Intrinsic value of Endologix, Inc. - ELGX

Previous Close

$6.71

  Intrinsic Value

$13.56

stock screener

  Rating & Target

str. buy

+102%

Previous close

$6.71

 
Intrinsic value

$13.56

 
Up/down potential

+102%

 
Rating

str. buy

We calculate the intrinsic value of ELGX 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 0.0

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  185
  189
  194
  199
  205
  212
  219
  227
  235
  244
  254
  264
  275
  287
  299
  312
  326
  341
  356
  373
  390
  408
  428
  448
  469
  492
  515
  540
  566
  594
Variable operating expenses, $m
  275
  282
  289
  297
  306
  316
  326
  338
  350
  364
  376
  392
  408
  425
  443
  463
  483
  505
  528
  552
  578
  605
  633
  663
  695
  728
  763
  800
  839
  880
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
  275
  282
  289
  297
  306
  316
  326
  338
  350
  364
  376
  392
  408
  425
  443
  463
  483
  505
  528
  552
  578
  605
  633
  663
  695
  728
  763
  800
  839
  880
Operating income, $m
  -91
  -93
  -95
  -98
  -101
  -104
  -107
  -111
  -115
  -120
  -122
  -127
  -133
  -138
  -144
  -150
  -157
  -164
  -172
  -180
  -188
  -197
  -206
  -216
  -226
  -237
  -248
  -260
  -273
  -286
EBITDA, $m
  -84
  -86
  -88
  -90
  -93
  -96
  -99
  -103
  -107
  -111
  -115
  -120
  -125
  -130
  -136
  -142
  -148
  -155
  -162
  -169
  -177
  -185
  -194
  -203
  -213
  -223
  -234
  -245
  -257
  -269
Interest expense (income), $m
  6
  25
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  39
  40
  42
  44
  47
  49
  51
  54
  57
  59
  63
  66
  69
  73
  76
  80
  84
  89
Earnings before tax, $m
  -116
  -118
  -121
  -125
  -129
  -133
  -137
  -142
  -148
  -153
  -158
  -164
  -171
  -179
  -186
  -195
  -204
  -213
  -223
  -233
  -244
  -256
  -268
  -281
  -295
  -309
  -324
  -340
  -357
  -375
Tax expense, $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
Net income, $m
  -116
  -118
  -121
  -125
  -129
  -133
  -137
  -142
  -148
  -153
  -158
  -164
  -171
  -179
  -186
  -195
  -204
  -213
  -223
  -233
  -244
  -256
  -268
  -281
  -295
  -309
  -324
  -340
  -357
  -375

