Intrinsic value of Hologic, Inc. - HOLX

Previous Close

$44.69

  Intrinsic Value

$8.89

stock screener

  Rating & Target

str. sell

-80%

Previous close

$44.69

 
Intrinsic value

$8.89

 
Up/down potential

-80%

 
Rating

str. sell

We calculate the intrinsic value of HOLX 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 13.0

 

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, %
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  3,379
  3,548
  3,725
  3,911
  4,107
  4,312
  4,528
  4,754
  4,992
  5,242
  5,504
  5,779
  6,068
  6,371
  6,690
  7,024
  7,376
  7,745
  8,132
  8,538
  8,965
  9,413
  9,884
  10,378
  10,897
  11,442
  12,014
  12,615
  13,246
  13,908
Variable operating expenses, $m
  2,856
  2,997
  3,144
  3,299
  3,461
  3,632
  3,811
  3,999
  4,197
  4,404
  4,575
  4,803
  5,043
  5,296
  5,560
  5,838
  6,130
  6,437
  6,759
  7,097
  7,451
  7,824
  8,215
  8,626
  9,057
  9,510
  9,986
  10,485
  11,009
  11,560
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
  2,856
  2,997
  3,144
  3,299
  3,461
  3,632
  3,811
  3,999
  4,197
  4,404
  4,575
  4,803
  5,043
  5,296
  5,560
  5,838
  6,130
  6,437
  6,759
  7,097
  7,451
  7,824
  8,215
  8,626
  9,057
  9,510
  9,986
  10,485
  11,009
  11,560
Operating income, $m
  523
  551
  581
  613
  646
  680
  717
  755
  795
  837
  929
  976
  1,025
  1,076
  1,130
  1,186
  1,245
  1,308
  1,373
  1,442
  1,514
  1,590
  1,669
  1,752
  1,840
  1,932
  2,029
  2,130
  2,237
  2,348
EBITDA, $m
  843
  885
  930
  976
  1,025
  1,076
  1,130
  1,187
  1,246
  1,308
  1,374
  1,442
  1,514
  1,590
  1,670
  1,753
  1,841
  1,933
  2,030
  2,131
  2,238
  2,349
  2,467
  2,590
  2,720
  2,856
  2,999
  3,149
  3,306
  3,471
Interest expense (income), $m
  868
  180
  193
  206
  221
  236
  251
  268
  285
  303
  323
  343
  364
  386
  409
  434
  459
  486
  515
  544
  576
  608
  643
  679
  717
  757
  798
  842
  888
  937
  988
Earnings before tax, $m
  343
  359
  375
  392
  410
  429
  449
  470
  492
  515
  587
  612
  639
  667
  696
  727
  759
  793
  829
  866
  905
  947
  990
  1,036
  1,083
  1,134
  1,186
  1,242
  1,300
  1,361
Tax expense, $m
  93
  97
  101
  106
  111
  116
  121
  127
  133
  139
  158
  165
  172
  180
  188
  196
  205
  214
  224
  234
  244
  256
  267
  280
  293
  306
  320
  335
  351
  367
Net income, $m
  250
  262
  274
  286
  299
  313
  328
  343
  359
  376
  428
  447
  466
  487
  508
  531
  554
  579
  605
  632
  661
  691
  723
  756
  791
  828
  866
  906
  949
  993

