Intrinsic value of electroCore - ECOR

Previous Close

$4.90

  Intrinsic Value

$15.53

stock screener

  Rating & Target

str. buy

+217%

Previous close

$4.90

 
Intrinsic value

$15.53

 
Up/down potential

+217%

 
Rating

str. buy

We calculate the intrinsic value of ECOR 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 0.1

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1
  2
  3
  4
  6
  8
  11
  15
  19
  24
  30
  37
  44
  53
  62
  72
  83
  95
  107
  121
  135
  150
  165
  181
  198
  216
  235
  254
  274
  295
Variable operating expenses, $m
  19
  30
  45
  65
  92
  127
  170
  223
  287
  363
  450
  551
  664
  790
  929
  1,080
  1,244
  1,421
  1,609
  1,809
  2,021
  2,243
  2,477
  2,721
  2,977
  3,243
  3,521
  3,809
  4,109
  4,421
Fixed operating expenses, $m
  11
  11
  12
  12
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
Total operating expenses, $m
  30
  41
  57
  77
  104
  140
  183
  236
  300
  377
  464
  565
  679
  805
  944
  1,096
  1,260
  1,437
  1,626
  1,826
  2,038
  2,261
  2,495
  2,740
  2,996
  3,262
  3,541
  3,829
  4,130
  4,442
Operating income, $m
  -29
  -40
  -54
  -73
  -98
  -131
  -171
  -221
  -281
  -352
  -434
  -528
  -634
  -752
  -882
  -1,024
  -1,177
  -1,342
  -1,518
  -1,705
  -1,903
  -2,111
  -2,330
  -2,558
  -2,797
  -3,046
  -3,306
  -3,575
  -3,856
  -4,148
EBITDA, $m
  -29
  -40
  -54
  -73
  -98
  -131
  -171
  -221
  -281
  -352
  -434
  -528
  -633
  -751
  -881
  -1,022
  -1,176
  -1,340
  -1,516
  -1,703
  -1,900
  -2,108
  -2,326
  -2,555
  -2,793
  -3,042
  -3,301
  -3,570
  -3,850
  -4,141
Interest expense (income), $m
  0
  0
  -411
  -393
  -368
  -334
  -289
  -230
  -157
  -67
  41
  169
  317
  486
  677
  890
  1,125
  1,381
  1,658
  1,956
  2,274
  2,612
  2,969
  3,345
  3,740
  4,153
  4,585
  5,035
  5,503
  5,991
  6,498
Earnings before tax, $m
  -29
  372
  340
  295
  236
  158
  59
  -64
  -214
  -393
  -603
  -845
  -1,120
  -1,429
  -1,772
  -2,149
  -2,558
  -3,000
  -3,474
  -3,980
  -4,515
  -5,080
  -5,675
  -6,298
  -6,950
  -7,631
  -8,340
  -9,079
  -9,847
  -10,646
Tax expense, $m
  0
  100
  92
  80
  64
  43
  16
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -29
  271
  248
  216
  172
  115
  43
  -64
  -214
  -393
  -603
  -845
  -1,120
  -1,429
  -1,772
  -2,149
  -2,558
  -3,000
  -3,474
  -3,980
  -4,515
  -5,080
  -5,675
  -6,298
  -6,950
  -7,631
  -8,340
  -9,079
  -9,847
  -10,646

