Intrinsic value of Glaukos - GKOS

Previous Close

$40.17

  Intrinsic Value

$6.51

stock screener

  Rating & Target

str. sell

-84%

Previous close

$40.17

 
Intrinsic value

$6.51

 
Up/down potential

-84%

 
Rating

str. sell

We calculate the intrinsic value of GKOS 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 1.4

 

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, %
  39.20
  35.78
  32.70
  29.93
  27.44
  25.19
  23.18
  21.36
  19.72
  18.25
  16.92
  15.73
  14.66
  13.69
  12.82
  12.04
  11.34
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
  6.61
Revenue, $m
  221
  301
  399
  518
  660
  827
  1,018
  1,236
  1,480
  1,750
  2,046
  2,367
  2,714
  3,086
  3,482
  3,901
  4,344
  4,808
  5,296
  5,805
  6,337
  6,891
  7,467
  8,067
  8,690
  9,338
  10,012
  10,711
  11,439
  12,195
Variable operating expenses, $m
  213
  289
  383
  497
  634
  793
  977
  1,186
  1,419
  1,678
  1,962
  2,271
  2,603
  2,960
  3,340
  3,742
  4,166
  4,612
  5,079
  5,568
  6,078
  6,609
  7,162
  7,737
  8,335
  8,957
  9,602
  10,273
  10,971
  11,696
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
  213
  289
  383
  497
  634
  793
  977
  1,186
  1,419
  1,678
  1,962
  2,271
  2,603
  2,960
  3,340
  3,742
  4,166
  4,612
  5,079
  5,568
  6,078
  6,609
  7,162
  7,737
  8,335
  8,957
  9,602
  10,273
  10,971
  11,696
Operating income, $m
  9
  12
  16
  21
  27
  34
  41
  50
  60
  71
  84
  97
  111
  126
  142
  160
  178
  197
  217
  237
  259
  282
  305
  330
  355
  382
  409
  438
  468
  499
EBITDA, $m
  11
  15
  20
  26
  33
  41
  51
  62
  74
  87
  102
  118
  136
  154
  174
  195
  217
  240
  265
  290
  317
  344
  373
  403
  434
  467
  500
  535
  572
  610
Interest expense (income), $m
  0
  0
  1
  1
  2
  3
  5
  6
  8
  10
  12
  15
  18
  21
  24
  27
  31
  35
  39
  44
  48
  53
  58
  63
  68
  74
  80
  86
  92
  99
  106
Earnings before tax, $m
  9
  11
  15
  19
  23
  29
  35
  42
  50
  59
  69
  79
  90
  102
  115
  128
  143
  157
  173
  189
  206
  224
  242
  261
  281
  302
  323
  346
  369
  393
Tax expense, $m
  2
  3
  4
  5
  6
  8
  9
  11
  14
  16
  19
  21
  24
  28
  31
  35
  38
  43
  47
  51
  56
  60
  65
  71
  76
  82
  87
  93
  100
  106
Net income, $m
  6
  8
  11
  14
  17
  21
  26
  31
  37
  43
  50
  58
  66
  75
  84
  94
  104
  115
  126
  138
  151
  163
  177
  191
  205
  220
  236
  252
  269
  287

