Intrinsic value of FLIR Systems, Inc. - FLIR

Previous Close

$51.02

  Intrinsic Value

$18.14

stock screener

  Rating & Target

str. sell

-64%

Previous close

$51.02

 
Intrinsic value

$18.14

 
Up/down potential

-64%

 
Rating

str. sell

We calculate the intrinsic value of FLIR 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 6.9

 

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
  1,812
  1,853
  1,901
  1,954
  2,014
  2,079
  2,149
  2,226
  2,309
  2,397
  2,492
  2,593
  2,701
  2,815
  2,937
  3,065
  3,201
  3,346
  3,498
  3,658
  3,828
  4,007
  4,195
  4,394
  4,603
  4,823
  5,055
  5,299
  5,556
  5,826
Variable operating expenses, $m
  1,496
  1,530
  1,568
  1,612
  1,660
  1,713
  1,770
  1,832
  1,899
  1,971
  2,024
  2,106
  2,193
  2,286
  2,385
  2,489
  2,600
  2,717
  2,840
  2,971
  3,109
  3,254
  3,407
  3,568
  3,738
  3,917
  4,105
  4,303
  4,512
  4,731
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
  1,496
  1,530
  1,568
  1,612
  1,660
  1,713
  1,770
  1,832
  1,899
  1,971
  2,024
  2,106
  2,193
  2,286
  2,385
  2,489
  2,600
  2,717
  2,840
  2,971
  3,109
  3,254
  3,407
  3,568
  3,738
  3,917
  4,105
  4,303
  4,512
  4,731
Operating income, $m
  316
  324
  332
  343
  354
  366
  379
  394
  409
  426
  468
  487
  507
  529
  552
  576
  602
  629
  657
  687
  719
  753
  788
  826
  865
  906
  950
  996
  1,044
  1,095
EBITDA, $m
  381
  390
  400
  411
  423
  437
  452
  468
  485
  504
  524
  545
  568
  592
  617
  644
  673
  703
  735
  769
  805
  842
  882
  924
  968
  1,014
  1,063
  1,114
  1,168
  1,225
Interest expense (income), $m
  16
  23
  24
  25
  26
  28
  29
  31
  33
  35
  37
  40
  42
  45
  48
  51
  55
  58
  62
  66
  70
  75
  79
  84
  89
  95
  101
  107
  113
  120
  127
Earnings before tax, $m
  293
  300
  308
  316
  326
  337
  348
  360
  374
  388
  428
  445
  462
  481
  500
  521
  543
  567
  591
  617
  645
  674
  704
  736
  770
  806
  843
  883
  924
  968
Tax expense, $m
  79
  81
  83
  85
  88
  91
  94
  97
  101
  105
  116
  120
  125
  130
  135
  141
  147
  153
  160
  167
  174
  182
  190
  199
  208
  218
  228
  238
  250
  261
Net income, $m
  214
  219
  225
  231
  238
  246
  254
  263
  273
  283
  313
  325
  337
  351
  365
  381
  397
  414
  432
  451
  471
  492
  514
  538
  562
  588
  616
  644
  675
  707

