Intrinsic value of Harvard Bioscience, Inc. - HBIO

Previous Close

$2.47

  Intrinsic Value

$0.52

stock screener

  Rating & Target

str. sell

-79%

Previous close

$2.47

 
Intrinsic value

$0.52

 
Up/down potential

-79%

 
Rating

str. sell

We calculate the intrinsic value of HBIO 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 0.1

 

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, %
  53.00
  48.20
  43.88
  39.99
  36.49
  33.34
  30.51
  27.96
  25.66
  23.60
  21.74
  20.06
  18.56
  17.20
  15.98
  14.88
  13.89
  13.01
  12.20
  11.48
  10.84
  10.25
  9.73
  9.25
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
Revenue, $m
  156
  231
  333
  466
  636
  848
  1,107
  1,416
  1,779
  2,199
  2,677
  3,214
  3,811
  4,466
  5,180
  5,951
  6,778
  7,659
  8,594
  9,581
  10,619
  11,707
  12,846
  14,035
  15,274
  16,564
  17,906
  19,301
  20,751
  22,258
Variable operating expenses, $m
  160
  237
  342
  478
  652
  870
  1,135
  1,452
  1,824
  2,255
  2,744
  3,295
  3,906
  4,578
  5,310
  6,100
  6,948
  7,851
  8,809
  9,821
  10,885
  12,001
  13,168
  14,387
  15,657
  16,980
  18,355
  19,785
  21,272
  22,816
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
  237
  342
  478
  652
  870
  1,135
  1,452
  1,824
  2,255
  2,744
  3,295
  3,906
  4,578
  5,310
  6,100
  6,948
  7,851
  8,809
  9,821
  10,885
  12,001
  13,168
  14,387
  15,657
  16,980
  18,355
  19,785
  21,272
  22,816
Operating income, $m
  -4
  -6
  -9
  -12
  -16
  -22
  -28
  -36
  -45
  -56
  -67
  -81
  -96
  -112
  -130
  -149
  -170
  -192
  -216
  -240
  -266
  -294
  -322
  -352
  -383
  -415
  -449
  -484
  -520
  -558
EBITDA, $m
  -1
  -1
  -2
  -2
  -3
  -4
  -6
  -7
  -9
  -12
  -14
  -17
  -20
  -24
  -27
  -31
  -36
  -40
  -45
  -51
  -56
  -62
  -68
  -74
  -81
  -87
  -95
  -102
  -110
  -118
Interest expense (income), $m
  1
  1
  1
  3
  4
  6
  9
  12
  16
  21
  27
  33
  41
  49
  59
  69
  80
  92
  105
  119
  133
  149
  165
  182
  200
  218
  237
  258
  279
  300
  323
Earnings before tax, $m
  -5
  -8
  -11
  -16
  -23
  -31
  -40
  -52
  -66
  -82
  -101
  -121
  -145
  -171
  -199
  -229
  -262
  -297
  -334
  -373
  -415
  -458
  -504
  -552
  -601
  -653
  -707
  -763
  -821
  -881
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
Net income, $m
  -5
  -8
  -11
  -16
  -23
  -31
  -40
  -52
  -66
  -82
  -101
  -121
  -145
  -171
  -199
  -229
  -262
  -297
  -334
  -373
  -415
  -458
  -504
  -552
  -601
  -653
  -707
  -763
  -821
  -881

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
  167
  248
  357
  499
  682
  909
  1,186
  1,518
  1,907
  2,357
  2,869
  3,445
  4,084
  4,787
  5,552
  6,378
  7,264
  8,209
  9,211
  10,269
  11,381
  12,548
  13,769
  15,043
  16,371
  17,754
  19,192
  20,687
  22,241
  23,856
Adjusted assets (=assets-cash), $m
  167
  248
  357
  499
  682
  909
  1,186
  1,518
  1,907
  2,357
  2,869
  3,445
  4,084
  4,787
  5,552
  6,378
  7,264
  8,209
  9,211
  10,269
  11,381
  12,548
  13,769
  15,043
  16,371
  17,754
  19,192
  20,687
  22,241
  23,856
Revenue / Adjusted assets
  0.934
  0.931
  0.933
  0.934
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
  0.933
Average production assets, $m
  46
  68
  98
  137
  188
  250
  326
  418
  525
  649
  790
  948
  1,124
  1,318
  1,528
  1,755
  1,999
  2,259
  2,535
  2,826
  3,133
  3,454
  3,790
  4,140
  4,506
  4,886
  5,282
  5,694
  6,122
  6,566
Working capital, $m
  48
  71
  101
  142
  194
  259
  337
  432
  543
  671
  817
  980
  1,162
  1,362
  1,580
  1,815
  2,067
  2,336
  2,621
  2,922
  3,239
  3,571
  3,918
  4,281
  4,659
  5,052
  5,461
  5,887
  6,329
  6,789
Total debt, $m
  27
  48
  76
  113
  160
  220
  292
  378
  479
  596
  729
  879
  1,045
  1,228
  1,427
  1,642
  1,872
  2,118
  2,378
  2,653
  2,942
  3,246
  3,563
  3,894
  4,240
  4,599
  4,973
  5,362
  5,766
  6,186
Total liabilities, $m
  43
  64
  93
  130
  177
  236
  308
  395
  496
  613
  746
  896
  1,062
  1,245
  1,443
  1,658
  1,889
  2,134
  2,395
  2,670
  2,959
  3,263
  3,580
  3,911
  4,256
  4,616
  4,990
  5,379
  5,783
  6,203
Total equity, $m
  124
  183
  264
  369
  504
  672
  878
  1,123
  1,411
  1,744
  2,123
  2,549
  3,022
  3,542
  4,108
  4,720
  5,376
  6,075
  6,816
  7,599
  8,422
  9,286
  10,189
  11,132
  12,115
  13,138
  14,202
  15,309
  16,459
  17,654
Total liabilities and equity, $m
  167
  247
  357
  499
  681
  908
  1,186
  1,518
  1,907
  2,357
  2,869
  3,445
  4,084
  4,787
  5,551
  6,378
  7,265
  8,209
  9,211
  10,269
  11,381
  12,549
  13,769
  15,043
  16,371
  17,754
  19,192
  20,688
  22,242
  23,857
Debt-to-equity ratio
  0.220
  0.260
  0.290
  0.310
  0.320
  0.330
  0.330
  0.340
  0.340
  0.340
  0.340
  0.340
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
Adjusted equity ratio
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740
  0.740

