Intrinsic value of GenMark Diagnostics - GNMK

Previous Close

$4.49

  Intrinsic Value

$0.17

stock screener

  Rating & Target

str. sell

-96%

Previous close

$4.49

 
Intrinsic value

$0.17

 
Up/down potential

-96%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of GNMK 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of GenMark Diagnostics (GNMK) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  25.64
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
  5.76
  5.68
  5.62
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
  5.24
  5.21
  5.19
Revenue, $m
  49
  53
  58
  63
  68
  73
  79
  84
  90
  96
  103
  109
  116
  123
  131
  138
  146
  155
  164
  173
  182
  193
  203
  214
  225
  237
  250
  263
  277
  291
  307
Variable operating expenses, $m
 
  91
  98
  107
  115
  124
  133
  143
  153
  163
  174
  185
  197
  209
  221
  234
  248
  262
  277
  293
  309
  326
  344
  363
  382
  402
  424
  446
  469
  494
  519
Fixed operating expenses, $m
 
  15
  16
  16
  17
  17
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  25
  25
  26
  26
  27
  28
  29
  29
  30
  31
  31
Total operating expenses, $m
  98
  106
  114
  123
  132
  141
  150
  161
  171
  182
  193
  205
  217
  230
  242
  256
  270
  285
  300
  317
  334
  351
  370
  389
  409
  430
  453
  475
  499
  525
  550
Operating income, $m
  -49
  -52
  -56
  -60
  -64
  -68
  -72
  -76
  -81
  -86
  -90
  -95
  -101
  -106
  -112
  -118
  -124
  -130
  -137
  -144
  -151
  -159
  -167
  -175
  -184
  -193
  -202
  -212
  -222
  -233
  -244
EBITDA, $m
  -45
  -49
  -52
  -55
  -59
  -63
  -66
  -70
  -74
  -79
  -83
  -88
  -92
  -97
  -103
  -108
  -113
  -119
  -125
  -132
  -138
  -145
  -152
  -160
  -168
  -176
  -184
  -193
  -202
  -212
  -222
Interest expense (income), $m
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
Earnings before tax, $m
  -51
  -53
  -57
  -61
  -65
  -69
  -74
  -78
  -83
  -88
  -93
  -99
  -104
  -110
  -116
  -122
  -129
  -136
  -143
  -150
  -158
  -166
  -174
  -183
  -192
  -202
  -212
  -222
  -233
  -244
  -256
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
  0
Net income, $m
  -51
  -53
  -57
  -61
  -65
  -69
  -74
  -78
  -83
  -88
  -93
  -99
  -104
  -110
  -116
  -122
  -129
  -136
  -143
  -150
  -158
  -166
  -174
  -183
  -192
  -202
  -212
  -222
  -233
  -244
  -256

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  42
  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
  80
  41
  45
  49
  53
  57
  61
  65
  70
  75
  80
  85
  90
  96
  101
  107
  114
  120
  127
  134
  142
  149
  158
  166
  175
  184
  194
  204
  215
  226
  238
Adjusted assets (=assets-cash), $m
  38
  41
  45
  49
  53
  57
  61
  65
  70
  75
  80
  85
  90
  96
  101
  107
  114
  120
  127
  134
  142
  149
  158
  166
  175
  184
  194
  204
  215
  226
  238
Revenue / Adjusted assets
  1.289
  1.293
  1.289
  1.286
  1.283
  1.281
  1.295
  1.292
  1.286
  1.280
  1.288
  1.282
  1.289
  1.281
  1.297
  1.290
  1.281
  1.292
  1.291
  1.291
  1.282
  1.295
  1.285
  1.289
  1.286
  1.288
  1.289
  1.289
  1.288
  1.288
  1.290
Average production assets, $m
  18
  19
  21
  22
  24
  26
  28
  30
  32
  34
  37
  39
  41
  44
  47
  49
  52
  55
  58
  62
  65
  69
  72
  76
  80
  85
  89
  94
  99
  104
  109
Working capital, $m
  32
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
Total debt, $m
  20
  15
  18
  22
  25
  29
  33
  37
  41
  45
  49
  54
  59
  64
  69
  74
  80
  86
  92
  98
  105
  112
  119
  127
  135
  143
  152
  161
  170
  180
  191
Total liabilities, $m
  42
  37
  40
  44
  47
  51
  55
  59
  63
  67
  71
  76
  81
  86
  91
  96
  102
  108
  114
  120
  127
  134
  141
  149
  157
  165
  174
  183
  192
  202
  213
Total equity, $m
  38
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  17
  18
  19
  20
  21
  23
  24
  25
Total liabilities and equity, $m
  80
  41
  45
  49
  53
  57
  61
  66
  70
  75
  79
  85
  90
  96
  102
  107
  114
  121
  127
  134
  142
  150
  158
  166
  175
  184
  194
  204
  215
  226
  238
Debt-to-equity ratio
  0.526
  3.470
  3.880
  4.230
  4.550
  4.830
  5.090
  5.320
  5.530
  5.720
  5.890
  6.050
  6.200
  6.330
  6.460
  6.570
  6.680
  6.780
  6.870
  6.960
  7.040
  7.120
  7.190
  7.260
  7.330
  7.390
  7.440
  7.500
  7.550
  7.600
  7.640
Adjusted equity ratio
  -0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105
  0.105

