Intrinsic value of IDEXX Laboratories, Inc. - IDXX

Previous Close

$225.32

  Intrinsic Value

$51.77

stock screener

  Rating & Target

str. sell

-77%

Previous close

$225.32

 
Intrinsic value

$51.77

 
Up/down potential

-77%

 
Rating

str. sell

We calculate the intrinsic value of IDXX 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 19.4

 

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, %
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
Revenue, $m
  2,401
  2,597
  2,800
  3,012
  3,231
  3,460
  3,697
  3,944
  4,201
  4,468
  4,745
  5,035
  5,336
  5,651
  5,978
  6,320
  6,677
  7,050
  7,440
  7,847
  8,273
  8,718
  9,184
  9,672
  10,182
  10,717
  11,277
  11,864
  12,479
  13,123
Variable operating expenses, $m
  1,629
  1,758
  1,893
  2,032
  2,177
  2,328
  2,485
  2,648
  2,817
  2,993
  3,133
  3,324
  3,523
  3,731
  3,947
  4,173
  4,409
  4,655
  4,912
  5,181
  5,462
  5,756
  6,064
  6,386
  6,723
  7,076
  7,446
  7,833
  8,239
  8,665
Fixed operating expenses, $m
  227
  232
  237
  242
  248
  253
  259
  264
  270
  276
  282
  288
  295
  301
  308
  314
  321
  328
  336
  343
  351
  358
  366
  374
  382
  391
  400
  408
  417
  426
Total operating expenses, $m
  1,856
  1,990
  2,130
  2,274
  2,425
  2,581
  2,744
  2,912
  3,087
  3,269
  3,415
  3,612
  3,818
  4,032
  4,255
  4,487
  4,730
  4,983
  5,248
  5,524
  5,813
  6,114
  6,430
  6,760
  7,105
  7,467
  7,846
  8,241
  8,656
  9,091
Operating income, $m
  545
  607
  671
  737
  807
  879
  954
  1,032
  1,113
  1,198
  1,330
  1,422
  1,518
  1,619
  1,723
  1,833
  1,947
  2,067
  2,192
  2,323
  2,460
  2,604
  2,754
  2,912
  3,077
  3,250
  3,432
  3,622
  3,822
  4,032
EBITDA, $m
  662
  730
  800
  873
  949
  1,028
  1,110
  1,196
  1,285
  1,378
  1,475
  1,576
  1,681
  1,791
  1,906
  2,026
  2,151
  2,282
  2,419
  2,562
  2,712
  2,870
  3,034
  3,207
  3,388
  3,577
  3,776
  3,984
  4,203
  4,432
Interest expense (income), $m
  32
  54
  52
  58
  65
  72
  80
  87
  95
  104
  112
  121
  131
  141
  151
  161
  172
  184
  196
  209
  222
  236
  250
  265
  281
  297
  314
  332
  351
  371
  392
Earnings before tax, $m
  491
  555
  613
  672
  734
  799
  867
  937
  1,010
  1,086
  1,209
  1,292
  1,378
  1,468
  1,562
  1,660
  1,763
  1,871
  1,983
  2,101
  2,225
  2,354
  2,489
  2,631
  2,780
  2,936
  3,099
  3,271
  3,451
  3,640
Tax expense, $m
  133
  150
  165
  182
  198
  216
  234
  253
  273
  293
  326
  349
  372
  396
  422
  448
  476
  505
  536
  567
  601
  636
  672
  710
  751
  793
  837
  883
  932
  983
Net income, $m
  359
  405
  447
  491
  536
  583
  633
  684
  737
  793
  882
  943
  1,006
  1,072
  1,140
  1,212
  1,287
  1,366
  1,448
  1,534
  1,624
  1,718
  1,817
  1,921
  2,029
  2,143
  2,263
  2,388
  2,519
  2,657