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -5
  -8
  -11
  -16
  -23
  -31
  -40
  -52
  -66
  -82
  -101
  -121
  -145
  -171
  -199
  -229
  -262
  -297
  -334
  -373
  -415
  -458
  -504
  -552
  -601
  -653
  -707
  -763
  -821
  -881
Depreciation, amort., depletion, $m
  3
  5
  7
  10
  13
  17
  22
  28
  36
  44
  53
  64
  75
  88
  103
  118
  134
  152
  170
  190
  210
  232
  254
  278
  302
  328
  355
  382
  411
  441
Funds from operations, $m
  -1
  -3
  -4
  -7
  -10
  -13
  -18
  -24
  -31
  -38
  -48
  -58
  -69
  -82
  -96
  -111
  -128
  -145
  -164
  -184
  -205
  -227
  -250
  -274
  -299
  -325
  -352
  -380
  -410
  -440
Change in working capital, $m
  16
  23
  31
  41
  52
  65
  79
  94
  111
  128
  146
  164
  182
  200
  218
  235
  252
  269
  285
  301
  317
  332
  347
  363
  378
  393
  409
  426
  442
  460
Cash from operations, $m
  -18
  -26
  -35
  -47
  -62
  -78
  -97
  -118
  -141
  -166
  -193
  -222
  -251
  -282
  -314
  -346
  -380
  -414
  -449
  -485
  -521
  -559
  -597
  -636
  -677
  -718
  -761
  -806
  -852
  -900
Maintenance CAPEX, $m
  -2
  -3
  -5
  -7
  -9
  -13
  -17
  -22
  -28
  -35
  -44
  -53
  -64
  -75
  -88
  -103
  -118
  -134
  -152
  -170
  -190
  -210
  -232
  -254
  -278
  -302
  -328
  -355
  -382
  -411
New CAPEX, $m
  -16
  -22
  -30
  -39
  -50
  -63
  -76
  -91
  -107
  -124
  -141
  -158
  -176
  -193
  -211
  -227
  -244
  -260
  -276
  -291
  -306
  -321
  -336
  -351
  -366
  -381
  -396
  -412
  -428
  -444
Cash from investing activities, $m
  -18
  -25
  -35
  -46
  -59
  -76
  -93
  -113
  -135
  -159
  -185
  -211
  -240
  -268
  -299
  -330
  -362
  -394
  -428
  -461
  -496
  -531
  -568
  -605
  -644
  -683
  -724
  -767
  -810
  -855
Free cash flow, $m
  -36
  -51
  -70
  -93
  -121
  -153
  -190
  -231
  -277
  -326
  -378
  -433
  -491
  -551
  -613
  -676
  -742
  -808
  -876
  -946
  -1,017
  -1,090
  -1,165
  -1,241
  -1,320
  -1,401
  -1,485
  -1,572
  -1,662
  -1,755
Issuance/(repayment) of debt, $m
  15
  21
  28
  37
  47
  59
  72
  86
  101
  117
  133
  150
  166
  183
  199
  215
  230
  246
  260
  275
  289
  303
  317
  331
  345
  359
  374
  389
  404
  420
Issuance/(repurchase) of shares, $m
  48
  67
  92
  122
  158
  199
  246
  298
  354
  415
  480
  547
  618
  690
  765
  841
  918
  996
  1,075
  1,156
  1,238
  1,322
  1,407
  1,494
  1,584
  1,676
  1,771
  1,869
  1,971
  2,076
Cash from financing (excl. dividends), $m  
  63
  88
  120
  159
  205
  258
  318
  384
  455
  532
  613
  697
  784
  873
  964
  1,056
  1,148
  1,242
  1,335
  1,431
  1,527
  1,625
  1,724
  1,825
  1,929
  2,035
  2,145
  2,258
  2,375
  2,496
Total cash flow (excl. dividends), $m
  27
  37
  50
  66
  84
  105
  128
  152
  179
  207
  235
  264
  293
  322
  351
  379
  406
  433
  460
  485
  510
  535
  560
  584
  609
  634
  660
  686
  713
  741
Retained Cash Flow (-), $m
  -48
  -67
  -92
  -122
  -158
  -199
  -246
  -298
  -354
  -415
  -480
  -547
  -618
  -690
  -765
  -841
  -918
  -996
  -1,075
  -1,156
  -1,238
  -1,322
  -1,407
  -1,494
  -1,584
  -1,676
  -1,771
  -1,869
  -1,971
  -2,076
Prev. year cash balance distribution, $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 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
  -21
  -30
  -42
  -56
  -74
  -94
  -118
  -145
  -175
  -209
  -245
  -283
  -325
  -368
  -414
  -462
  -511
  -563
  -616
  -671
  -728
  -787
  -847
  -910
  -975
  -1,042
  -1,111
  -1,183
  -1,258
  -1,335
Discount rate, %
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
  -20
  -27
  -35
  -45
  -54
  -65
  -74
  -83
  -91
  -97
  -102
  -104
  -104
  -102
  -98
  -92
  -85
  -77
  -68
  -59
  -51
  -42
  -35
  -28
  -22
  -17
  -12
  -9
  -6
  -4
Current shareholders' claim on cash, %
  65.8
  44.5
  30.9
  22.0
  16.0
  11.9
  9.0
  6.9
  5.4
  4.3
  3.5
  2.8
  2.3
  1.9
  1.6
  1.4
  1.2
  1.0
  0.9
  0.8
  0.7
  0.6
  0.5
  0.5
  0.4
  0.4
  0.3
  0.3
  0.3
  0.2

