Intrinsic value of ICU Medical, Inc. - ICUI

Previous Close

$248.87

  Intrinsic Value

$37.15

stock screener

  Rating & Target

str. sell

-85%

Previous close

$248.87

 
Intrinsic value

$37.15

 
Up/down potential

-85%

 
Rating

str. sell

We calculate the intrinsic value of ICUI 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 5.1

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  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
Revenue, $m
  1,428
  1,461
  1,498
  1,541
  1,587
  1,638
  1,694
  1,755
  1,820
  1,890
  1,964
  2,044
  2,129
  2,219
  2,315
  2,416
  2,524
  2,637
  2,757
  2,884
  3,018
  3,159
  3,307
  3,464
  3,629
  3,802
  3,985
  4,177
  4,380
  4,592
Variable operating expenses, $m
  776
  793
  812
  834
  858
  884
  913
  944
  977
  1,013
  1,008
  1,049
  1,092
  1,139
  1,188
  1,240
  1,295
  1,353
  1,415
  1,480
  1,548
  1,621
  1,697
  1,777
  1,862
  1,951
  2,045
  2,143
  2,247
  2,356
Fixed operating expenses, $m
  624
  638
  652
  667
  681
  696
  712
  727
  743
  760
  776
  793
  811
  829
  847
  865
  885
  904
  924
  944
  965
  986
  1,008
  1,030
  1,053
  1,076
  1,100
  1,124
  1,148
  1,174
Total operating expenses, $m
  1,400
  1,431
  1,464
  1,501
  1,539
  1,580
  1,625
  1,671
  1,720
  1,773
  1,784
  1,842
  1,903
  1,968
  2,035
  2,105
  2,180
  2,257
  2,339
  2,424
  2,513
  2,607
  2,705
  2,807
  2,915
  3,027
  3,145
  3,267
  3,395
  3,530
Operating income, $m
  28
  30
  34
  40
  48
  58
  70
  84
  100
  117
  180
  202
  226
  252
  280
  311
  344
  380
  419
  460
  504
  552
  602
  657
  714
  776
  841
  910
  984
  1,062
EBITDA, $m
  137
  141
  147
  155
  165
  177
  192
  208
  227
  248
  271
  296
  324
  354
  387
  423
  461
  502
  546
  593
  644
  698
  755
  817
  882
  951
  1,025
  1,103
  1,186
  1,275
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  3
  4
  4
  5
  6
  7
  8
  9
  10
  11
  13
  14
  15
  17
  18
  20
  22
  24
  26
  28
  30
  32
  34
  37
Earnings before tax, $m
  28
  30
  33
  39
  47
  56
  67
  80
  95
  112
  174
  195
  218
  243
  270
  300
  332
  366
  403
  443
  486
  532
  581
  633
  689
  748
  811
  878
  950
  1,026
Tax expense, $m
  7
  8
  9
  11
  13
  15
  18
  22
  26
  30
  47
  53
  59
  66
  73
  81
  90
  99
  109
  120
  131
  144
  157
  171
  186
  202
  219
  237
  256
  277
Net income, $m
  20
  22
  24
  29
  34
  41
  49
  59
  70
  82
  127
  142
  159
  177
  197
  219
  242
  267
  295
  324
  355
  388
  424
  462
  503
  546
  592
  641
  693
  749