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
  355
  363
  373
  383
  395
  407
  421
  436
  452
  470
  488
  508
  529
  552
  576
  601
  627
  656
  686
  717
  750
  785
  822
  861
  902
  945
  991
  1,039
  1,089
  1,142
Adjusted assets (=assets-cash), $m
  355
  363
  373
  383
  395
  407
  421
  436
  452
  470
  488
  508
  529
  552
  576
  601
  627
  656
  686
  717
  750
  785
  822
  861
  902
  945
  991
  1,039
  1,089
  1,142
Revenue / Adjusted assets
  0.521
  0.521
  0.520
  0.520
  0.519
  0.521
  0.520
  0.521
  0.520
  0.519
  0.520
  0.520
  0.520
  0.520
  0.519
  0.519
  0.520
  0.520
  0.519
  0.520
  0.520
  0.520
  0.521
  0.520
  0.520
  0.521
  0.520
  0.520
  0.520
  0.520
Average production assets, $m
  125
  128
  132
  135
  139
  144
  149
  154
  160
  166
  172
  179
  187
  195
  203
  212
  222
  232
  242
  253
  265
  277
  290
  304
  319
  334
  350
  367
  384
  403
Working capital, $m
  40
  41
  42
  43
  44
  46
  47
  49
  51
  53
  55
  57
  59
  62
  65
  67
  70
  74
  77
  81
  84
  88
  92
  97
  101
  106
  111
  117
  122
  128
Total debt, $m
  231
  237
  245
  253
  262
  272
  283
  295
  307
  321
  336
  351
  368
  385
  404
  424
  445
  467
  490
  515
  541
  568
  597
  628
  660
  694
  729
  767
  806
  848
Total liabilities, $m
  278
  285
  292
  300
  309
  319
  330
  342
  355
  368
  383
  398
  415
  433
  451
  471
  492
  514
  537
  562
  588
  616
  645
  675
  707
  741
  777
  814
  854
  895
Total equity, $m
  77
  78
  80
  83
  85
  88
  91
  94
  98
  101
  105
  110
  114
  119
  124
  130
  136
  142
  148
  155
  162
  170
  178
  186
  195
  204
  214
  224
  235
  247
Total liabilities and equity, $m
  355
  363
  372
  383
  394
  407
  421
  436
  453
  469
  488
  508
  529
  552
  575
  601
  628
  656
  685
  717
  750
  786
  823
  861
  902
  945
  991
  1,038
  1,089
  1,142
Debt-to-equity ratio
  3.010
  3.030
  3.040
  3.060
  3.070
  3.090
  3.110
  3.130
  3.150
  3.160
  3.180
  3.200
  3.220
  3.230
  3.250
  3.260
  3.280
  3.300
  3.310
  3.320
  3.340
  3.350
  3.360
  3.380
  3.390
  3.400
  3.410
  3.420
  3.430
  3.440
Adjusted equity ratio
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -116
  -118
  -121
  -125
  -129
  -133
  -137
  -142
  -148
  -153
  -158
  -164
  -171
  -179
  -186
  -195
  -204
  -213
  -223
  -233
  -244
  -256
  -268
  -281
  -295
  -309
  -324
  -340
  -357
  -375
Depreciation, amort., depletion, $m
  7
  7
  7
  7
  8
  8
  8
  8
  8
  9
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
Funds from operations, $m
  -109
  -111
  -114
  -117
  -121
  -125
  -129
  -134
  -139
  -145
  -151
  -157
  -164
  -171
  -178
  -186
  -195
  -204
  -213
  -223
  -234
  -245
  -257
  -269
  -282
  -296
  -310
  -325
  -341
  -358
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
Cash from operations, $m
  -109
  -112
  -115
  -119
  -122
  -126
  -131
  -136
  -141
  -147
  -153
  -159
  -166
  -173
  -181
  -189
  -198
  -207
  -216
  -227
  -237
  -249
  -261
  -273
  -287
  -301
  -315
  -331
  -347
  -364
Maintenance CAPEX, $m
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
New CAPEX, $m
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
Cash from investing activities, $m
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -14
  -14
  -14
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -26
  -28
  -30
  -31
  -33
  -35
Free cash flow, $m
  -117
  -120
  -124
  -128
  -132
  -137
  -142
  -147
  -153
  -159
  -166
  -173
  -181
  -189
  -197
  -206
  -216
  -226
  -236
  -248
  -259
  -272
  -285
  -299
  -313
  -329
  -345
  -362
  -380
  -398
Issuance/(repayment) of debt, $m
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  31
  32
  34
  36
  37
  39
  41
Issuance/(repurchase) of shares, $m
  117
  120
  123
  127
  131
  135
  140
  145
  151
  157
  162
  168
  176
  183
  192
  200
  209
  219
  229
  240
  252
  264
  276
  290
  304
  319
  334
  351
  368
  386
Cash from financing (excl. dividends), $m  
  123
  126
  130
  135
  140
  145
  151
  157
  164
  171
  177
  184
  193
  201
  211
  220
  230
  241
  252
  265
  278
  291
  305
  321
  336
  353
  370
  388
  407
  427
Total cash flow (excl. dividends), $m
  6
  6
  7
  8
  8
  9
  10
  10
  11
  11
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
Retained Cash Flow (-), $m
  -117
  -120
  -123
  -127
  -131
  -135
  -140
  -145
  -151
  -157
  -162
  -168
  -176
  -183
  -192
  -200
  -209
  -219
  -229
  -240
  -252
  -264
  -276
  -290
  -304
  -319
  -334
  -351
  -368
  -386
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
  -111
  -114
  -116
  -119
  -123
  -127
  -131
  -135
  -140
  -146
  -151
  -158
  -164
  -171
  -179
  -186
  -195
  -204
  -213
  -223
  -233
  -244
  -256
  -268
  -281
  -295
  -309
  -324
  -340
  -357
Discount rate, %
  10.00
  10.50
  11.03
  11.58
  12.16
  12.76
  13.40
  14.07
  14.77
  15.51
  16.29
  17.10
  17.96
  18.86
  19.80
  20.79
  21.83
  22.92
  24.07
  25.27
  26.53
  27.86
  29.25
  30.72
  32.25
  33.86
  35.56
  37.33
  39.20
  41.16
PV of cash for distribution, $m
  -101
  -93
  -85
  -77
  -69
  -62
  -54
  -47
  -41
  -34
  -29
  -24
  -19
  -15
  -12
  -9
  -7
  -5
  -4
  -2
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  31.0
  9.6
  2.9
  0.9
  0.3
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
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Endologix, Inc. is engaged in developing, manufacturing, marketing and selling medical devices for the treatment of aortic disorders. The Company's products are intended for the treatment of abdominal aortic aneurysms (AAA). The AAA products are built on one of two platforms, including traditional minimally invasive endovascular repair (EVAR) or endovascular sealing (EVAS), its solution for sealing the aneurysm sac while maintaining blood flow through two blood flow lumens. The EVAR products include the Endologix AFX Endovascular AAA System (AFX), the VELA Proximal Endograft (VELA) and the Endologix Powerlink with Intuitrak Delivery System (Intuitrak). The EVAS product is the Nellix EndoVascular Aneurysm Sealing System (Nellix EVAS System). It offers accessories to facilitate the optimal delivery of its EVAR products, including compatible guidewires, snares, and catheter introducer sheaths.