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -51
  -53
  -57
  -61
  -65
  -69
  -74
  -78
  -83
  -88
  -93
  -99
  -104
  -110
  -116
  -122
  -129
  -136
  -143
  -150
  -158
  -166
  -174
  -183
  -192
  -202
  -212
  -222
  -233
  -244
  -256
Depreciation, amort., depletion, $m
  4
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
Funds from operations, $m
  -35
  -49
  -53
  -57
  -60
  -64
  -68
  -72
  -77
  -81
  -86
  -91
  -96
  -101
  -107
  -112
  -118
  -125
  -131
  -138
  -145
  -152
  -160
  -168
  -176
  -185
  -194
  -203
  -213
  -224
  -234
Change in working capital, $m
  1
  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
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  -36
  -49
  -53
  -56
  -60
  -64
  -68
  -72
  -77
  -81
  -86
  -91
  -96
  -101
  -106
  -112
  -118
  -124
  -131
  -137
  -144
  -152
  -159
  -167
  -176
  -184
  -193
  -203
  -213
  -223
  -234
Maintenance CAPEX, $m
  0
  -4
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
New CAPEX, $m
  -9
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Cash from investing activities, $m
  -24
  -6
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -17
  -18
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
Free cash flow, $m
  -60
  -54
  -58
  -62
  -66
  -71
  -75
  -80
  -85
  -90
  -95
  -100
  -106
  -112
  -118
  -124
  -131
  -138
  -145
  -152
  -160
  -168
  -177
  -186
  -195
  -205
  -215
  -225
  -236
  -248
  -260
Issuance/(repayment) of debt, $m
  10
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
Issuance/(repurchase) of shares, $m
  32
  54
  57
  61
  66
  70
  74
  79
  84
  89
  94
  99
  105
  111
  117
  123
  130
  136
  143
  151
  159
  167
  175
  184
  193
  203
  213
  223
  234
  246
  258
Cash from financing (excl. dividends), $m  
  40
  57
  60
  64
  69
  74
  78
  83
  88
  93
  98
  104
  110
  116
  122
  128
  136
  142
  149
  157
  166
  174
  182
  192
  201
  211
  222
  232
  244
  256
  269
Total cash flow (excl. dividends), $m
  -19
  2
  2
  3
  3
  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
Retained Cash Flow (-), $m
  11
  -54
  -57
  -61
  -66
  -70
  -74
  -79
  -84
  -89
  -94
  -99
  -105
  -111
  -117
  -123
  -130
  -136
  -143
  -151
  -159
  -167
  -175
  -184
  -193
  -203
  -213
  -223
  -234
  -246
  -258
Prev. year cash balance distribution, $m
 
  34
  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
 
  -17
  -55
  -59
  -63
  -67
  -71
  -76
  -81
  -85
  -91
  -96
  -101
  -107
  -113
  -119
  -125
  -132
  -139
  -146
  -153
  -161
  -169
  -178
  -187
  -196
  -206
  -216
  -227
  -238
  -250
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
 
  -17
  -50
  -51
  -52
  -52
  -52
  -51
  -50
  -49
  -47
  -45
  -43
  -41
  -38
  -35
  -32
  -29
  -26
  -22
  -20
  -17
  -14
  -12
  -10
  -8
  -6
  -5
  -4
  -3
  -2
Current shareholders' claim on cash, %
  100
  33.2
  11.1
  3.8
  1.3
  0.4
  0.2
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

