Intrinsic value of Glaukos - GKOS

Previous Close

$58.86

  Intrinsic Value

$3.86

stock screener

  Rating & Target

str. sell

-93%

Previous close

$58.86

 
Intrinsic value

$3.86

 
Up/down potential

-93%

 
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 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 2.1

 

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, %
  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
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
Revenue, $m
  166
  174
  182
  190
  199
  209
  219
  229
  240
  251
  264
  276
  290
  304
  319
  334
  351
  368
  386
  405
  425
  446
  468
  492
  516
  542
  568
  597
  626
  658
Variable operating expenses, $m
  160
  167
  175
  183
  192
  201
  210
  220
  231
  242
  253
  265
  278
  292
  306
  321
  337
  353
  371
  389
  408
  428
  450
  472
  495
  520
  546
  573
  601
  631
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
  160
  167
  175
  183
  192
  201
  210
  220
  231
  242
  253
  265
  278
  292
  306
  321
  337
  353
  371
  389
  408
  428
  450
  472
  495
  520
  546
  573
  601
  631
Operating income, $m
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
EBITDA, $m
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  25
  26
  27
  28
  30
  31
  33
  35
  36
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
Earnings before tax, $m
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
Tax expense, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
Net income, $m
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16

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
  77
  81
  84
  88
  92
  97
  101
  106
  111
  116
  122
  128
  134
  141
  148
  155
  162
  170
  179
  188
  197
  207
  217
  228
  239
  251
  263
  276
  290
  304
Adjusted assets (=assets-cash), $m
  77
  81
  84
  88
  92
  97
  101
  106
  111
  116
  122
  128
  134
  141
  148
  155
  162
  170
  179
  188
  197
  207
  217
  228
  239
  251
  263
  276
  290
  304
Revenue / Adjusted assets
  2.156
  2.148
  2.167
  2.159
  2.163
  2.155
  2.168
  2.160
  2.162
  2.164
  2.164
  2.156
  2.164
  2.156
  2.155
  2.155
  2.167
  2.165
  2.156
  2.154
  2.157
  2.155
  2.157
  2.158
  2.159
  2.159
  2.160
  2.163
  2.159
  2.164
Average production assets, $m
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
  50
Working capital, $m
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
Total debt, $m
  1
  3
  4
  5
  7
  9
  10
  12
  14
  16
  18
  20
  23
  25
  28
  30
  33
  36
  39
  43
  46
  50
  54
  58
  62
  66
  71
  76
  81
  87
Total liabilities, $m
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
  70
  74
  77
  81
  85
  90
  94
  99
  104
  109
  114
Total equity, $m
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  84
  88
  92
  97
  102
  106
  112
  117
  123
  129
  136
  142
  149
  157
  164
  173
  181
  190
Total liabilities and equity, $m
  77
  80
  85
  88
  93
  96
  101
  106
  111
  117
  122
  128
  134
  141
  147
  155
  163
  170
  179
  187
  197
  206
  217
  227
  239
  251
  263
  277
  290
  304
Debt-to-equity ratio
  0.030
  0.050
  0.080
  0.100
  0.120
  0.140
  0.160
  0.180
  0.200
  0.220
  0.240
  0.250
  0.270
  0.290
  0.300
  0.310
  0.330
  0.340
  0.350
  0.360
  0.380
  0.390
  0.400
  0.410
  0.410
  0.420
  0.430
  0.440
  0.450
  0.450
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
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
Depreciation, amort., depletion, $m
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
Funds from operations, $m
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
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
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
Maintenance CAPEX, $m
  -2
  -3
  -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
  -9
  -10
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
Free cash flow, $m
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  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
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
  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
Total cash flow (excl. dividends), $m
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
Retained Cash Flow (-), $m
  -2
  -2
  -2
  -2
  -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
  -9
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
  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
  96
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
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
  3
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
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

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 399.5
Price to Sales 17.5
Price to Book 17.1
Price to Tangible Book
Price to Cash Flow 166.5
Price to Free Cash Flow 333
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 $159.254 million for the last fiscal year's total revenue generated by Glaukos. The default revenue input number comes from 0001 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 4.5% 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 96.2%.

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 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 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 GKOS are equal to 7.6%.

Life of production assets of 2.7 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 2.3%. 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 - $138.202 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 35.255 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 $2.1 billion.

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COMPANY NEWS

▶ An Apple A Day Can't Keep Strong Gains Away From These 5 Hot Medical Stocks   [Sep-04-18 09:45AM  Investor's Business Daily]
▶ 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]

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