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
  11
  16
  25
  36
  50
  69
  93
  122
  157
  198
  246
  301
  363
  432
  507
  590
  680
  776
  879
  989
  1,104
  1,226
  1,353
  1,487
  1,627
  1,772
  1,924
  2,082
  2,246
  2,416
Adjusted assets (=assets-cash), $m
  11
  16
  25
  36
  50
  69
  93
  122
  157
  198
  246
  301
  363
  432
  507
  590
  680
  776
  879
  989
  1,104
  1,226
  1,353
  1,487
  1,627
  1,772
  1,924
  2,082
  2,246
  2,416
Revenue / Adjusted assets
  0.091
  0.125
  0.120
  0.111
  0.120
  0.116
  0.118
  0.123
  0.121
  0.121
  0.122
  0.123
  0.121
  0.123
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
Average production assets, $m
  0
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  12
  13
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
Working capital, $m
  -6
  -9
  -13
  -19
  -26
  -36
  -48
  -63
  -82
  -103
  -128
  -156
  -189
  -224
  -264
  -307
  -353
  -404
  -457
  -514
  -574
  -637
  -704
  -773
  -846
  -921
  -1,000
  -1,082
  -1,167
  -1,256
Total debt, $m
  -120
  -115
  -107
  -97
  -84
  -67
  -46
  -20
  12
  49
  92
  142
  197
  259
  327
  402
  483
  569
  662
  760
  864
  974
  1,089
  1,209
  1,335
  1,466
  1,602
  1,744
  1,892
  2,045
Total liabilities, $m
  10
  15
  22
  32
  45
  62
  84
  110
  141
  178
  222
  271
  326
  388
  457
  531
  612
  699
  791
  890
  994
  1,103
  1,218
  1,338
  1,464
  1,595
  1,731
  1,873
  2,021
  2,174
Total equity, $m
  1
  2
  2
  4
  5
  7
  9
  12
  16
  20
  25
  30
  36
  43
  51
  59
  68
  78
  88
  99
  110
  123
  135
  149
  163
  177
  192
  208
  225
  242
Total liabilities and equity, $m
  11
  17
  24
  36
  50
  69
  93
  122
  157
  198
  247
  301
  362
  431
  508
  590
  680
  777
  879
  989
  1,104
  1,226
  1,353
  1,487
  1,627
  1,772
  1,923
  2,081
  2,246
  2,416
Debt-to-equity ratio
  -112.500
  -69.640
  -43.590
  -27.240
  -16.690
  -9.690
  -4.920
  -1.600
  0.760
  2.480
  3.750
  4.700
  5.440
  6.000
  6.450
  6.810
  7.100
  7.330
  7.530
  7.690
  7.830
  7.950
  8.040
  8.130
  8.210
  8.270
  8.330
  8.380
  8.420
  8.460
Adjusted equity ratio
  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
  -29
  271
  248
  216
  172
  115
  43
  -64
  -214
  -393
  -603
  -845
  -1,120
  -1,429
  -1,772
  -2,149
  -2,558
  -3,000
  -3,474
  -3,980
  -4,515
  -5,080
  -5,675
  -6,298
  -6,950
  -7,631
  -8,340
  -9,079
  -9,847
  -10,646
Depreciation, amort., depletion, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  6
  6
  6
Funds from operations, $m
  -29
  271
  248
  216
  172
  115
  43
  -64
  -214
  -393
  -602
  -844
  -1,119
  -1,428
  -1,771
  -2,147
  -2,556
  -2,998
  -3,472
  -3,977
  -4,512
  -5,077
  -5,671
  -6,294
  -6,946
  -7,626
  -8,335
  -9,073
  -9,841
  -10,639
Change in working capital, $m
  -2
  -3
  -4
  -6
  -8
  -10
  -12
  -15
  -18
  -21
  -25
  -28
  -32
  -36
  -39
  -43
  -47
  -50
  -53
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -79
  -82
  -85
  -89
Cash from operations, $m
  -27
  274
  252
  221
  180
  125
  55
  -49
  -196
  -371
  -578
  -816
  -1,087
  -1,392
  -1,731
  -2,104
  -2,510
  -2,948
  -3,419
  -3,920
  -4,452
  -5,014
  -5,605
  -6,225
  -6,874
  -7,551
  -8,256
  -8,991
  -9,756
  -10,550
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
Free cash flow, $m
  -27
  274
  252
  221
  179
  125
  55
  -50
  -197
  -372
  -579
  -817
  -1,089
  -1,394
  -1,733
  -2,106
  -2,512
  -2,951
  -3,422
  -3,924
  -4,456
  -5,019
  -5,610
  -6,230
  -6,879
  -7,557
  -8,263
  -8,999
  -9,763
  -10,559
Issuance/(repayment) of debt, $m
  -120
  5
  7
  10
  13
  17
  21
  26
  31
  37
  43
  49
  56
  62
  68
  75
  81
  87
  93
  98
  104
  109
  115
  120
  126
  131
  136
  142
  148
  153
Issuance/(repurchase) of shares, $m
  152
  0
  0
  0
  0
  0
  0
  67
  218
  397
  608
  851
  1,127
  1,436
  1,780
  2,157
  2,567
  3,010
  3,485
  3,991
  4,527
  5,093
  5,688
  6,312
  6,964
  7,646
  8,356
  9,095
  9,863
  10,663
Cash from financing (excl. dividends), $m  
  32
  5
  7
  10
  13
  17
  21
  93
  249
  434
  651
  900
  1,183
  1,498
  1,848
  2,232
  2,648
  3,097
  3,578
  4,089
  4,631
  5,202
  5,803
  6,432
  7,090
  7,777
  8,492
  9,237
  10,011
  10,816
Total cash flow (excl. dividends), $m
  5
  280
  259
  231
  193
  142
  76
  44
  53
  62
  72
  83
  93
  104
  115
  125
  135
  145
  155
  165
  174
  184
  193
  202
  211
  220
  229
  238
  247
  257
Retained Cash Flow (-), $m
  -152
  -1
  -1
  -1
  -1
  -2
  -2
  -67
  -218
  -397
  -608
  -851
  -1,127
  -1,436
  -1,780
  -2,157
  -2,567
  -3,010
  -3,485
  -3,991
  -4,527
  -5,093
  -5,688
  -6,312
  -6,964
  -7,646
  -8,356
  -9,095
  -9,863
  -10,663
Prev. year cash balance distribution, $m
  31
  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
  -116
  279
  259
  230
  191
  140
  74
  -23
  -165
  -335
  -536
  -768
  -1,033
  -1,332
  -1,665
  -2,032
  -2,432
  -2,865
  -3,329
  -3,826
  -4,352
  -4,909
  -5,495
  -6,110
  -6,754
  -7,426
  -8,127
  -8,857
  -9,616
  -10,405
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
  -111
  255
  225
  189
  148
  102
  50
  -15
  -95
  -176
  -254
  -328
  -393
  -447
  -489
  -516
  -529
  -528
  -513
  -486
  -450
  -407
  -360
  -311
  -263
  -217
  -174
  -137
  -105
  -78
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  6.1
  0.3
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