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
  7,593
  7,973
  8,371
  8,790
  9,229
  9,691
  10,175
  10,684
  11,218
  11,779
  12,368
  12,987
  13,636
  14,318
  15,034
  15,785
  16,575
  17,403
  18,274
  19,187
  20,147
  21,154
  22,212
  23,322
  24,488
  25,713
  26,998
  28,348
  29,766
  31,254
Adjusted assets (=assets-cash), $m
  7,593
  7,973
  8,371
  8,790
  9,229
  9,691
  10,175
  10,684
  11,218
  11,779
  12,368
  12,987
  13,636
  14,318
  15,034
  15,785
  16,575
  17,403
  18,274
  19,187
  20,147
  21,154
  22,212
  23,322
  24,488
  25,713
  26,998
  28,348
  29,766
  31,254
Revenue / Adjusted assets
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
Average production assets, $m
  3,355
  3,523
  3,699
  3,884
  4,078
  4,282
  4,496
  4,721
  4,957
  5,205
  5,465
  5,739
  6,026
  6,327
  6,643
  6,975
  7,324
  7,690
  8,075
  8,479
  8,902
  9,348
  9,815
  10,306
  10,821
  11,362
  11,930
  12,527
  13,153
  13,811
Working capital, $m
  267
  280
  294
  309
  324
  341
  358
  376
  394
  414
  435
  457
  479
  503
  529
  555
  583
  612
  642
  675
  708
  744
  781
  820
  861
  904
  949
  997
  1,046
  1,099
Total debt, $m
  3,567
  3,819
  4,083
  4,361
  4,653
  4,960
  5,281
  5,619
  5,974
  6,346
  6,737
  7,148
  7,579
  8,032
  8,507
  9,006
  9,530
  10,081
  10,658
  11,265
  11,902
  12,571
  13,273
  14,011
  14,785
  15,598
  16,452
  17,348
  18,289
  19,277
Total liabilities, $m
  5,042
  5,294
  5,559
  5,836
  6,128
  6,435
  6,756
  7,094
  7,449
  7,821
  8,213
  8,623
  9,054
  9,507
  9,982
  10,481
  11,006
  11,556
  12,134
  12,740
  13,377
  14,046
  14,749
  15,486
  16,260
  17,073
  17,927
  18,823
  19,764
  20,753
Total equity, $m
  2,551
  2,679
  2,813
  2,953
  3,101
  3,256
  3,419
  3,590
  3,769
  3,958
  4,156
  4,364
  4,582
  4,811
  5,051
  5,304
  5,569
  5,848
  6,140
  6,447
  6,769
  7,108
  7,463
  7,836
  8,228
  8,639
  9,071
  9,525
  10,001
  10,501
Total liabilities and equity, $m
  7,593
  7,973
  8,372
  8,789
  9,229
  9,691
  10,175
  10,684
  11,218
  11,779
  12,369
  12,987
  13,636
  14,318
  15,033
  15,785
  16,575
  17,404
  18,274
  19,187
  20,146
  21,154
  22,212
  23,322
  24,488
  25,712
  26,998
  28,348
  29,765
  31,254
Debt-to-equity ratio
  1.400
  1.430
  1.450
  1.480
  1.500
  1.520
  1.540
  1.570
  1.580
  1.600
  1.620
  1.640
  1.650
  1.670
  1.680
  1.700
  1.710
  1.720
  1.740
  1.750
  1.760
  1.770
  1.780
  1.790
  1.800
  1.810
  1.810
  1.820
  1.830
  1.840
Adjusted equity ratio
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  250
  262
  274
  286
  299
  313
  328
  343
  359
  376
  428
  447
  466
  487
  508
  531
  554
  579
  605
  632
  661
  691
  723
  756
  791
  828
  866
  906
  949
  993
Depreciation, amort., depletion, $m
  321
  334
  349
  364
  379
  396
  413
  432
  451
  471
  444
  467
  490
  514
  540
  567
  595
  625
  656
  689
  724
  760
  798
  838
  880
  924
  970
  1,018
  1,069
  1,123
Funds from operations, $m
  571
  596
  622
  650
  679
  709
  741
  775
  810
  847
  873
  913
  956
  1,001
  1,048
  1,098
  1,150
  1,204
  1,261
  1,322
  1,385
  1,451
  1,521
  1,594
  1,671
  1,751
  1,836
  1,925
  2,018
  2,116
Change in working capital, $m
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  50
  52
Cash from operations, $m
  558
  583
  608
  635
  663
  693
  724
  757
  791
  827
  852
  892
  933
  977
  1,023
  1,071
  1,122
  1,175
  1,231
  1,289
  1,351
  1,416
  1,484
  1,555
  1,630
  1,708
  1,791
  1,877
  1,968
  2,064
Maintenance CAPEX, $m
  -260
  -273
  -286
  -301
  -316
  -332
  -348
  -366
  -384
  -403
  -423
  -444
  -467
  -490
  -514
  -540
  -567
  -595
  -625
  -656
  -689
  -724
  -760
  -798
  -838
  -880
  -924
  -970
  -1,018
  -1,069
New CAPEX, $m
  -161
  -168
  -176
  -185
  -194
  -204
  -214
  -225
  -236
  -248
  -260
  -273
  -287
  -301
  -316
  -332
  -349
  -366
  -385
  -404
  -424
  -445
  -467
  -491
  -515
  -541
  -568
  -597
  -626
  -658
Cash from investing activities, $m
  -421
  -441
  -462
  -486
  -510
  -536
  -562
  -591
  -620
  -651
  -683
  -717
  -754
  -791
  -830
  -872
  -916
  -961
  -1,010
  -1,060
  -1,113
  -1,169
  -1,227
  -1,289
  -1,353
  -1,421
  -1,492
  -1,567
  -1,644
  -1,727
Free cash flow, $m
  138
  142
  146
  149
  153
  157
  162
  166
  171
  176
  168
  174
  180
  186
  192
  199
  206
  213
  221
  229
  238
  247
  256
  266
  277
  287
  299
  311
  324
  337
Issuance/(repayment) of debt, $m
  240
  252
  265
  278
  292
  306
  322
  338
  355
  372
  391
  411
  431
  453
  475
  499
  524
  550
  578
  607
  637
  669
  702
  737
  774
  813
  854
  896
  941
  988
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  
  240
  252
  265
  278
  292
  306
  322
  338
  355
  372
  391
  411
  431
  453
  475
  499
  524
  550
  578
  607
  637
  669
  702
  737
  774
  813
  854
  896
  941
  988
Total cash flow (excl. dividends), $m
  377
  394
  410
  427
  445
  464
  484
  504
  526
  549
  560
  585
  611
  639
  668
  698
  730
  764
  799
  836
  875
  916
  959
  1,004
  1,051
  1,100
  1,153
  1,207
  1,265
  1,325
Retained Cash Flow (-), $m
  -122
  -128
  -134
  -141
  -148
  -155
  -163
  -171
  -179
  -188
  -198
  -208
  -218
  -229
  -241
  -253
  -265
  -278
  -292
  -307
  -322
  -338
  -355
  -373
  -392
  -411
  -432
  -454
  -476
  -500
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
  255
  267
  276
  287
  298
  309
  321
  333
  346
  360
  362
  377
  393
  409
  427
  445
  465
  485
  507
  529
  552
  577
  603
  630
  659
  689
  721
  754
  789
  825
Discount rate, %
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
  239
  232
  223
  212
  200
  187
  174
  160
  146
  132
  114
  101
  88
  76
  64
  54
  44
  36
  28
  22
  17
  13
  9
  7
  5
  3
  2
  1
  1
  1
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