Harvard Bioscience, Inc. is a developer, manufacturer and marketer of a range of scientific instruments, systems and lab consumables used for basic research, drug discovery, clinical and environmental testing. The Company's products are sold to thousands of researchers in over 100 countries through its global sales organization, Websites, catalogs and through distributors. The Company's product range is organized into three commercial product families: Cell and Animal Physiology (CAP), Lab Products and Services (LPS), and Molecular Separation and Analysis (MSA). The Company sells these products under brand names, including Harvard Apparatus, KD Scientific, Denville Scientific, AHN, Hoefer, Biochrom, BTX, Warner Instruments, MCS, HEKA, Hugo Sachs Elektronik, Panlab, Coulbourn Instruments, TBSI and CMA Microdialysis. The Company's products consist of instruments, consumables and systems that are made up of various individual products.

FINANCIAL RATIOS  of  Harvard Bioscience, Inc. (HBIO)

Valuation Ratios
P/E Ratio -21.3
Price to Sales 0.8
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 17
Price to Free Cash Flow 21.3
Growth Rates
Sales Growth Rate -3.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.7%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 16.7%
Total Debt to Equity 19.4%
Interest Coverage -2
Management Effectiveness
Return On Assets -2.3%
Ret/ On Assets - 3 Yr. Avg. -3.9%
Return On Total Capital -4.4%
Ret/ On T. Cap. - 3 Yr. Avg. -6.8%
Return On Equity -5.3%
Return On Equity - 3 Yr. Avg. -8.4%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 45.7%
Gross Margin - 3 Yr. Avg. 45.2%
EBITDA Margin 2.9%
EBITDA Margin - 3 Yr. Avg. 4.3%
Operating Margin -1.9%
Oper. Margin - 3 Yr. Avg. 0.6%
Pre-Tax Margin -2.9%
Pre-Tax Margin - 3 Yr. Avg. -1%
Net Profit Margin -3.8%
Net Profit Margin - 3 Yr. Avg. -6.5%
Effective Tax Rate -33.3%
Eff/ Tax Rate - 3 Yr. Avg. -119.4%
Payout Ratio 0%

HBIO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HBIO stock intrinsic value calculation we used $102 million for the last fiscal year's total revenue generated by Harvard Bioscience, Inc.. The default revenue input number comes from 0001 income statement of Harvard Bioscience, 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 HBIO stock valuation model: a) initial revenue growth rate of 53% 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 5.1%, whose default value for HBIO is calculated based on our internal credit rating of Harvard Bioscience, 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 Harvard Bioscience, 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 HBIO stock the variable cost ratio is equal to 102.9%.

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 HBIO 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 5.6% for Harvard Bioscience, Inc..

Corporate tax rate of 27% is the nominal tax rate for Harvard Bioscience, 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 HBIO 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 HBIO are equal to 29.5%.

Life of production assets of 14.9 years is the average useful life of capital assets used in Harvard Bioscience, 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 HBIO is equal to 30.5%. 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 - $80.9 million for Harvard Bioscience, 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 37.294 million for Harvard Bioscience, 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 Harvard Bioscience, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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