Intrinsic value of eMagin - EMAN

Previous Close

$1.32

  Intrinsic Value

$0.10

stock screener

  Rating & Target

str. sell

-93%

Previous close

$1.32

 
Intrinsic value

$0.10

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of EMAN 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, %
  34.30
  31.37
  28.73
  26.36
  24.22
  22.30
  20.57
  19.01
  17.61
  16.35
  15.22
  14.19
  13.28
  12.45
  11.70
  11.03
  10.43
  9.89
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
Revenue, $m
  30
  39
  50
  63
  79
  96
  116
  138
  162
  189
  217
  248
  281
  316
  353
  392
  433
  476
  520
  567
  616
  666
  719
  773
  830
  889
  950
  1,014
  1,080
  1,149
Variable operating expenses, $m
  42
  55
  70
  89
  111
  135
  163
  194
  228
  266
  306
  349
  396
  445
  497
  552
  609
  670
  733
  798
  867
  938
  1,012
  1,088
  1,168
  1,251
  1,338
  1,427
  1,520
  1,617
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
  42
  55
  70
  89
  111
  135
  163
  194
  228
  266
  306
  349
  396
  445
  497
  552
  609
  670
  733
  798
  867
  938
  1,012
  1,088
  1,168
  1,251
  1,338
  1,427
  1,520
  1,617
Operating income, $m
  -12
  -16
  -20
  -26
  -32
  -39
  -47
  -56
  -66
  -77
  -89
  -101
  -115
  -129
  -144
  -160
  -176
  -194
  -212
  -231
  -251
  -271
  -293
  -315
  -338
  -362
  -387
  -413
  -440
  -468
EBITDA, $m
  -10
  -13
  -16
  -21
  -26
  -31
  -38
  -45
  -53
  -62
  -71
  -81
  -92
  -103
  -115
  -128
  -141
  -155
  -170
  -185
  -201
  -218
  -235
  -253
  -271
  -290
  -310
  -331
  -353
  -375
Interest expense (income), $m
  0
  1
  1
  1
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  16
  18
  20
  22
  25
  27
  30
  33
  35
  38
  41
  45
  48
  51
  55
  59
  63
Earnings before tax, $m
  -13
  -17
  -22
  -28
  -35
  -43
  -52
  -62
  -73
  -86
  -99
  -113
  -128
  -145
  -162
  -180
  -199
  -219
  -239
  -261
  -283
  -307
  -331
  -357
  -383
  -410
  -439
  -468
  -499
  -531
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
  -13
  -17
  -22
  -28
  -35
  -43
  -52
  -62
  -73
  -86
  -99
  -113
  -128
  -145
  -162
  -180
  -199
  -219
  -239
  -261
  -283
  -307
  -331
  -357
  -383
  -410
  -439
  -468
  -499
  -531