Hologic, Inc. is a developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products with an emphasis on women's health. The Company operates through four segments: Diagnostics, Breast Health, GYN Surgical and Skeletal Health. The diagnostics products include Aptima family of assays, ThinPrep system, the Rapid Fetal Fibronectin Test and Procleix blood screening assays. It offers viral load assays for the quantitation of Hepatitis B Virus (HBV), Hepatitis C Virus (HCV) and Human Immunodeficiency Virus-1 (HIV-1). The Breast Health products include breast imaging and related products and accessories, including digital mammography systems, computer-aided detection (CAD) and breast biopsy guidance systems. The GYN Surgical products include NovaSure Endometrial Ablation System and MyoSure Hysteroscopic Tissue Removal System. The Skeletal Health segment offers Discovery and Horizon X-ray bone densitometers and mini C-arm imaging systems.

FINANCIAL RATIOS  of  Hologic, Inc. (HOLX)

Valuation Ratios
P/E Ratio 16.3
Price to Sales 4
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 1537.8
Price to Free Cash Flow -123
Growth Rates
Sales Growth Rate 8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.1%
Cap. Spend. - 3 Yr. Gr. Rate 6.2%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 78.8%
Total Debt to Equity 120.2%
Interest Coverage 2
Management Effectiveness
Return On Assets 16.9%
Ret/ On Assets - 3 Yr. Avg. 8.8%
Return On Total Capital 13%
Ret/ On T. Cap. - 3 Yr. Avg. 7%
Return On Equity 30.7%
Return On Equity - 3 Yr. Avg. 17.6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 53%
Gross Margin - 3 Yr. Avg. 53.7%
EBITDA Margin 83.3%
EBITDA Margin - 3 Yr. Avg. 50.6%
Operating Margin 44.7%
Oper. Margin - 3 Yr. Avg. 26.1%
Pre-Tax Margin 40.2%
Pre-Tax Margin - 3 Yr. Avg. 20.5%
Net Profit Margin 24.7%
Net Profit Margin - 3 Yr. Avg. 13.8%
Effective Tax Rate 38.6%
Eff/ Tax Rate - 3 Yr. Avg. 28.1%
Payout Ratio 0%

HOLX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HOLX stock intrinsic value calculation we used $3218 million for the last fiscal year's total revenue generated by Hologic, Inc.. The default revenue input number comes from 0001 income statement of Hologic, 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 HOLX stock valuation model: a) initial revenue growth rate of 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 6.8%, whose default value for HOLX is calculated based on our internal credit rating of Hologic, 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 Hologic, 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 HOLX stock the variable cost ratio is equal to 84.6%.

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 HOLX 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 Hologic, Inc..

Corporate tax rate of 27% is the nominal tax rate for Hologic, 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 HOLX 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 HOLX are equal to 99.3%.

Life of production assets of 12.3 years is the average useful life of capital assets used in Hologic, 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 HOLX is equal to 7.9%. 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 - $2428.8 million for Hologic, 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 291.413 million for Hologic, 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 Hologic, Inc. at the current share price and the inputted number of shares is $13.0 billion.

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