  146
  157
  168
  180
  191
  204
  217
Total equity, $m
  0
  1
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  23
  24
Total liabilities and equity, $m
  8
  7
  9
  11
  14
  18
  21
  26
  30
  36
  41
  47
  53
  60
  68
  76
  83
  92
  101
  110
  120
  130
  140
  151
  162
  174
  187
  200
  212
  227
  241
Debt-to-equity ratio
  0.000
  -3.000
  -0.200
  1.810
  3.280
  4.370
  5.190
  5.830
  6.320
  6.720
  7.030
  7.290
  7.500
  7.670
  7.810
  7.940
  8.040
  8.130
  8.210
  8.270
  8.330
  8.380
  8.430
  8.470
  8.510
  8.540
  8.570
  8.600
  8.620
  8.650
  8.670
Adjusted equity ratio
  -0.600
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -7
  -6
  -3
  1
  4
  8
  12
  18
  23
  30
  36
  44
  52
  61
  70
  79
  90
  100
  111
  123
  135
  148
  161
  175
  189
  204
  219
  235
  252
  269
  287
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
  0
  0
  0
  0
  0
  0
  0
  0
Funds from operations, $m
  -2
  -6
  -3
  1
  4
  8
  13
  18
  23
  30
  37
  44
  52
  61
  70
  79
  90
  100
  111
  123
  135
  148
  161
  175
  189
  204
  219
  235
  252
  269
  287
Change in working capital, $m
  1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
Cash from operations, $m
  -3
  -5
  -1
  3
  6
  11
  16
  21
  27
  34
  41
  49
  57
  66
  76
  86
  96
  107
  119
  131
  143
  156
  169
  184
  198
  213
  229
  246
  263
  280
  299
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
  0
  0
  0
  0
  0
  0
  0
New CAPEX, $m
  -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
Cash from investing activities, $m
  -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
Free cash flow, $m
  -4
  -5
  -1
  3
  6
  11
  16
  21
  27
  34
  41
  49
  57
  66
  76
  86
  96
  107
  119
  131
  143
  156
  169
  184
  198
  213
  229
  246
  263
  280
  299
Issuance/(repayment) of debt, $m
  0
  -2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
Issuance/(repurchase) of shares, $m
  0
  10
  3
  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  
  4
  8
  5
  2
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
Total cash flow (excl. dividends), $m
  1
  3
  4
  5
  9
  14
  19
  25
  31
  38
  46
  54
  63
  72
  82
  93
  103
  115
  127
  139
  152
  165
  179
  193
  208
  224
  240
  257
  275
  293
  312
Retained Cash Flow (-), $m
  0
  -10
  -3
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Prev. year cash balance distribution, $m
 
  3
  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
 
  -4
  0
  5
  9
  13
  19
  24
  31
  38
  46
  54
  62
  72
  82
  92
  103
  114
  126
  138
  151
  164
  178
  192
  207
  223
  239
  256
  273
  291
  310
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
 
  -4
  0
  4
  7
  10
  13
  16
  19
  22
  24
  26
  27
  27
  27
  27
  26
  25
  23
  21
  19
  17
  15
  13
  11
  9
  7
  5
  4
  3
  2
Current shareholders' claim on cash, %
  100
  50.0
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4
  8.4

Champions Oncology, Inc. is engaged in the development and sale of technology solutions and products to personalize the development and use of oncology drugs. The Company has two business segments: Personalized Oncology Solutions (POS) and Translational Oncology Solutions (TOS). The POS segment provides physicians and patients information to help guide the development of personalized treatment plans. The TOS segment provides services to pharmaceutical and biotechnology companies seeking personalized approaches to drug development. Its TumorGraft Technology Platform consists of processes, physical tumors and information that it uses to personalize the development and use of oncology drugs. Each tumor from patients that it has preserved for implantation in mice, along with the patient data and molecular information associated with the tumors, are known as TumorGrafts or Patient Derived XenoGrafts of PDX Models. The collection of TumorGrafts is referred to as the Company's TumorBank.

FINANCIAL RATIOS  of  Champions Oncology (CSBR)

Valuation Ratios
P/E Ratio -5
Price to Sales 2.3
Price to Book 0
Price to Tangible Book
Price to Cash Flow -11.7
Price to Free Cash Flow -8.8
Growth Rates
Sales Growth Rate 36.4%
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
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -100%
Ret/ On Assets - 3 Yr. Avg. -111.6%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. -162.1%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. -162.1%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 40%
Gross Margin - 3 Yr. Avg. 26.1%
EBITDA Margin -46.7%
EBITDA Margin - 3 Yr. Avg. -94%
Operating Margin -46.7%
Oper. Margin - 3 Yr. Avg. -97%
Pre-Tax Margin -46.7%
Pre-Tax Margin - 3 Yr. Avg. -94%
Net Profit Margin -46.7%
Net Profit Margin - 3 Yr. Avg. -94%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CSBR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSBR stock intrinsic value calculation we used $15 million for the last fiscal year's total revenue generated by Champions Oncology. The default revenue input number comes from 2017 income statement of Champions Oncology. 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 CSBR stock valuation model: a) initial revenue growth rate of 33.3% 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 4.3%, whose default value for CSBR is calculated based on our internal credit rating of Champions Oncology, 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 Champions Oncology.
    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 CSBR stock the variable cost ratio is equal to 40%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $18 million in the base year in the intrinsic value calculation for CSBR 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 3.5% for Champions Oncology.

Corporate tax rate of 27% is the nominal tax rate for Champions Oncology. 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 CSBR 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 CSBR are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Champions Oncology 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 CSBR is equal to -26.7%. 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 - $0 million for Champions Oncology - 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 10.54 million for Champions Oncology 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 Champions Oncology at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Champions Oncology Signs $2 million Contract   [Nov-17-16 04:05PM  PR Newswire]
▶ Champions Oncology Inc (CSBR) Stock: Have We Met?   [Nov-16-16 07:05PM  at Insider Monkey]
▶ Champions Oncology Successfully Delivers First AML Study   [Jul-18-16 08:30AM  PR Newswire]
▶ 5 Top Biotech Stocks That Ran This Past Week   [Sep-05  09:15AM  at 24/7 Wall St.]
▶ /C O R R E C T I O N -- Champions Oncology, Inc./   [Aug-12  09:25AM  PR Newswire]
Financial statements of CSBR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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