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
  1,481
  1,515
  1,554
  1,598
  1,647
  1,700
  1,758
  1,820
  1,888
  1,960
  2,038
  2,120
  2,208
  2,302
  2,401
  2,507
  2,618
  2,736
  2,860
  2,992
  3,130
  3,277
  3,431
  3,593
  3,764
  3,944
  4,134
  4,333
  4,543
  4,764
Adjusted assets (=assets-cash), $m
  1,481
  1,515
  1,554
  1,598
  1,647
  1,700
  1,758
  1,820
  1,888
  1,960
  2,038
  2,120
  2,208
  2,302
  2,401
  2,507
  2,618
  2,736
  2,860
  2,992
  3,130
  3,277
  3,431
  3,593
  3,764
  3,944
  4,134
  4,333
  4,543
  4,764
Revenue / Adjusted assets
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
  0.964
Average production assets, $m
  501
  513
  526
  541
  557
  575
  595
  616
  639
  663
  689
  717
  747
  779
  813
  848
  886
  926
  968
  1,012
  1,059
  1,109
  1,161
  1,216
  1,274
  1,335
  1,399
  1,466
  1,537
  1,612
Working capital, $m
  301
  308
  316
  325
  335
  346
  357
  370
  384
  399
  414
  431
  449
  468
  488
  510
  532
  556
  582
  609
  637
  666
  698
  731
  766
  802
  841
  881
  924
  969
Total debt, $m
  6
  13
  22
  31
  42
  54
  67
  81
  95
  111
  129
  147
  166
  187
  209
  232
  257
  283
  310
  339
  370
  402
  436
  472
  510
  550
  592
  636
  682
  731
Total liabilities, $m
  327
  335
  344
  353
  364
  376
  388
  402
  417
  433
  450
  469
  488
  509
  531
  554
  579
  605
  632
  661
  692
  724
  758
  794
  832
  872
  914
  958
  1,004
  1,053
Total equity, $m
  1,154
  1,180
  1,211
  1,245
  1,283
  1,324
  1,369
  1,418
  1,471
  1,527
  1,587
  1,652
  1,720
  1,793
  1,871
  1,953
  2,039
  2,131
  2,228
  2,330
  2,438
  2,552
  2,672
  2,799
  2,932
  3,073
  3,220
  3,376
  3,539
  3,711
Total liabilities and equity, $m
  1,481
  1,515
  1,555
  1,598
  1,647
  1,700
  1,757
  1,820
  1,888
  1,960
  2,037
  2,121
  2,208
  2,302
  2,402
  2,507
  2,618
  2,736
  2,860
  2,991
  3,130
  3,276
  3,430
  3,593
  3,764
  3,945
  4,134
  4,334
  4,543
  4,764
Debt-to-equity ratio
  0.000
  0.010
  0.020
  0.030
  0.030
  0.040
  0.050
  0.060
  0.060
  0.070
  0.080
  0.090
  0.100
  0.100
  0.110
  0.120
  0.130
  0.130
  0.140
  0.150
  0.150
  0.160
  0.160
  0.170
  0.170
  0.180
  0.180
  0.190
  0.190
  0.200
Adjusted equity ratio
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  20
  22
  24
  29
  34
  41
  49
  59
  70
  82
  127
  142
  159
  177
  197
  219
  242
  267
  295
  324
  355
  388
  424
  462
  503
  546
  592
  641
  693
  749
Depreciation, amort., depletion, $m
  109
  111
  113
  114
  117
  119
  122
  124
  127
  131
  91
  94
  98
  102
  107
  112
  117
  122
  127
  133
  139
  146
  153
  160
  168
  176
  184
  193
  202
  212
Funds from operations, $m
  129
  132
  137
  143
  151
  160
  171
  183
  197
  212
  218
  237
  257
  280
  304
  330
  359
  389
  422
  457
  494
  534
  577
  622
  670
  722
  776
  834
  896
  961
Change in working capital, $m
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
Cash from operations, $m
  123
  125
  129
  134
  141
  149
  159
  170
  183
  198
  202
  220
  239
  261
  284
  309
  336
  365
  397
  430
  466
  504
  545
  589
  636
  685
  738
  794
  853
  916
Maintenance CAPEX, $m
  -65
  -66
  -67
  -69
  -71
  -73
  -76
  -78
  -81
  -84
  -87
  -91
  -94
  -98
  -102
  -107
  -112
  -117
  -122
  -127
  -133
  -139
  -146
  -153
  -160
  -168
  -176
  -184
  -193
  -202
New CAPEX, $m
  -10
  -12
  -13
  -15
  -16
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -64
  -67
  -71
  -75
Cash from investing activities, $m
  -75
  -78
  -80
  -84
  -87
  -91
  -96
  -99
  -104
  -109
  -113
  -119
  -124
  -130
  -136
  -143
  -150
  -157
  -164
  -171
  -180
  -188
  -198
  -208
  -218
  -229
  -240
  -251
  -264
  -277
Free cash flow, $m
  49
  48
  48
  50
  53
  58
  64
  71
  79
  89
  89
  101
  115
  131
  148
  167
  187
  209
  233
  258
  286
  316
  347
  381
  418
  456
  498
  542
  589
  639
Issuance/(repayment) of debt, $m
  6
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
Issuance/(repurchase) of shares, $m
  3
  5
  6
  6
  4
  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
Cash from financing (excl. dividends), $m  
  9
  13
  15
  16
  15
  13
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
Total cash flow (excl. dividends), $m
  57
  60
  63
  65
  68
  70
  76
  85
  94
  105
  106
  120
  135
  152
  170
  190
  211
  235
  260
  287
  317
  348
  381
  417
  455
  496
  540
  586
  635
  688
Retained Cash Flow (-), $m
  -23
  -27
  -30
  -34
  -38
  -41
  -45
  -49
  -53
  -56
  -60
  -64
  -69
  -73
  -77
  -82
  -87
  -92
  -97
  -102
  -108
  -114
  -120
  -127
  -133
  -140
  -148
  -155
  -163
  -172
Prev. year cash balance distribution, $m
  133
  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
  167
  34
  33
  31
  30
  29
  31
  36
  42
  49
  45
  55
  66
  79
  92
  108
  125
  143
  163
  185
  208
  234
  261
  291
  322
  356
  392
  431
  472
  516
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
  160
  31
  28
  26
  23
  21
  21
  22
  24
  26
  22
  24
  25
  26
  27
  27
  27
  26
  25
  24
  22
  19
  17
  15
  13
  10
  8
  7
  5
  4
Current shareholders' claim on cash, %
  99.9
  99.8
  99.7
  99.6
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5

