Intrinsic value of Cutera, Inc. - CUTR

Previous Close

$17.97

  Intrinsic Value

$14.34

stock screener

  Rating & Target

sell

-20%

Previous close

$17.97

 
Intrinsic value

$14.34

 
Up/down potential

-20%

 
Rating

sell

We calculate the intrinsic value of CUTR 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 0.2

 

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, %
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
Revenue, $m
  161
  170
  181
  191
  203
  214
  227
  239
  253
  267
  281
  296
  312
  329
  346
  364
  384
  404
  425
  447
  470
  494
  519
  546
  573
  603
  633
  665
  699
  734
Variable operating expenses, $m
  120
  127
  135
  143
  152
  160
  169
  179
  189
  199
  210
  221
  233
  246
  259
  272
  286
  301
  317
  333
  351
  369
  388
  407
  428
  450
  473
  497
  522
  548
Fixed operating expenses, $m
  29
  29
  30
  31
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  53
  54
Total operating expenses, $m
  149
  156
  165
  174
  183
  192
  202
  212
  223
  234
  246
  257
  270
  284
  298
  312
  327
  342
  359
  376
  395
  414
  434
  454
  476
  499
  523
  548
  575
  602
Operating income, $m
  12
  14
  16
  18
  20
  22
  25
  27
  30
  33
  36
  39
  42
  45
  49
  53
  57
  61
  65
  70
  75
  80
  85
  91
  97
  103
  110
  117
  124
  132
EBITDA, $m
  13
  15
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  43
  47
  50
  54
  58
  62
  67
  71
  76
  82
  87
  93
  99
  106
  112
  119
  127
  135
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  9
  9
Earnings before tax, $m
  12
  14
  15
  17
  19
  21
  24
  26
  28
  31
  34
  37
  40
  43
  46
  49
  53
  57
  61
  65
  70
  75
  80
  85
  90
  96
  103
  109
  116
  123
Tax expense, $m
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  28
  29
  31
  33
Net income, $m
  9
  10
  11
  13
  14
  16
  17
  19
  21
  22
  25
  27
  29
  31
  34
  36
  39
  42
  45
  48
  51
  54
  58
  62
  66
  70
  75
  80
  85
  90

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
  118
  126
  133
  141
  149
  158
  167
  176
  186
  196
  207
  218
  230
  242
  255
  269
  283
  297
  313
  329
  346
  364
  382
  402
  423
  444
  467
  490
  515
  541
Adjusted assets (=assets-cash), $m
  118
  126
  133
  141
  149
  158
  167
  176
  186
  196
  207
  218
  230
  242
  255
  269
  283
  297
  313
  329
  346
  364
  382
  402
  423
  444
  467
  490
  515
  541
Revenue / Adjusted assets
  1.364
  1.349
  1.361
  1.355
  1.362
  1.354
  1.359
  1.358
  1.360
  1.362
  1.357
  1.358
  1.357
  1.360
  1.357
  1.353
  1.357
  1.360
  1.358
  1.359
  1.358
  1.357
  1.359
  1.358
  1.355
  1.358
  1.355
  1.357
  1.357
  1.357
Average production assets, $m
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
Working capital, $m
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
Total debt, $m
  3
  6
  9
  12
  16
  20
  23
  27
  31
  36
  40
  45
  50
  55
  60
  66
  72
  78
  84
  91
  98
  105
  113
  121
  130
  139
  148
  158
  168
  179
Total liabilities, $m
  49
  52
  56
  59
  62
  66
  70
  74
  78
  82
  86
  91
  96
  101
  106
  112
  118
  124
  130
  137
  144
  152
  159
  168
  176
  185
  195
  204
  215
  226
Total equity, $m
  69
  73
  78
  82
  87
  92
  97
  103
  109
  115
  121
  127
  134
  141
  149
  157
  165
  173
  182
  192
  202
  212
  223
  234
  246
  259
  272
  286
  300
  316
Total liabilities and equity, $m
  118
  125
  134
  141
  149
  158
  167
  177
  187
  197
  207
  218
  230
  242
  255
  269
  283
  297
  312
  329
  346
  364
  382
  402
  422
  444
  467
  490
  515
  542
Debt-to-equity ratio
  0.040
  0.080
  0.120
  0.150
  0.180
  0.210
  0.240
  0.260
  0.290
  0.310
  0.330
  0.350
  0.370
  0.390
  0.400
  0.420
  0.430
  0.450
  0.460
  0.470
  0.490
  0.500
  0.510
  0.520
  0.530
  0.540
  0.540
  0.550
  0.560
  0.570
Adjusted equity ratio
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  10
  11
  13
  14
  16
  17
  19
  21
  22
  25
  27
  29
  31
  34
  36
  39
  42
  45
  48
  51
  54
  58
  62
  66
  70
  75
  80
  85
  90
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
Funds from operations, $m
  9
  11
  12
  13
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  43
  46
  49
  53
  56
  60
  64
  68
  72
  77
  82
  87
  93
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
Cash from operations, $m
  9
  10
  11
  13
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  34
  36
  39
  42
  45
  48
  51
  55
  58
  62
  66
  71
  75
  80
  85
  90
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
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
  -1
  -1
  -1
  -1
  -1
  -1
Cash from investing activities, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
Free cash flow, $m
  8
  9
  11
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  43
  46
  49
  53
  56
  60
  64
  68
  73
  77
  82
  87
Issuance/(repayment) of debt, $m
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
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  
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
Total cash flow (excl. dividends), $m
  11
  12
  14
  15
  17
  18
  20
  22
  24
  26
  28
  30
  33
  35
  38
  40
  43
  46
  49
  53
  56
  60
  64
  68
  72
  77
  82
  87
  92
  98
Retained Cash Flow (-), $m
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
Prev. year cash balance distribution, $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 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
  7
  8
  9
  11
  12
  13
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  35
  38
  40
  43
  46
  50
  53
  57
  61
  65
  69
  73
  78
  83
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
  7
  7
  8
  9
  9
  10
  10
  10
  10
  10
  10
  10
  10
  9
  9
  8
  8
  7
  6
  6
  5
  4
  3
  3
  2
  2
  1
  1
  1
  1
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