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
  1,669
  1,805
  1,946
  2,093
  2,246
  2,404
  2,569
  2,741
  2,919
  3,105
  3,298
  3,499
  3,708
  3,927
  4,155
  4,392
  4,640
  4,899
  5,170
  5,453
  5,749
  6,058
  6,382
  6,721
  7,076
  7,447
  7,837
  8,244
  8,672
  9,120
Adjusted assets (=assets-cash), $m
  1,669
  1,805
  1,946
  2,093
  2,246
  2,404
  2,569
  2,741
  2,919
  3,105
  3,298
  3,499
  3,708
  3,927
  4,155
  4,392
  4,640
  4,899
  5,170
  5,453
  5,749
  6,058
  6,382
  6,721
  7,076
  7,447
  7,837
  8,244
  8,672
  9,120
Revenue / Adjusted assets
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
  1.439
Average production assets, $m
  579
  626
  675
  726
  779
  834
  891
  950
  1,012
  1,077
  1,144
  1,213
  1,286
  1,362
  1,441
  1,523
  1,609
  1,699
  1,793
  1,891
  1,994
  2,101
  2,213
  2,331
  2,454
  2,583
  2,718
  2,859
  3,007
  3,163
Working capital, $m
  173
  187
  202
  217
  233
  249
  266
  284
  302
  322
  342
  363
  384
  407
  430
  455
  481
  508
  536
  565
  596
  628
  661
  696
  733
  772
  812
  854
  898
  945
Total debt, $m
  955
  1,078
  1,205
  1,337
  1,474
  1,617
  1,766
  1,920
  2,081
  2,248
  2,421
  2,602
  2,791
  2,988
  3,193
  3,406
  3,630
  3,863
  4,107
  4,361
  4,627
  4,906
  5,197
  5,502
  5,822
  6,156
  6,506
  6,873
  7,258
  7,661
Total liabilities, $m
  1,502
  1,624
  1,751
  1,884
  2,021
  2,164
  2,312
  2,467
  2,627
  2,794
  2,968
  3,149
  3,338
  3,534
  3,739
  3,953
  4,176
  4,409
  4,653
  4,908
  5,174
  5,453
  5,744
  6,049
  6,368
  6,703
  7,053
  7,420
  7,805
  8,208
Total equity, $m
  167
  180
  195
  209
  225
  240
  257
  274
  292
  310
  330
  350
  371
  393
  415
  439
  464
  490
  517
  545
  575
  606
  638
  672
  708
  745
  784
  824
  867
  912
Total liabilities and equity, $m
  1,669
  1,804
  1,946
  2,093
  2,246
  2,404
  2,569
  2,741
  2,919
  3,104
  3,298
  3,499
  3,709
  3,927
  4,154
  4,392
  4,640
  4,899
  5,170
  5,453
  5,749
  6,059
  6,382
  6,721
  7,076
  7,448
  7,837
  8,244
  8,672
  9,120
Debt-to-equity ratio
  5.720
  5.970
  6.190
  6.390
  6.570
  6.730
  6.870
  7.010
  7.130
  7.240
  7.340
  7.440
  7.530
  7.610
  7.680
  7.760
  7.820
  7.880
  7.940
  8.000
  8.050
  8.100
  8.140
  8.190
  8.230
  8.270
  8.300
  8.340
  8.370
  8.400
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  359
  405
  447
  491
  536
  583
  633
  684
  737
  793
  882
  943
  1,006
  1,072
  1,140
  1,212
  1,287
  1,366
  1,448
  1,534
  1,624
  1,718
  1,817
  1,921
  2,029
  2,143
  2,263
  2,388
  2,519
  2,657
Depreciation, amort., depletion, $m
  117
  123
  129
  136
  142
  149
  156
  164
  172
  180
  145
  154
  163
  172
  182
  193
  204
  215
  227
  239
  252
  266
  280
  295
  311
  327
  344
  362
  381
  400
Funds from operations, $m
  476
  528
  576
  626
  678
  733
  789
  848
  909
  973
  1,027
  1,096
  1,169
  1,244
  1,323
  1,405
  1,491
  1,581
  1,675
  1,773
  1,876
  1,984
  2,097
  2,216
  2,340
  2,470
  2,607
  2,750
  2,900
  3,058
Change in working capital, $m
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
Cash from operations, $m
  462
  514
  562
  611
  663
  716
  772
  830
  890
  953
  1,007
  1,076
  1,147
  1,221
  1,299
  1,380
  1,465
  1,554
  1,647
  1,744
  1,846
  1,952
  2,064
  2,181
  2,303
  2,432
  2,566
  2,708
  2,856
  3,011
Maintenance CAPEX, $m
  -67
  -73
  -79
  -85
  -92
  -99
  -106
  -113
  -120
  -128
  -136
  -145
  -154
  -163
  -172
  -182
  -193
  -204
  -215
  -227
  -239
  -252
  -266
  -280
  -295
  -311
  -327
  -344
  -362
  -381
New CAPEX, $m
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -118
  -123
  -129
  -135
  -141
  -148
  -155
Cash from investing activities, $m
  -112
  -120
  -128
  -136
  -145
  -154
  -163
  -172
  -182
  -192
  -203
  -215
  -227
  -239
  -251
  -264
  -279
  -294
  -309
  -325
  -342
  -359
  -378
  -398
  -418
  -440
  -462
  -485
  -510
  -536
Free cash flow, $m
  349
  394
  433
  475
  518
  563
  609
  658
  708
  761
  804
  861
  921
  983
  1,048
  1,116
  1,186
  1,260
  1,338
  1,419
  1,504
  1,592
  1,685
  1,783
  1,885
  1,992
  2,104
  2,222
  2,346
  2,475
Issuance/(repayment) of debt, $m
  -45
  122
  127
  132
  137
  143
  148
  154
  160
  167
  174
  181
  189
  197
  205
  214
  223
  233
  244
  255
  266
  279
  291
  305
  319
  334
  350
  367
  385
  403
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  
  -45
  122
  127
  132
  137
  143
  148
  154
  160
  167
  174
  181
  189
  197
  205
  214
  223
  233
  244
  255
  266
  279
  291
  305
  319
  334
  350
  367
  385
  403
Total cash flow (excl. dividends), $m
  304
  516
  561
  607
  655
  705
  758
  812
  869
  928
  978
  1,042
  1,109
  1,179
  1,253
  1,329
  1,410
  1,494
  1,581
  1,673
  1,770
  1,871
  1,977
  2,088
  2,204
  2,326
  2,455
  2,589
  2,730
  2,878
Retained Cash Flow (-), $m
  -176
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
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
  127
  502
  546
  592
  640
  690
  741
  795
  851
  909
  958
  1,022
  1,088
  1,158
  1,230
  1,306
  1,385
  1,468
  1,554
  1,645
  1,740
  1,840
  1,944
  2,054
  2,169
  2,289
  2,416
  2,548
  2,687
  2,834
Discount rate, %
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
  117
  421
  414
  402
  385
  364
  340
  312
  283
  253
  220
  190
  162
  135
  111
  89
  70
  54
  40
  30
  21
  15
  10
  7
  4
  3
  2
  1
  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

