Intrinsic value of Cardiovascular Systems, Inc. - CSII

Previous Close

$39.46

  Intrinsic Value

$22.25

stock screener

  Rating & Target

sell

-44%

Previous close

$39.46

 
Intrinsic value

$22.25

 
Up/down potential

-44%

 
Rating

sell

We calculate the intrinsic value of CSII 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 1.4

 

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, %
  14.40
  13.46
  12.61
  11.85
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.65
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
Revenue, $m
  248
  282
  317
  355
  394
  436
  480
  525
  573
  622
  674
  727
  783
  841
  901
  963
  1,028
  1,096
  1,166
  1,239
  1,315
  1,395
  1,477
  1,563
  1,653
  1,747
  1,845
  1,947
  2,054
  2,166
Variable operating expenses, $m
  171
  194
  218
  243
  270
  298
  328
  359
  391
  425
  457
  493
  531
  570
  611
  653
  697
  743
  791
  840
  892
  946
  1,002
  1,060
  1,121
  1,185
  1,251
  1,320
  1,393
  1,469
Fixed operating expenses, $m
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  83
  84
  86
  88
  90
  92
  94
  96
  98
  100
  103
  105
  107
  110
  112
  114
  117
  120
  122
  125
Total operating expenses, $m
  237
  262
  287
  314
  342
  372
  404
  436
  470
  506
  540
  577
  617
  658
  701
  745
  791
  839
  889
  940
  995
  1,051
  1,109
  1,170
  1,233
  1,299
  1,368
  1,440
  1,515
  1,594
Operating income, $m
  11
  20
  30
  40
  52
  63
  76
  89
  102
  117
  134
  150
  166
  182
  200
  218
  237
  257
  277
  298
  321
  344
  368
  394
  420
  448
  477
  507
  539
  572
EBITDA, $m
  17
  27
  38
  49
  61
  73
  86
  100
  114
  129
  145
  161
  178
  196
  214
  233
  253
  274
  296
  318
  342
  366
  392
  418
  446
  476
  506
  538
  572
  607
Interest expense (income), $m
  1
  2
  3
  3
  4
  5
  6
  7
  8
  10
  11
  12
  13
  15
  16
  18
  19
  21
  23
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
Earnings before tax, $m
  9
  17
  27
  36
  46
  57
  69
  80
  93
  106
  122
  136
  151
  166
  182
  199
  216
  234
  253
  272
  293
  314
  336
  360
  384
  409
  436
  464
  493
  524
Tax expense, $m
  2
  5
  7
  10
  13
  15
  19
  22
  25
  29
  33
  37
  41
  45
  49
  54
  58
  63
  68
  74
  79
  85
  91
  97
  104
  111
  118
  125
  133
  141
Net income, $m
  7
  13
  19
  26
  34
  42
  50
  59
  68
  77
  89
  99
  110
  121
  133
  145
  158
  171
  185
  199
  214
  229
  246
  262
  280
  299
  318
  339
  360
  382

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
  142
  161
  181
  203
  225
  249
  274
  300
  327
  356
  385
  416
  447
  480
  515
  550
  588
  626
  666
  708
  752
  797
  844
  893
  945
  998
  1,054
  1,113
  1,174
  1,238
Adjusted assets (=assets-cash), $m
  142
  161
  181
  203
  225
  249
  274
  300
  327
  356
  385
  416
  447
  480
  515
  550
  588
  626
  666
  708
  752
  797
  844
  893
  945
  998
  1,054
  1,113
  1,174
  1,238
Revenue / Adjusted assets
  1.746
  1.752
  1.751
  1.749
  1.751
  1.751
  1.752
  1.750
  1.752
  1.747
  1.751
  1.748
  1.752
  1.752
  1.750
  1.751
  1.748
  1.751
  1.751
  1.750
  1.749
  1.750
  1.750
  1.750
  1.749
  1.751
  1.750
  1.749
  1.750
  1.750
Average production assets, $m
  36
  41
  46
  51
  57
  63
  69
  76
  82
  90
  97
  105
  113
  121
  130
  139
  148
  158
  168
  178
  189
  201
  213
  225
  238
  252
  266
  280
  296
  312
Working capital, $m
  15
  17
  20
  22
  24
  27
  30
  33
  36
  39
  42
  45
  49
  52
  56
  60
  64
  68
  72
  77
  82
  86
  92
  97
  102
  108
  114
  121
  127
  134
Total debt, $m
  31
  42
  53
  65
  77
  90
  104
  119
  134
  149
  166
  183
  200
  219
  238
  258
  278
  300
  322
  345
  369
  394
  421
  448
  476
  506
  537
  570
  604
  639
Total liabilities, $m
  79
  89
  101
  113
  125
  138
  152
  167
  182
  197
  214
  231
  248
  267
  286
  306
  326
  348
  370
  393
  417
  442
  468
  496
  524
  554
  585
  618
  651
  687
Total equity, $m
  63
  72
  81
  90
  100
  111
  122
  134
  146
  158
  171
  185
  199
  214
  229
  245
  261
  279
  297
  315
  334
  355
  376
  398
  420
  444
  469
  495
  522
  551
Total liabilities and equity, $m
  142
  161
  182
  203
  225
  249
  274
  301
  328
  355
  385
  416
  447
  481
  515
  551
  587
  627
  667
  708
  751
  797
  844
  894
  944
  998
  1,054
  1,113
  1,173
  1,238
Debt-to-equity ratio
  0.490
  0.580
  0.650
  0.720
  0.770
  0.820
  0.860
  0.890
  0.920
  0.940
  0.970
  0.990
  1.010
  1.020
  1.040
  1.050
  1.060
  1.080
  1.090
  1.100
  1.100
  1.110
  1.120
  1.130
  1.130
  1.140
  1.150
  1.150
  1.160
  1.160
Adjusted equity ratio
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7
  13
  19
  26
  34
  42
  50
  59
  68
  77
  89
  99
  110
  121
  133
  145
  158
  171
  185
  199
  214
  229
  246
  262
  280
  299
  318
  339
  360
  382
Depreciation, amort., depletion, $m
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  11
  12
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
Funds from operations, $m
  13
  20
  27
  35
  43
  51
  60
  70
  80
  90
  100
  111
  123
  135
  147
  160
  174
  188
  203
  218
  235
  251
  269
  287
  306
  326
  347
  369
  392
  416
Change in working capital, $m
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
Cash from operations, $m
  11
  18
  25
  33
  40
  49
  58
  67
  77
  87
  97
  108
  119
  131
  144
  156
  170
  184
  199
  214
  230
  246
  264
  282
  301
  321
  341
  363
  386
  410
Maintenance CAPEX, $m
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
New CAPEX, $m
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
Cash from investing activities, $m
  -7
  -9
  -9
  -10
  -12
  -12
  -13
  -15
  -15
  -16
  -17
  -19
  -20
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -35
  -38
  -40
  -42
  -44
  -46
  -49
Free cash flow, $m
  3
  9
  15
  22
  29
  37
  45
  53
  62
  71
  79
  89
  100
  110
  122
  133
  145
  158
  171
  185
  199
  214
  230
  246
  263
  281
  300
  319
  340
  361
Issuance/(repayment) of debt, $m
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  11
  11
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  32
  34
  35
Total cash flow (excl. dividends), $m
  15
  20
  27
  34
  42
  50
  58
  67
  77
  86
  96
  106
  117
  129
  141
  153
  166
  179
  193
  208
  223
  239
  256
  273
  292
  311
  331
  352
  373
  396
Retained Cash Flow (-), $m
  -8
  -8
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
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
  86
  11
  18
  24
  32
  39
  47
  56
  65
  74
  83
  93
  103
  114
  125
  137
  149
  162
  176
  190
  204
  219
  235
  252
  269
  287
  306
  326
  346
  368
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
  83
  10
  15
  20
  25
  29
  32
  35
  37
  39
  39
  40
  39
  38
  37
  35
  33
  30
  27
  24
  21
  18
  15
  13
  10
  8
  7
  5
  4
  3
Current shareholders' claim on cash, %
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7