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
  37
  48
  62
  78
  97
  119
  144
  171
  201
  234
  270
  308
  349
  392
  438
  486
  537
  590
  646
  704
  764
  827
  892
  959
  1,030
  1,103
  1,179
  1,258
  1,340
  1,426
Adjusted assets (=assets-cash), $m
  37
  48
  62
  78
  97
  119
  144
  171
  201
  234
  270
  308
  349
  392
  438
  486
  537
  590
  646
  704
  764
  827
  892
  959
  1,030
  1,103
  1,179
  1,258
  1,340
  1,426
Revenue / Adjusted assets
  0.811
  0.813
  0.806
  0.808
  0.814
  0.807
  0.806
  0.807
  0.806
  0.808
  0.804
  0.805
  0.805
  0.806
  0.806
  0.807
  0.806
  0.807
  0.805
  0.805
  0.806
  0.805
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
  0.806
Average production assets, $m
  12
  16
  20
  26
  32
  39
  47
  56
  66
  76
  88
  101
  114
  128
  143
  159
  175
  193
  211
  230
  249
  270
  291
  313
  336
  360
  385
  411
  438
  465
Working capital, $m
  12
  16
  20
  26
  32
  39
  47
  56
  65
  76
  88
  100
  114
  128
  143
  158
  175
  192
  210
  229
  249
  269
  290
  312
  335
  359
  384
  410
  436
  464
Total debt, $m
  7
  11
  16
  22
  29
  37
  46
  55
  66
  78
  91
  105
  119
  135
  151
  169
  187
  206
  226
  247
  268
  291
  314
  338
  364
  390
  417
  446
  475
  506
Total liabilities, $m
  13
  17
  22
  28
  35
  43
  52
  61
  72
  84
  97
  111
  125
  141
  157
  175
  193
  212
  232
  253
  274
  297
  320
  344
  370
  396
  423
  452
  481
  512
Total equity, $m
  24
  31
  40
  50
  62
  76
  92
  110
  129
  150
  173
  197
  224
  251
  281
  312
  344
  378
  414
  451
  490
  530
  572
  615
  660
  707
  756
  806
  859
  914
Total liabilities and equity, $m
  37
  48
  62
  78
  97
  119
  144
  171
  201
  234
  270
  308
  349
  392
  438
  487
  537
  590
  646
  704
  764
  827
  892
  959
  1,030
  1,103
  1,179
  1,258
  1,340
  1,426
Debt-to-equity ratio
  0.300
  0.370
  0.410
  0.440
  0.460
  0.480
  0.490
  0.510
  0.510
  0.520
  0.530
  0.530
  0.530
  0.540
  0.540
  0.540
  0.540
  0.540
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
Adjusted equity ratio
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -13
  -17
  -22
  -28
  -35
  -43
  -52
  -62
  -73
  -86
  -99
  -113
  -128
  -145
  -162
  -180
  -199
  -219
  -239
  -261
  -283
  -307
  -331
  -357
  -383
  -410
  -439
  -468
  -499
  -531
Depreciation, amort., depletion, $m
  2
  3
  4
  5
  6
  8
  9
  11
  13
  15
  18
  20
  23
  26
  29
  32
  35
  39
  42
  46
  50
  54
  58
  63
  67
  72
  77
  82
  88
  93
Funds from operations, $m
  -10
  -14
  -18
  -23
  -29
  -35
  -43
  -51
  -60
  -70
  -81
  -93
  -106
  -119
  -133
  -148
  -164
  -180
  -197
  -215
  -234
  -253
  -273
  -294
  -316
  -338
  -362
  -386
  -412
  -438
Change in working capital, $m
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
Cash from operations, $m
  -13
  -17
  -22
  -28
  -35
  -42
  -51
  -60
  -70
  -81
  -93
  -105
  -119
  -133
  -148
  -164
  -180
  -197
  -215
  -234
  -253
  -273
  -294
  -316
  -339
  -362
  -387
  -412
  -438
  -466
Maintenance CAPEX, $m
  -2
  -2
  -3
  -4
  -5
  -6
  -8
  -9
  -11
  -13
  -15
  -18
  -20
  -23
  -26
  -29
  -32
  -35
  -39
  -42
  -46
  -50
  -54
  -58
  -63
  -67
  -72
  -77
  -82
  -88
New CAPEX, $m
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
Cash from investing activities, $m
  -5
  -6
  -8
  -9
  -11
  -13
  -16
  -18
  -21
  -24
  -27
  -30
  -33
  -37
  -41
  -45
  -49
  -52
  -57
  -61
  -66
  -70
  -75
  -80
  -86
  -91
  -97
  -103
  -109
  -116
Free cash flow, $m
  -18
  -24
  -30
  -38
  -46
  -56
  -66
  -78
  -91
  -105
  -120
  -136
  -152
  -170
  -189
  -208
  -228
  -250
  -272
  -295
  -319
  -344
  -370
  -396
  -424
  -453
  -483
  -515
  -547
  -581
Issuance/(repayment) of debt, $m
  3
  4
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  28
  30
  31
Issuance/(repurchase) of shares, $m
  19
  24
  31
  38
  47
  57
  68
  80
  93
  107
  122
  138
  155
  172
  191
  211
  231
  253
  275
  298
  322
  347
  373
  400
  428
  457
  487
  519
  552
  586
Cash from financing (excl. dividends), $m  
  22
  28
  36
  44
  54
  65
  77
  90
  104
  119
  135
  152
  170
  188
  207
  228
  249
  272
  295
  319
  344
  370
  396
  424
  453
  483
  514
  547
  582
  617
Total cash flow (excl. dividends), $m
  4
  5
  6
  7
  8
  9
  10
  11
  12
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
Retained Cash Flow (-), $m
  -19
  -24
  -31
  -38
  -47
  -57
  -68
  -80
  -93
  -107
  -122
  -138
  -155
  -172
  -191
  -211
  -231
  -253
  -275
  -298
  -322
  -347
  -373
  -400
  -428
  -457
  -487
  -519
  -552
  -586
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
  -15
  -19
  -25
  -32
  -39
  -48
  -58
  -68
  -80
  -93
  -107
  -122
  -138
  -154
  -172
  -191
  -210
  -231
  -252
  -274
  -297
  -321
  -346
  -372
  -399
  -427
  -456
  -486
  -518
  -551
Discount rate, %
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
  -14
  -17
  -21
  -25
  -28
  -31
  -34
  -37
  -39
  -40
  -40
  -40
  -39
  -37
  -35
  -32
  -29
  -25
  -22
  -19
  -15
  -13
  -10
  -8
  -6
  -4
  -3
  -2
  -1
  -1
Current shareholders' claim on cash, %
  76.2
  58.5
  45.3
  35.3
  27.6
  21.8
  17.3
  13.8
  11.0
  8.9
  7.2
  5.8
  4.7
  3.9
  3.2
  2.6
  2.1
  1.7
  1.4
  1.2
  1.0
  0.8
  0.7
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2

