Intrinsic value of Enzo Biochem - ENZ

Previous Close

$4.07

  Intrinsic Value

$13.53

stock screener

  Rating & Target

str. buy

+233%

Previous close

$4.07

 
Intrinsic value

$13.53

 
Up/down potential

+233%

 
Rating

str. buy

We calculate the intrinsic value of ENZ 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 2017), $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
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  5.00
Revenue, $m
  113
  119
  125
  131
  137
  144
  151
  159
  167
  175
  184
  193
  202
  212
  223
  234
  246
  258
  271
  284
  298
  313
  329
  345
  363
  381
  400
  420
  441
  463
Variable operating expenses, $m
  62
  65
  68
  71
  75
  78
  82
  86
  91
  95
  99
  104
  109
  114
  120
  126
  132
  139
  146
  153
  160
  168
  177
  186
  195
  205
  215
  226
  237
  249
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
  62
  65
  68
  71
  75
  78
  82
  86
  91
  95
  99
  104
  109
  114
  120
  126
  132
  139
  146
  153
  160
  168
  177
  186
  195
  205
  215
  226
  237
  249
Operating income, $m
  51
  54
  57
  59
  62
  66
  69
  72
  76
  80
  85
  89
  93
  98
  103
  108
  114
  119
  125
  131
  138
  145
  152
  160
  168
  176
  185
  194
  204
  214
EBITDA, $m
  54
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
  97
  102
  107
  112
  118
  124
  130
  136
  143
  150
  158
  166
  174
  183
  192
  201
  211
  222
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
Earnings before tax, $m
  51
  54
  57
  59
  62
  65
  69
  72
  76
  79
  84
  88
  93
  97
  102
  107
  112
  118
  124
  130
  136
  143
  150
  158
  165
  174
  182
  191
  201
  211
Tax expense, $m
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
Net income, $m
  38
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  68
  71
  74
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
  127
  133
  140
  147
  154

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
  64
  68
  71
  74
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
  127
  133
  140
  147
  154
  162
  170
  178
  187
  196
  206
  216
  227
  239
  251
  263
Adjusted assets (=assets-cash), $m
  64
  68
  71
  74
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
  127
  133
  140
  147
  154
  162
  170
  178
  187
  196
  206
  216
  227
  239
  251
  263
Revenue / Adjusted assets
  1.766
  1.750
  1.761
  1.770
  1.756
  1.756
  1.756
  1.767
  1.758
  1.768
  1.769
  1.755
  1.757
  1.752
  1.756
  1.759
  1.757
  1.755
  1.760
  1.753
  1.753
  1.758
  1.759
  1.760
  1.762
  1.764
  1.762
  1.757
  1.757
  1.760
Average production assets, $m
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  59
  61
  65
  68
  71
  75
  78
  82
Working capital, $m
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
Total debt, $m
  1
  2
  3
  4
  5
  6
  8
  9
  10
  12
  13
  15
  17
  18
  20
  22
  24
  26
  29
  31
  33
  36
  39
  42
  45
  48
  51
  55
  58
  62
Total liabilities, $m
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  50
  52
  55
  57
  60
  63
  66
  70
  73
  77
  81
Total equity, $m
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  72
  76
  80
  84
  88
  92
  97
  102
  107
  112
  118
  123
  130
  136
  143
  150
  158
  165
  174
  182
Total liabilities and equity, $m
  65
  68
  71
  75
  78
  82
  86
  91
  95
  100
  104
  110
  115
  121
  127
  133
  140
  147
  154
  162
  170
  178
  187
  196
  206
  216
  228
  238
  251
  263
Debt-to-equity ratio
  0.030
  0.040
  0.060
  0.080
  0.100
  0.110
  0.130
  0.140
  0.160
  0.170
  0.180
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.260
  0.270
  0.280
  0.280
  0.290
  0.300
  0.310
  0.310
  0.320
  0.320
  0.330
  0.340
  0.340
Adjusted equity ratio
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  38
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
  68
  71
  74
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
  127
  133
  140
  147
  154
Depreciation, amort., depletion, $m
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
Funds from operations, $m
  41
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
  86
  91
  95
  100
  105
  110
  115
  121
  127
  133
  140
  147
  154
  162
Change in working capital, $m
  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
  -1
Cash from operations, $m
  41
  43
  45
  47
  49
  51
  54
  57
  59
  62
  65
  68
  72
  75
  79
  83
  87
  91
  96
  100
  105
  110
  116
  122
  128
  134
  141
  148
  155
  163
Maintenance CAPEX, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
Cash from investing activities, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -9
  -10
  -11
  -11
  -12
Free cash flow, $m
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  70
  73
  77
  80
  84
  89
  93
  98
  102
  108
  113
  118
  124
  131
  137
  144
  151
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
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  
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
Total cash flow (excl. dividends), $m
  39
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  79
  83
  87
  91
  95
  100
  105
  110
  116
  121
  127
  134
  140
  147
  155
Retained Cash Flow (-), $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
Prev. year cash balance distribution, $m
  46
  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
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Cash available for distribution, $m
  83
  38
  40
  42
  44
  46
  49
  51
  53
  56
  58
  61
  64
  67
  71
  74
  78
  82
  86
  90
  95
  99
  104
  109
  115
  120
  126
  133
  139
  146
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
  80
  35
  35
  35
  34
  34
  33
  32
  31
  29
  28
  26
  24
  23
  21
  19
  17
  15
  13
  11
  10
  8
  7
  6
  4
  4
  3
  2
  2
  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