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
  102
  139
  184
  240
  305
  382
  471
  571
  684
  809
  946
  1,095
  1,255
  1,427
  1,610
  1,804
  2,008
  2,223
  2,448
  2,684
  2,930
  3,186
  3,452
  3,730
  4,018
  4,317
  4,629
  4,952
  5,288
  5,638
Adjusted assets (=assets-cash), $m
  102
  139
  184
  240
  305
  382
  471
  571
  684
  809
  946
  1,095
  1,255
  1,427
  1,610
  1,804
  2,008
  2,223
  2,448
  2,684
  2,930
  3,186
  3,452
  3,730
  4,018
  4,317
  4,629
  4,952
  5,288
  5,638
Revenue / Adjusted assets
  2.167
  2.165
  2.168
  2.158
  2.164
  2.165
  2.161
  2.165
  2.164
  2.163
  2.163
  2.162
  2.163
  2.163
  2.163
  2.162
  2.163
  2.163
  2.163
  2.163
  2.163
  2.163
  2.163
  2.163
  2.163
  2.163
  2.163
  2.163
  2.163
  2.163
Average production assets, $m
  20
  27
  36
  47
  60
  75
  93
  112
  135
  159
  186
  215
  247
  281
  317
  355
  395
  438
  482
  528
  577
  627
  680
  734
  791
  850
  911
  975
  1,041
  1,110
Working capital, $m
  7
  9
  12
  16
  20
  26
  32
  38
  46
  54
  63
  73
  84
  96
  108
  121
  135
  149
  164
  180
  196
  214
  231
  250
  269
  289
  310
  332
  355
  378
Total debt, $m
  11
  24
  41
  62
  87
  115
  149
  186
  229
  275
  327
  383
  443
  507
  576
  649
  725
  806
  890
  979
  1,071
  1,167
  1,267
  1,371
  1,479
  1,591
  1,708
  1,829
  1,955
  2,086
Total liabilities, $m
  38
  52
  69
  90
  114
  143
  177
  214
  257
  303
  355
  410
  471
  535
  604
  676
  753
  834
  918
  1,006
  1,099
  1,195
  1,295
  1,399
  1,507
  1,619
  1,736
  1,857
  1,983
  2,114
Total equity, $m
  64
  87
  115
  150
  191
  239
  294
  357
  428
  506
  591
  684
  784
  892
  1,006
  1,127
  1,255
  1,389
  1,530
  1,677
  1,831
  1,991
  2,158
  2,331
  2,511
  2,698
  2,893
  3,095
  3,305
  3,524
Total liabilities and equity, $m
  102
  139
  184
  240
  305
  382
  471
  571
  685
  809
  946
  1,094
  1,255
  1,427
  1,610
  1,803
  2,008
  2,223
  2,448
  2,683
  2,930
  3,186
  3,453
  3,730
  4,018
  4,317
  4,629
  4,952
  5,288
  5,638
Debt-to-equity ratio
  0.160
  0.280
  0.360
  0.410
  0.450
  0.480
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.560
  0.570
  0.570
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
Adjusted equity ratio
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  8
  11
  14
  17
  21
  26
  31
  37
  43
  50
  58
  66
  75
  84
  94
  104
  115
  126
  138
  151
  163
  177
  191
  205
  220
  236
  252
  269
  287
Depreciation, amort., depletion, $m
  2
  3
  4
  5
  6
  8
  10
  12
  14
  16
  19
  22
  25
  28
  32
  36
  40
  44
  48
  53
  58
  63
  68
  73
  79
  85
  91
  97
  104
  111
Funds from operations, $m
  9
  11
  15
  19
  23
  29
  35
  42
  50
  59
  69
  79
  91
  103
  116
  129
  144
  159
  174
  191
  208
  226
  245
  264
  284
  305
  327
  350
  373
  398