FINANCIAL RATIOS  of  electroCore (ECOR)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
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 NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

ECOR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ECOR stock intrinsic value calculation we used $0.811457 million for the last fiscal year's total revenue generated by electroCore. The default revenue input number comes from 0001 income statement of electroCore. 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 ECOR stock valuation model: a) initial revenue growth rate of 60% 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 ECOR is calculated based on our internal credit rating of electroCore, 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 electroCore.
    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 ECOR stock the variable cost ratio is equal to 1500%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $11 million in the base year in the intrinsic value calculation for ECOR 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 343.5% for electroCore.

Corporate tax rate of 27% is the nominal tax rate for electroCore. 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 ECOR 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 ECOR are equal to 10.9%.

Life of production assets of 3.4 years is the average useful life of capital assets used in electroCore 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 ECOR is equal to -426.1%. 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 - $-90.071611 million for electroCore - 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 27.561 million for electroCore 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 electroCore at the current share price and the inputted number of shares is $0.1 billion.

COMPANY NEWS

▶ electroCore, Inc. Announces Third Quarter Financial Results   [Nov-13-18 04:05PM  GlobeNewswire]
▶ Who Really Owns electroCore Inc (NASDAQ:ECOR)?   [Sep-25-18 11:22AM  Simply Wall St.]
▶ [$$] Autolus, ElectroCore IPOs Cap Strong Week for Life Sciences   [Jun-22-18 07:07PM  The Wall Street Journal]
▶ 8 Biotech Stocks With IPOs This Week   [Jun-20-18 03:11PM  InvestorPlace]

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