eMagin Corporation is engaged in the manufacture of microdisplays using organic light emitting diode (OLED) technology. The Company designs, develops, manufactures and markets OLED on silicon microdisplays, virtual imaging products that utilizes OLED microdisplays and related products. The Company also performs research in the OLED field. The Company's virtual imaging products integrate OLED technology with silicon chips to produce microdisplays smaller than one-inch diagonally, which when viewed through a magnifier, create virtual images that appear comparable in size to that of a computer monitor or a large-screen television. The Company offers its products to OEMs and other buyers as both separate components, integrated bundles coupled with its own optics, or full systems. The Company also offers engineering support. Its products include SVGA+ OLED Microdisplay Series, Digital SVGA OLED-XL, SXGA096 OLED-XL/XLS, SXGA OLED-XL, WUXGA OLED-XL, VGA OLED-XL and Integrated Modules.

FINANCIAL RATIOS  of  eMagin (EMAN)

Valuation Ratios
P/E Ratio -5.2
Price to Sales 2
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow -4.6
Price to Free Cash Flow -4.2
Growth Rates
Sales Growth Rate -16%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 10%
Interest Coverage 0
Management Effectiveness
Return On Assets -29.1%
Ret/ On Assets - 3 Yr. Avg. -20.9%
Return On Total Capital -35.6%
Ret/ On T. Cap. - 3 Yr. Avg. -25.3%
Return On Equity -37.2%
Return On Equity - 3 Yr. Avg. -25.9%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 28.6%
Gross Margin - 3 Yr. Avg. 27.8%
EBITDA Margin -28.6%
EBITDA Margin - 3 Yr. Avg. -17.3%
Operating Margin -42.9%
Oper. Margin - 3 Yr. Avg. -26%
Pre-Tax Margin -38.1%
Pre-Tax Margin - 3 Yr. Avg. -24.4%
Net Profit Margin -38.1%
Net Profit Margin - 3 Yr. Avg. -24.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

EMAN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EMAN stock intrinsic value calculation we used $22.031 million for the last fiscal year's total revenue generated by eMagin. The default revenue input number comes from 0001 income statement of eMagin. 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 EMAN stock valuation model: a) initial revenue growth rate of 34.3% 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 5.7%, whose default value for EMAN is calculated based on our internal credit rating of eMagin, 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 eMagin.
    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 EMAN stock the variable cost ratio is equal to 140.9%.

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 EMAN 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 13.2% for eMagin.

Corporate tax rate of 27% is the nominal tax rate for eMagin. 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 EMAN 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 EMAN are equal to 40.5%.

Life of production assets of 4.4 years is the average useful life of capital assets used in eMagin 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 EMAN is equal to 40.4%. 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 - $17.491 million for eMagin - 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 45.111 million for eMagin 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 eMagin at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ eMagin Corporation Announces New Board Member   [Oct-16-18 08:00AM  Business Wire]
▶ Is It Too Late To Buy eMagin Corporation (NYSEMKT:EMAN)?   [Mar-16-18 07:34PM  Simply Wall St.]
▶ eMagin Corporation Updates the Market   [Feb-12-18 03:29PM  Business Wire]
▶ ETFs with exposure to eMagin Corp. : December 20, 2017   [Dec-20-17 11:41AM  Capital Cube]
▶ ETFs with exposure to eMagin Corp. : December 8, 2017   [Dec-08-17 12:44PM  Capital Cube]
▶ ETFs with exposure to eMagin Corp. : November 27, 2017   [Nov-27-17 01:20PM  Capital Cube]
▶ ETFs with exposure to eMagin Corp. : November 1, 2017   [Nov-01-17 12:06PM  Capital Cube]
▶ ETFs with exposure to eMagin Corp. : October 18, 2017   [Oct-18-17 09:43AM  Capital Cube]
▶ What Are The Drivers Of eMagin Corporations (EMAN) Risks?   [Oct-02-17 06:57AM  Simply Wall St.]
▶ ETFs with exposure to eMagin Corp. : September 1, 2017   [Sep-01-17 07:41PM  Capital Cube]
▶ ETFs with exposure to eMagin Corp. : June 5, 2017   [Jun-05-17 02:14PM  Capital Cube]
▶ ETFs with exposure to eMagin Corp. : May 25, 2017   [May-25-17 12:39PM  Capital Cube]
▶ ETFs with exposure to eMagin Corp. : April 21, 2017   [Apr-21-17 02:55PM  Capital Cube]
▶ ETFs with exposure to eMagin Corp. : April 5, 2017   [Apr-05-17 04:41PM  Capital Cube]
▶ eMagin Announces Working Capital Facility   [08:00AM  Business Wire]
▶ eMagin Corporation Issues Clarification   [Sep-26-16 08:08AM  Business Wire]

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