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
  2,637
  2,698
  2,767
  2,845
  2,931
  3,026
  3,129
  3,240
  3,360
  3,489
  3,627
  3,774
  3,931
  4,098
  4,274
  4,462
  4,660
  4,870
  5,091
  5,325
  5,572
  5,832
  6,107
  6,396
  6,700
  7,021
  7,358
  7,714
  8,087
  8,480
Adjusted assets (=assets-cash), $m
  2,637
  2,698
  2,767
  2,845
  2,931
  3,026
  3,129
  3,240
  3,360
  3,489
  3,627
  3,774
  3,931
  4,098
  4,274
  4,462
  4,660
  4,870
  5,091
  5,325
  5,572
  5,832
  6,107
  6,396
  6,700
  7,021
  7,358
  7,714
  8,087
  8,480
Revenue / Adjusted assets
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
Average production assets, $m
  804
  823
  844
  868
  894
  923
  954
  988
  1,025
  1,064
  1,106
  1,151
  1,199
  1,250
  1,304
  1,361
  1,421
  1,485
  1,553
  1,624
  1,700
  1,779
  1,863
  1,951
  2,044
  2,142
  2,245
  2,353
  2,467
  2,587
Working capital, $m
  475
  486
  498
  512
  528
  545
  563
  583
  605
  628
  653
  679
  708
  738
  769
  803
  839
  877
  916
  959
  1,003
  1,050
  1,099
  1,151
  1,206
  1,264
  1,324
  1,388
  1,456
  1,526
Total debt, $m
  440
  462
  486
  513
  543
  576
  612
  652
  694
  739
  787
  839
  893
  952
  1,014
  1,079
  1,149
  1,222
  1,299
  1,381
  1,468
  1,559
  1,655
  1,756
  1,863
  1,975
  2,093
  2,217
  2,348
  2,486
Total liabilities, $m
  923
  944
  968
  996
  1,026
  1,059
  1,095
  1,134
  1,176
  1,221
  1,270
  1,321
  1,376
  1,434
  1,496
  1,562
  1,631
  1,704
  1,782
  1,864
  1,950
  2,041
  2,137
  2,239
  2,345
  2,457
  2,575
  2,700
  2,830
  2,968
Total equity, $m
  1,714
  1,753
  1,798
  1,849
  1,905
  1,967
  2,034
  2,106
  2,184
  2,268
  2,358
  2,453
  2,555
  2,664
  2,778
  2,900
  3,029
  3,165
  3,309
  3,461
  3,622
  3,791
  3,969
  4,157
  4,355
  4,564
  4,783
  5,014
  5,257
  5,512
Total liabilities and equity, $m
  2,637
  2,697
  2,766
  2,845
  2,931
  3,026
  3,129
  3,240
  3,360
  3,489
  3,628
  3,774
  3,931
  4,098
  4,274
  4,462
  4,660
  4,869
  5,091
  5,325
  5,572
  5,832
  6,106
  6,396
  6,700
  7,021
  7,358
  7,714
  8,087
  8,480
Debt-to-equity ratio
  0.260
  0.260
  0.270
  0.280
  0.290
  0.290
  0.300
  0.310
  0.320
  0.330
  0.330
  0.340
  0.350
  0.360
  0.360
  0.370
  0.380
  0.390
  0.390
  0.400
  0.410
  0.410
  0.420
  0.420
  0.430
  0.430
  0.440
  0.440
  0.450
  0.450
Adjusted equity ratio
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650
  0.650

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  214
  219
  225
  231
  238
  246
  254
  263
  273
  283
  313
  325
  337
  351
  365
  381
  397
  414
  432
  451
  471
  492
  514
  538
  562
  588
  616
  644
  675
  707
Depreciation, amort., depletion, $m
  65
  66
  67
  68
  70
  71
  73
  74
  76
  78
  56
  58
  60
  63
  66
  68
  71
  75
  78
  82
  85
  89
  94
  98
  103
  108
  113
  118
  124
  130
Funds from operations, $m
  279
  285
  292
  299
  308
  317
  327
  338
  349
  362
  368
  383
  398
  414
  431
  449
  468
  488
  510
  532
  556
  581
  608
  636
  665
  696
  728
  763
  799
  837
Change in working capital, $m
  9
  11
  12
  14
  16
  17
  19
  20
  22
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  67
  71
Cash from operations, $m
  270
  274
  279
  285
  292
  300
  308
  317
  328
  338
  343
  356
  369
  384
  399
  415
  432
  451
  470
  490
  512
  534
  558
  584
  610
  638
  668
  699
  731
  766
Maintenance CAPEX, $m
  -40
  -40
  -41
  -42
  -44
  -45
  -46
  -48
  -50
  -52
  -53
  -56
  -58
  -60
  -63
  -66
  -68
  -71
  -75
  -78
  -82
  -85
  -89
  -94
  -98
  -103
  -108
  -113
  -118
  -124
New CAPEX, $m
  -16
  -18
  -21
  -24
  -26
  -29
  -31
  -34
  -37
  -39
  -42
  -45
  -48
  -51
  -54
  -57
  -60
  -64
  -68
  -71
  -75
  -79
  -84
  -88
  -93
  -98
  -103
  -108
  -114
  -120
Cash from investing activities, $m
  -56
  -58
  -62
  -66
  -70
  -74
  -77
  -82
  -87
  -91
  -95
  -101
  -106
  -111
  -117
  -123
  -128
  -135
  -143
  -149
  -157
  -164
  -173
  -182
  -191
  -201
  -211
  -221
  -232
  -244
Free cash flow, $m
  214
  215
  217
  219
  222
  226
  230
  235
  241
  248
  248
  256
  264
  273
  282
  293
  303
  315
  328
  341
  355
  370
  385
  402
  419
  438
  457
  478
  499
  522
Issuance/(repayment) of debt, $m
  18
  21
  24
  27
  30
  33
  36
  39
  42
  45
  48
  52
  55
  58
  62
  66
  69
  73
  78
  82
  86
  91
  96
  101
  107
  112
  118
  124
  131
  138
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  
  18
  21
  24
  27
  30
  33
  36
  39
  42
  45
  48
  52
  55
  58
  62
  66
  69
  73
  78
  82
  86
  91
  96
  101
  107
  112
  118
  124
  131
  138
Total cash flow (excl. dividends), $m
  232
  236
  241
  246
  252
  259
  266
  275
  283
  293
  296
  307
  319
  331
  344
  358
  373
  389
  405
  423
  441
  461
  481
  503
  526
  550
  575
  602
  630
  660
Retained Cash Flow (-), $m
  -33
  -39
  -45
  -51
  -56
  -62
  -67
  -72
  -78
  -84
  -90
  -96
  -102
  -108
  -115
  -122
  -129
  -136
  -144
  -152
  -160
  -169
  -178
  -188
  -198
  -208
  -219
  -231
  -243
  -255
Prev. year cash balance distribution, $m
  196
  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
  395
  197
  196
  196
  196
  198
  199
  202
  205
  209
  207
  211
  217
  223
  229
  236
  244
  252
  261
  271
  281
  291
  303
  315
  328
  341
  356
  371
  387
  404
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
  379
  180
  170
  161
  152
  143
  135
  126
  118
  110
  98
  90
  82
  75
  67
  60
  53
  46
  40
  34
  29
  24
  20
  16
  13
  10
  8
  6
  4
  3
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