Cardiovascular Systems, Inc. is a medical technology company. The Company is engaged in treating patients suffering from peripheral and coronary artery diseases, including those with arterial calcium. The Company develops an orbital atherectomy technology for both peripheral and coronary commercial applications. Its peripheral artery disease (PAD) systems are catheter-based platforms capable of treating a range of plaque types in leg arteries both above and below the knee. Its products include Diamondback 360 Peripheral Orbital Atherectomy System (OAS) (Diamondback 360 Peripheral), the Stealth 360 OAS (Stealth 360), Diamondback 360 Peripheral, Diamondback 360 60cm Peripheral, Diamondback 360 Low Profile Peripheral, Diamondback 360 1.50 Peripheral and Diamondback 360 2.00 Peripheral. The Company's coronary arterial disease (CAD) product, Diamondback 360 Coronary OAS (Coronary OAS), is marketed as a treatment for severely calcified coronary arteries.

FINANCIAL RATIOS  of  Cardiovascular Systems, Inc. (CSII)

Valuation Ratios
P/E Ratio -648.1
Price to Sales 6.3
Price to Book 11
Price to Tangible Book
Price to Cash Flow 64.8
Price to Free Cash Flow 72
Growth Rates
Sales Growth Rate 15.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60%
Cap. Spend. - 3 Yr. Gr. Rate -31.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 17.8%
Total Debt to Equity 17.8%
Interest Coverage -1
Management Effectiveness
Return On Assets -0.6%
Ret/ On Assets - 3 Yr. Avg. -18.4%
Return On Total Capital -1.7%
Ret/ On T. Cap. - 3 Yr. Avg. -23.6%
Return On Equity -1.8%
Return On Equity - 3 Yr. Avg. -23.7%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 80.5%
Gross Margin - 3 Yr. Avg. 79.6%
EBITDA Margin 1.5%
EBITDA Margin - 3 Yr. Avg. -14.9%
Operating Margin -0.5%
Oper. Margin - 3 Yr. Avg. -16.5%
Pre-Tax Margin -1%
Pre-Tax Margin - 3 Yr. Avg. -16.9%
Net Profit Margin -1%
Net Profit Margin - 3 Yr. Avg. -16.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CSII stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CSII stock intrinsic value calculation we used $217 million for the last fiscal year's total revenue generated by Cardiovascular Systems, Inc.. The default revenue input number comes from 0001 income statement of Cardiovascular Systems, 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 CSII stock valuation model: a) initial revenue growth rate of 14.4% 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 CSII is calculated based on our internal credit rating of Cardiovascular Systems, 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 Cardiovascular Systems, 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 CSII stock the variable cost ratio is equal to 69.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $65 million in the base year in the intrinsic value calculation for CSII 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 8.1% for Cardiovascular Systems, Inc..

Corporate tax rate of 27% is the nominal tax rate for Cardiovascular Systems, 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 CSII 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 CSII are equal to 14.4%.

Life of production assets of 9.1 years is the average useful life of capital assets used in Cardiovascular Systems, 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 CSII is equal to 6.2%. 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 - $134.47 million for Cardiovascular Systems, 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 34.769 million for Cardiovascular Systems, 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 Cardiovascular Systems, Inc. at the current share price and the inputted number of shares is $1.4 billion.

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