GenMark Diagnostics, Inc. is a molecular diagnostics company. The Company is focused on developing and commercializing multiplex molecular tests that aid in the diagnosis of complex medical conditions. It develops and commercializes multiplex molecular tests based on its eSensor electrochemical detection technology. It offers four Food and Drug Administration (FDA)-cleared diagnostic tests which run on its XT-8 instrument; its Respiratory Viral Panel; its Cystic Fibrosis Genotyping Test; its Warfarin Sensitivity Test, and its Thrombophilia Risk Test. It also offers a Hepatitis C (HCV) genotyping test and associated custom manufactured reagents, as well as a 2C19 Genotyping Test, versions of which are available for use with its XT-8 instrument for research use only (RUO). Its XT-8 and ePlex test cartridges utilize the combination of distinct electrodes and multiple signal probes to detect dozens of target biomarkers from a single sample, thereby enabling highly multiplexed testing.

FINANCIAL RATIOS  of  GenMark Diagnostics (GNMK)

Valuation Ratios
P/E Ratio -4.1
Price to Sales 4.3
Price to Book 5.5
Price to Tangible Book
Price to Cash Flow -5.8
Price to Free Cash Flow -4.6
Growth Rates
Sales Growth Rate 25.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 125%
Cap. Spend. - 3 Yr. Gr. Rate 12.5%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 31.6%
Total Debt to Equity 52.6%
Interest Coverage -50
Management Effectiveness
Return On Assets -66.2%
Ret/ On Assets - 3 Yr. Avg. -50.7%
Return On Total Capital -87.2%
Ret/ On T. Cap. - 3 Yr. Avg. -63%
Return On Equity -117.2%
Return On Equity - 3 Yr. Avg. -74.7%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 61.2%
Gross Margin - 3 Yr. Avg. 59.2%
EBITDA Margin -93.9%
EBITDA Margin - 3 Yr. Avg. -102.5%
Operating Margin -100%
Oper. Margin - 3 Yr. Avg. -111.2%
Pre-Tax Margin -104.1%
Pre-Tax Margin - 3 Yr. Avg. -112.5%
Net Profit Margin -104.1%
Net Profit Margin - 3 Yr. Avg. -111.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0.9%
Payout Ratio 0%

GNMK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GNMK stock intrinsic value calculation we used $49 million for the last fiscal year's total revenue generated by GenMark Diagnostics. The default revenue input number comes from 2016 income statement of GenMark Diagnostics. 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 GNMK stock valuation model: a) initial revenue growth rate of 9.1% 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 GNMK is calculated based on our internal credit rating of GenMark Diagnostics, 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 GenMark Diagnostics.
    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 GNMK stock the variable cost ratio is equal to 169.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $15 million in the base year in the intrinsic value calculation for GNMK 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 6.7% for GenMark Diagnostics.

Corporate tax rate of 27% is the nominal tax rate for GenMark Diagnostics. 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 GNMK 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 GNMK are equal to 35.7%.

Life of production assets of 4.4 years is the average useful life of capital assets used in GenMark Diagnostics 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 GNMK is equal to -4.1%. 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 - $38 million for GenMark Diagnostics - 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 56.372 million for GenMark Diagnostics 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 GenMark Diagnostics at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ 8 Stocks That Will Hit All-Time Lows in 2018   [Jan-19-18 01:08PM  InvestorPlace]
▶ GenMark Diagnostics reports 3Q loss   [Nov-02-17 06:32PM  Associated Press]
▶ Is GenMark Diagnostics Inc (GNMK) Undervalued?   [Oct-12-17 02:54PM  Simply Wall St.]
▶ GenMark Diagnostics reports 2Q loss   [Aug-01-17 10:54PM  Associated Press]
▶ GenMark Reports Second Quarter 2017 Results   [08:05AM  Business Wire]
▶ GenMark Diagnostics reports 1Q loss   [May-02-17 06:16PM  Associated Press]
▶ GenMark Diagnostics reports 4Q loss   [05:19PM  Associated Press]
▶ 7 Stocks Making Big Moves With Unusual Volume   [Jan-11-17 09:20AM  TheStreet.com]
Financial statements of GNMK
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