FLIR Systems, Inc. (FLIR) designs, develops, markets and distributes thermal imaging systems, visible-light imaging systems, locater systems, measurement and diagnostic systems and threat-detection solutions. The Company's segments include Surveillance, Instruments, Security, OEM & Emerging Markets, Maritime and Detection. Its Surveillance segment provides enhanced imaging and recognition solutions. Its Instruments segment provides devices that image, measure and assess thermal energy, gases and other environmental elements for industrial, commercial, and scientific applications under the FLIR and Extech brands. Its OEM & Emerging Markets segment provides thermal imaging camera cores and components. Its Maritime segment develops and manufactures electronics and imaging instruments. Its Security segment develops and manufactures a range of cameras and video recording systems. The Detection segment offers sensors, instruments and integrated platform solutions.

FINANCIAL RATIOS  of  FLIR Systems, Inc. (FLIR)

Valuation Ratios
P/E Ratio 41.7
Price to Sales 4.2
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 22.3
Price to Free Cash Flow 25.2
Growth Rates
Sales Growth Rate 6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -47.1%
Cap. Spend. - 3 Yr. Gr. Rate -7.1%
Financial Strength
Quick Ratio 24
Current Ratio 0
LT Debt to Equity 29.9%
Total Debt to Equity 30.8%
Interest Coverage 18
Management Effectiveness
Return On Assets 7%
Ret/ On Assets - 3 Yr. Avg. 8.9%
Return On Total Capital 7.9%
Ret/ On T. Cap. - 3 Yr. Avg. 10%
Return On Equity 10%
Return On Equity - 3 Yr. Avg. 12.4%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 46.1%
Gross Margin - 3 Yr. Avg. 47.9%
EBITDA Margin 21.1%
EBITDA Margin - 3 Yr. Avg. 21.9%
Operating Margin 17.8%
Oper. Margin - 3 Yr. Avg. 18.1%
Pre-Tax Margin 16.6%
Pre-Tax Margin - 3 Yr. Avg. 17.5%
Net Profit Margin 10%
Net Profit Margin - 3 Yr. Avg. 12.9%
Effective Tax Rate 39.5%
Eff/ Tax Rate - 3 Yr. Avg. 26.7%
Payout Ratio 39.5%

FLIR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FLIR stock intrinsic value calculation we used $1776 million for the last fiscal year's total revenue generated by FLIR Systems, Inc.. The default revenue input number comes from 0001 income statement of FLIR Systems, 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 FLIR 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 4.3%, whose default value for FLIR is calculated based on our internal credit rating of FLIR Systems, 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 FLIR Systems, 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 FLIR stock the variable cost ratio is equal to 82.6%.

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 FLIR 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 FLIR Systems, Inc..

Corporate tax rate of 27% is the nominal tax rate for FLIR Systems, 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 FLIR 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 FLIR are equal to 44.4%.

Life of production assets of 19.9 years is the average useful life of capital assets used in FLIR Systems, 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 FLIR is equal to 26.2%. 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 - $1876.786 million for FLIR Systems, 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 135.620 million for FLIR Systems, 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 FLIR Systems, Inc. at the current share price and the inputted number of shares is $6.9 billion.

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