Change in working capital, $m
  2
  2
  3
  4
  4
  5
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  23
Cash from operations, $m
  7
  9
  12
  15
  19
  24
  29
  36
  43
  51
  60
  69
  80
  91
  103
  116
  130
  144
  159
  175
  192
  209
  227
  246
  265
  285
  306
  328
  351
  374
Maintenance CAPEX, $m
  -1
  -2
  -3
  -4
  -5
  -6
  -8
  -9
  -11
  -13
  -16
  -19
  -22
  -25
  -28
  -32
  -36
  -40
  -44
  -48
  -53
  -58
  -63
  -68
  -73
  -79
  -85
  -91
  -97
  -104
New CAPEX, $m
  -6
  -7
  -9
  -11
  -13
  -15
  -17
  -20
  -22
  -25
  -27
  -29
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -59
  -61
  -64
  -66
  -69
Cash from investing activities, $m
  -7
  -9
  -12
  -15
  -18
  -21
  -25
  -29
  -33
  -38
  -43
  -48
  -54
  -59
  -64
  -70
  -76
  -82
  -88
  -94
  -101
  -108
  -115
  -123
  -130
  -138
  -146
  -155
  -163
  -173
Free cash flow, $m
  0
  0
  0
  0
  1
  3
  4
  7
  9
  13
  17
  21
  27
  33
  39
  46
  54
  62
  71
  81
  91
  101
  112
  123
  135
  147
  160
  173
  187
  202
Issuance/(repayment) of debt, $m
  11
  14
  17
  21
  25
  29
  33
  38
  42
  47
  51
  56
  60
  64
  69
  73
  77
  81
  84
  88
  92
  96
  100
  104
  108
  112
  117
  121
  126
  131
Issuance/(repurchase) of shares, $m
  12
  15
  18
  21
  24
  27
  30
  32
  34
  35
  35
  35
  34
  33
  30
  27
  24
  19
  14
  9
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  23
  29
  35
  42
  49
  56
  63
  70
  76
  82
  86
  91
  94
  97
  99
  100
  101
  100
  98
  97
  95
  96
  100
  104
  108
  112
  117
  121
  126
  131
Total cash flow (excl. dividends), $m
  22
  28
  35
  42
  50
  58
  67
  76
  85
  95
  103
  112
  121
  130
  138
  147
  155
  162
  170
  178
  186
  197
  212
  227
  243
  260
  277
  295
  313
  333
Retained Cash Flow (-), $m
  -18
  -23
  -28
  -34
  -41
  -48
  -55
  -63
  -70
  -78
  -86
  -93
  -100
  -107
  -114
  -121
  -128
  -134
  -141
  -147
  -154
  -160
  -167
  -173
  -180
  -187
  -195
  -202
  -210
  -219
Prev. year cash balance distribution, $m
  92
  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
  17
  24
  33
  44
  57
  73
  91
  112
  136
  163
  192
  225
  260
  299
  339
  383
  429
  478
  529
  583
  639
  697
  758
  821
  887
  956
  1,027
  1,101
  1,178
  1,258
Cash available for distribution, $m
  96
  5
  6
  8
  9
  10
  12
  13
  15
  17
  18
  19
  21
  22
  24
  25
  27
  28
  29
  31
  32
  37
  45
  54
  63
  72
  82
  93
  103
  114
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
  92
  5
  5
  6
  7
  8
  8
  8
  9
  9
  9
  8
  8
  8
  7
  6
  6
  5
  5
  4
  3
  3
  3
  3
  2
  2
  2
  1
  1
  1
Current shareholders' claim on cash, %
  97.5
  95.3
  93.4
  91.7
  90.2
  88.9
  87.8
  86.9
  86.1
  85.3
  84.7
  84.2
  83.8
  83.5
  83.2
  83.0
  82.8
  82.6
  82.6
  82.5
  82.5
  82.5
  82.5
  82.5
  82.5
  82.5
  82.5
  82.5
  82.5
  82.5