Cutera, Inc. is a medical device company. The Company is engaged in the design, development, manufacture, marketing and servicing of laser and other energy-based aesthetics systems for practitioners across the world. The Company offers products based on product platforms, such as enlighten, excel HR, truSculpt, excel V and xeo, each of which enables physicians and other practitioners to perform aesthetic procedures for customers. Each of its laser and other energy-based platforms consists of one or more hand pieces and a console that incorporates a universal graphical user interface, a laser or other energy-based module, control system software and high voltage electronics. The Company also offers products, such as CoolGlide that includes CV, Excel and Vantage; Solera that includes Titan S, ProWave 770, OPS 600, LP560, AcuTip 500, Titan V/XL and LimeLight, and a third-party sourced system, myQ for the Japanese market.

FINANCIAL RATIOS  of  Cutera, Inc. (CUTR)

Valuation Ratios
P/E Ratio 82.5
Price to Sales 2.1
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 123.7
Price to Free Cash Flow 247.4
Growth Rates
Sales Growth Rate 24.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
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 3.5%
Ret/ On Assets - 3 Yr. Avg. -3.6%
Return On Total Capital 5.4%
Ret/ On T. Cap. - 3 Yr. Avg. -4.7%
Return On Equity 5.4%
Return On Equity - 3 Yr. Avg. -4.7%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 57.6%
Gross Margin - 3 Yr. Avg. 56.5%
EBITDA Margin 3.4%
EBITDA Margin - 3 Yr. Avg. -3.8%
Operating Margin 1.7%
Oper. Margin - 3 Yr. Avg. -5.5%
Pre-Tax Margin 2.5%
Pre-Tax Margin - 3 Yr. Avg. -4.8%
Net Profit Margin 2.5%
Net Profit Margin - 3 Yr. Avg. -5.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -3.3%
Payout Ratio 0%

CUTR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CUTR stock intrinsic value calculation we used $151 million for the last fiscal year's total revenue generated by Cutera, Inc.. The default revenue input number comes from 0001 income statement of Cutera, 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 CUTR stock valuation model: a) initial revenue growth rate of 6.3% 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 CUTR is calculated based on our internal credit rating of Cutera, 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 Cutera, 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 CUTR stock the variable cost ratio is equal to 74.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $28 million in the base year in the intrinsic value calculation for CUTR 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 Cutera, Inc..

Corporate tax rate of 27% is the nominal tax rate for Cutera, 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 CUTR 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 CUTR are equal to 1.8%.

Life of production assets of 3.3 years is the average useful life of capital assets used in Cutera, 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 CUTR is equal to 6.1%. 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 - $64.893 million for Cutera, 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 13.904 million for Cutera, 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 Cutera, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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