ICU Medical, Inc. is engaged in the development, manufacture and sales of medical devices used in infusion therapy, oncology and critical care applications. The Company's product line includes needlefree connection devices, custom infusion sets, closed system transfer devices (CSTD) for the handling of hazardous drugs, advanced sensor catheters, needlefree closed blood sampling systems, disposable pressure transducer systems and hemodynamic monitoring systems. The primary critical care products it manufactures are Hemodynamic Monitoring Systems, SafeSet Closed Blood Sampling and Conservation System, Transpac Consumable Blood Pressure Transducers and Other Critical Care Products. The primary oncology products it manufactures are ChemoLock Needlefree CSTD, ChemoClave Needlefree CSTD and Diana Hazardous Drug Compounding System. As of December 31, 2016, its products were used in acute care hospitals and ambulatory clinics in more than 65 countries throughout the world.

FINANCIAL RATIOS  of  ICU Medical, Inc. (ICUI)

Valuation Ratios
P/E Ratio 64.5
Price to Sales 10.7
Price to Book 6.2
Price to Tangible Book
Price to Cash Flow 45.2
Price to Free Cash Flow 62.6
Growth Rates
Sales Growth Rate 10.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 78.6%
Cap. Spend. - 3 Yr. Gr. Rate 4.6%
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 9.5%
Ret/ On Assets - 3 Yr. Avg. 7.4%
Return On Total Capital 10.2%
Ret/ On T. Cap. - 3 Yr. Avg. 7.9%
Return On Equity 10.2%
Return On Equity - 3 Yr. Avg. 7.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 53%
Gross Margin - 3 Yr. Avg. 51.6%
EBITDA Margin 27.4%
EBITDA Margin - 3 Yr. Avg. 24.1%
Operating Margin 22.2%
Oper. Margin - 3 Yr. Avg. 18.3%
Pre-Tax Margin 22.4%
Pre-Tax Margin - 3 Yr. Avg. 18.6%
Net Profit Margin 16.6%
Net Profit Margin - 3 Yr. Avg. 12.7%
Effective Tax Rate 25.9%
Eff/ Tax Rate - 3 Yr. Avg. 32.2%
Payout Ratio 0%

ICUI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ICUI stock intrinsic value calculation we used $1400 million for the last fiscal year's total revenue generated by ICU Medical, Inc.. The default revenue input number comes from 0001 income statement of ICU Medical, 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 ICUI stock valuation model: a) initial revenue growth rate of 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 ICUI is calculated based on our internal credit rating of ICU Medical, 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 ICU Medical, 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 ICUI stock the variable cost ratio is equal to 54.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $611 million in the base year in the intrinsic value calculation for ICUI 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 ICU Medical, Inc..

Corporate tax rate of 27% is the nominal tax rate for ICU Medical, 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 ICUI 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 ICUI are equal to 35.1%.

Life of production assets of 7.6 years is the average useful life of capital assets used in ICU Medical, 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 ICUI is equal to 21.1%. 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 - $1263.655 million for ICU Medical, 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 20.485 million for ICU Medical, 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 ICU Medical, Inc. at the current share price and the inputted number of shares is $5.1 billion.

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