Glaukos Corporation is an ophthalmic medical technology company. The Company focuses on the development and commercialization of products and procedures for the treatment of glaucoma. It offers iStent, a micro-invasive glaucoma surgery (MIGS) device. The iStent is a micro-bypass stent inserted through the small corneal incision made during cataract surgery and placed into Schlemm's canal, a circular channel in the eye that collects aqueous humor and delivers it back into the bloodstream. It is developing three additional pipeline products: the iStent Inject, the iStent Supra and iDose. The iStent Inject includes two stents pre-loaded in an auto-injection inserter. The iStent Supra is designed to access an alternative drainage space within the eye. iDose is a drug delivery system that is designed to be implanted in the eye to continuously deliver therapeutic levels of medication for extended periods of time to lower intraocular pressure in glaucoma patients.

FINANCIAL RATIOS  of  Glaukos (GKOS)

Valuation Ratios
P/E Ratio 272.7
Price to Sales 12
Price to Book 11.7
Price to Tangible Book
Price to Cash Flow 113.6
Price to Free Cash Flow 227.2
Growth Rates
Sales Growth Rate 58.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -62.5%
Cap. Spend. - 3 Yr. Gr. Rate 43.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. -28.3%
Return On Total Capital 4.5%
Ret/ On T. Cap. - 3 Yr. Avg. -31.3%
Return On Equity 4.7%
Return On Equity - 3 Yr. Avg. -60.9%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 86%
Gross Margin - 3 Yr. Avg. 80.6%
EBITDA Margin 8.8%
EBITDA Margin - 3 Yr. Avg. -18.9%
Operating Margin 3.5%
Oper. Margin - 3 Yr. Avg. -24.9%
Pre-Tax Margin 4.4%
Pre-Tax Margin - 3 Yr. Avg. -26.3%
Net Profit Margin 4.4%
Net Profit Margin - 3 Yr. Avg. -24.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

GKOS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GKOS stock intrinsic value calculation we used $159 million for the last fiscal year's total revenue generated by Glaukos. The default revenue input number comes from 2017 income statement of Glaukos. 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 GKOS stock valuation model: a) initial revenue growth rate of 39.2% 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 GKOS is calculated based on our internal credit rating of Glaukos, 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 Glaukos.
    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 GKOS stock the variable cost ratio is equal to 96.1%.

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 GKOS 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 Glaukos.

Corporate tax rate of 27% is the nominal tax rate for Glaukos. 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 GKOS stock is equal to 11%.

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 GKOS are equal to 9.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Glaukos 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 GKOS 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 - $138 million for Glaukos - 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 34 million for Glaukos 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 Glaukos at the current share price and the inputted number of shares is $1.4 billion.

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COMPANY NEWS

▶ Glaukos: 2Q Earnings Snapshot   [05:09AM  Associated Press]
▶ Glaukos Corp to Host Earnings Call   [02:30PM  ACCESSWIRE]
▶ Glaukos Gets RS Rating Upgrade   [May-24-18 03:00AM  Investor's Business Daily]
▶ Glaukos: 1Q Earnings Snapshot   [May-09-18 06:16PM  Associated Press]
▶ Why Glaukos Corp. Is Sinking Today   [Apr-13-18 12:45PM  Motley Fool]
▶ Glaukos tops Street 4Q forecasts   [Feb-28-18 05:57PM  Associated Press]
▶ Glaukos Corp to Host Earnings Call   [12:00PM  ACCESSWIRE]
▶ Glaukos Q4 Earnings Outlook   [09:35AM  Benzinga]
▶ ETFs with exposure to Glaukos Corp. : December 26, 2017   [Dec-26-17 11:34AM  Capital Cube]
▶ Why SCANA, Glaukos, and Juno Therapeutics Slumped Today   [Dec-11-17 04:30PM  Motley Fool]
▶ ETFs with exposure to Glaukos Corp. : November 16, 2017   [Nov-16-17 11:38AM  Capital Cube]
▶ Glaukos beats Street 3Q forecasts   [Nov-07-17 07:03PM  Associated Press]
▶ Glaukos Corp to Host Earnings Call   [10:00AM  ACCESSWIRE]
▶ ETFs with exposure to Glaukos Corp. : October 16, 2017   [Oct-16-17 09:53AM  Capital Cube]
▶ Should You Be Holding Glaukos Corporation (GKOS) Right Now?   [Oct-03-17 05:06PM  Simply Wall St.]
▶ ETFs with exposure to Glaukos Corp. : October 2, 2017   [Oct-02-17 10:51AM  Capital Cube]
▶ Here's Why Glaukos Corp. Stock Is Stumbling Today   [Sep-14-17 12:07PM  Motley Fool]
▶ IBD Rating Upgrades: Glaukos Flashes Improved Price Strength   [Sep-08-17 03:00AM  Investor's Business Daily]
▶ Glaukos Announces 2017 Investor Day and Webcast   [Aug-31-17 07:00AM  Business Wire]
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