Enzo Biochem, Inc. is a bioscience company focusing on delivering and applying technology capabilities to produce products and services. The Company's segments include Enzo Clinical Labs, Enzo Life Sciences and Enzo Therapeutics. Enzo Clinical Labs is a clinical reference laboratory providing a range of clinical services to physicians, medical centers, other clinical labs and pharmaceutical companies. It offers a menu of molecular and other clinical laboratory tests or procedures. Enzo Life Sciences manufactures, develops and markets products and tools to clinical research, drug development and bioscience research customers. Enzo Therapeutics is a biopharmaceutical venture that develops multiple approaches in the areas of gastrointestinal, infectious, ophthalmic and metabolic diseases. Its products in the development pipeline include a range of assays for detection of various women's health infectious agents, as well as for use in the identification of pathogens for other markets.

FINANCIAL RATIOS  of  Enzo Biochem (ENZ)

Valuation Ratios
P/E Ratio -63.1
Price to Sales 1.8
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow -94.6
Growth Rates
Sales Growth Rate 4.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 1.1%
Total Debt to Equity 1.1%
Interest Coverage 0
Management Effectiveness
Return On Assets -2.7%
Ret/ On Assets - 3 Yr. Avg. 14.7%
Return On Total Capital -3.3%
Ret/ On T. Cap. - 3 Yr. Avg. 19%
Return On Equity -3.4%
Return On Equity - 3 Yr. Avg. 19.8%
Asset Turnover 1
Profitability Ratios
Gross Margin 44.4%
Gross Margin - 3 Yr. Avg. 44.3%
EBITDA Margin 1.9%
EBITDA Margin - 3 Yr. Avg. 17.8%
Operating Margin -2.8%
Oper. Margin - 3 Yr. Avg. 13.9%
Pre-Tax Margin -1.9%
Pre-Tax Margin - 3 Yr. Avg. 13.9%
Net Profit Margin -2.8%
Net Profit Margin - 3 Yr. Avg. 13%
Effective Tax Rate -50%
Eff/ Tax Rate - 3 Yr. Avg. -15.2%
Payout Ratio 0%

ENZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENZ stock intrinsic value calculation we used $108 million for the last fiscal year's total revenue generated by Enzo Biochem. The default revenue input number comes from 2017 income statement of Enzo Biochem. 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 ENZ stock valuation model: a) initial revenue growth rate of 4.9% 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 ENZ is calculated based on our internal credit rating of Enzo Biochem, 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 Enzo Biochem.
    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 ENZ stock the variable cost ratio is equal to 54.7%.

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 ENZ 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 Enzo Biochem.

Corporate tax rate of 27% is the nominal tax rate for Enzo Biochem. 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 ENZ stock is equal to 1.4%.

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 ENZ are equal to 17.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Enzo Biochem 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 ENZ is equal to -3.1%. 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 - $89 million for Enzo Biochem - 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 46 million for Enzo Biochem 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 Enzo Biochem at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Top 5 Biotech Stocks for 2018   [Jul-11-18 07:05PM  Investopedia]
▶ Enzo Biochem: Fiscal 3Q Earnings Snapshot   [Jun-11-18 04:21PM  Associated Press]
▶ Enzo Biochem Reports Third Quarter Results   [04:10PM  Business Wire]
▶ Earnings Outlook For Enzo Biochem   [Mar-13-18 08:04AM  Benzinga]
▶ Enzo Biochem reports 2Q loss   [Mar-12-18 04:29PM  Associated Press]
▶ Enzo Biochem, Inc. to Host Earnings Call   [Dec-08-17 07:00AM  ACCESSWIRE]
▶ Enzo Biochem reports 1Q loss   [Dec-07-17 04:15PM  Associated Press]
▶ Top 5 Biotech Stocks for 2017   [Oct-12-17 02:35PM  Investopedia]
▶ Enzo Biochem posts 4Q profit   [Sep-27-17 09:16PM  Associated Press]
▶ Enzo Biochem posts 4Q profit   [04:16PM  Associated Press]
▶ ETFs with exposure to Enzo Biochem, Inc. : July 10, 2017   [Jul-10-17 02:25PM  Capital Cube]
▶ BeiGene (BGNE) Surges: Stock Moves 20.8% Higher   [Jul-05-17 08:33AM  Zacks]
▶ Enzo Biochem Reports Delaware Court Ruling   [Jun-29-17 08:00AM  Business Wire]
▶ 5 Biomedical Stocks That Are Expected To Surge   [Jun-27-17 12:41PM  Zacks]
▶ ETFs with exposure to Enzo Biochem, Inc. : June 19, 2017   [Jun-19-17 03:17PM  Capital Cube]
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