IDEXX Laboratories, Inc. develops, manufactures and distributes products and provides services for the companion animal veterinary, livestock and poultry, dairy and water testing markets. The Company also sells a line of portable electrolytes and blood gas analyzers for the human point-of-care medical diagnostics market. Its segments include diagnostic and information technology-based products and services for the veterinary market, which the Company refers to as the Companion Animal Group; water quality products; diagnostic products and services for livestock and poultry health, which the Company refers to as Livestock, Poultry and Dairy, and Other operating segment, which combines and presents products for the human point-of-care medical diagnostics market with its pharmaceutical product line and its out-licensing arrangements. Its products and services include point-of-care veterinary diagnostic products, comprising instruments, consumables and rapid assay test kits, among others.

FINANCIAL RATIOS  of  IDEXX Laboratories, Inc. (IDXX)

Valuation Ratios
P/E Ratio 89.3
Price to Sales 11.2
Price to Book -183.5
Price to Tangible Book
Price to Cash Flow 59.2
Price to Free Cash Flow 73.4
Growth Rates
Sales Growth Rate 10.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -21.7%
Cap. Spend. - 3 Yr. Gr. Rate -3.8%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity -462%
Total Debt to Equity -1027.8%
Interest Coverage 11
Management Effectiveness
Return On Assets 16.2%
Ret/ On Assets - 3 Yr. Avg. 15.2%
Return On Total Capital 22.3%
Ret/ On T. Cap. - 3 Yr. Avg. 20%
Return On Equity -231.3%
Return On Equity - 3 Yr. Avg. 318.5%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 54.9%
Gross Margin - 3 Yr. Avg. 55.1%
EBITDA Margin 24.3%
EBITDA Margin - 3 Yr. Avg. 22.9%
Operating Margin 19.7%
Oper. Margin - 3 Yr. Avg. 18.6%
Pre-Tax Margin 18.1%
Pre-Tax Margin - 3 Yr. Avg. 17.3%
Net Profit Margin 12.5%
Net Profit Margin - 3 Yr. Avg. 12.2%
Effective Tax Rate 31.1%
Eff/ Tax Rate - 3 Yr. Avg. 29%
Payout Ratio 0%

IDXX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IDXX stock intrinsic value calculation we used $2213 million for the last fiscal year's total revenue generated by IDEXX Laboratories, Inc.. The default revenue input number comes from 0001 income statement of IDEXX Laboratories, 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 IDXX stock valuation model: a) initial revenue growth rate of 8.5% 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 8.8%, whose default value for IDXX is calculated based on our internal credit rating of IDEXX Laboratories, 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 IDEXX Laboratories, 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 IDXX stock the variable cost ratio is equal to 68%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $222 million in the base year in the intrinsic value calculation for IDXX 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 IDEXX Laboratories, Inc..

Corporate tax rate of 27% is the nominal tax rate for IDEXX Laboratories, 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 IDXX 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 IDXX are equal to 24.1%.

Life of production assets of 7.9 years is the average useful life of capital assets used in IDEXX Laboratories, 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 IDXX is equal to 7.2%. 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 - $-9.513 million for IDEXX Laboratories, 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 86.027 million for IDEXX Laboratories, 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 IDEXX Laboratories, Inc. at the current share price and the inputted number of shares is $19.4 billion.

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