FINANCIAL RATIOS  of  Endologix, Inc. (ELGX)

Valuation Ratios
P/E Ratio -3.6
Price to Sales 2.9
Price to Book 4.9
Price to Tangible Book
Price to Cash Flow -7.4
Price to Free Cash Flow -7.1
Growth Rates
Sales Growth Rate 25.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 156.6%
Total Debt to Equity 156.6%
Interest Coverage -25
Management Effectiveness
Return On Assets -43.1%
Ret/ On Assets - 3 Yr. Avg. -23.9%
Return On Total Capital -55.3%
Ret/ On T. Cap. - 3 Yr. Avg. -31.4%
Return On Equity -143.5%
Return On Equity - 3 Yr. Avg. -71.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 64.2%
Gross Margin - 3 Yr. Avg. 67.4%
EBITDA Margin -72%
EBITDA Margin - 3 Yr. Avg. -41.3%
Operating Margin -48.2%
Oper. Margin - 3 Yr. Avg. -32.3%
Pre-Tax Margin -79.8%
Pre-Tax Margin - 3 Yr. Avg. -46.8%
Net Profit Margin -80.3%
Net Profit Margin - 3 Yr. Avg. -44.8%
Effective Tax Rate -0.6%
Eff/ Tax Rate - 3 Yr. Avg. 5.3%
Payout Ratio 0%

ELGX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ELGX stock intrinsic value calculation we used $181 million for the last fiscal year's total revenue generated by Endologix, Inc.. The default revenue input number comes from 0001 income statement of Endologix, 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 ELGX stock valuation model: a) initial revenue growth rate of 2% 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 10%, whose default value for ELGX is calculated based on our internal credit rating of Endologix, 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 Endologix, 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 ELGX stock the variable cost ratio is equal to 149.2%.

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 ELGX 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 11% for Endologix, Inc..

Corporate tax rate of 27% is the nominal tax rate for Endologix, 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 ELGX 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 ELGX are equal to 67.9%.

Life of production assets of 24.6 years is the average useful life of capital assets used in Endologix, 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 ELGX is equal to 21.6%. 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 - $75.062 million for Endologix, 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 1.034 million for Endologix, 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 Endologix, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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