Intrinsic value of Illumina, Inc. - ILMN

Previous Close

$286.17

  Intrinsic Value

$139.11

stock screener

  Rating & Target

str. sell

-51%

Previous close

$286.17

 
Intrinsic value

$139.11

 
Up/down potential

-51%

 
Rating

str. sell

We calculate the intrinsic value of ILMN 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 42.1

 

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, %
  11.60
  10.94
  10.35
  9.81
  9.33
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.86
  6.68
  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
  5.35
  5.31
Revenue, $m
  3,720
  4,127
  4,553
  5,000
  5,467
  5,953
  6,460
  6,987
  7,534
  8,104
  8,695
  9,310
  9,949
  10,614
  11,305
  12,024
  12,772
  13,551
  14,363
  15,209
  16,091
  17,012
  17,973
  18,977
  20,026
  21,122
  22,268
  23,467
  24,721
  26,034
Variable operating expenses, $m
  1,933
  2,133
  2,342
  2,561
  2,790
  3,029
  3,278
  3,536
  3,805
  4,084
  4,267
  4,569
  4,883
  5,209
  5,548
  5,900
  6,268
  6,650
  7,048
  7,464
  7,897
  8,349
  8,820
  9,313
  9,828
  10,366
  10,928
  11,516
  12,132
  12,776
Fixed operating expenses, $m
  738
  754
  771
  788
  805
  823
  841
  859
  878
  898
  917
  937
  958
  979
  1,001
  1,023
  1,045
  1,068
  1,092
  1,116
  1,140
  1,165
  1,191
  1,217
  1,244
  1,271
  1,299
  1,328
  1,357
  1,387
Total operating expenses, $m
  2,671
  2,887
  3,113
  3,349
  3,595
  3,852
  4,119
  4,395
  4,683
  4,982
  5,184
  5,506
  5,841
  6,188
  6,549
  6,923
  7,313
  7,718
  8,140
  8,580
  9,037
  9,514
  10,011
  10,530
  11,072
  11,637
  12,227
  12,844
  13,489
  14,163
Operating income, $m
  1,049
  1,240
  1,441
  1,651
  1,871
  2,101
  2,341
  2,591
  2,851
  3,122
  3,511
  3,804
  4,109
  4,426
  4,756
  5,100
  5,459
  5,833
  6,223
  6,629
  7,054
  7,498
  7,962
  8,447
  8,954
  9,485
  10,041
  10,623
  11,232
  11,871
EBITDA, $m
  1,306
  1,514
  1,732
  1,961
  2,200
  2,449
  2,710
  2,981
  3,263
  3,556
  3,862
  4,180
  4,510
  4,854
  5,213
  5,586
  5,974
  6,380
  6,802
  7,243
  7,704
  8,185
  8,687
  9,213
  9,763
  10,338
  10,940
  11,570
  12,230
  12,922
Interest expense (income), $m
  0
  108
  121
  135
  149
  164
  180
  197
  214
  232
  250
  270
  290
  311
  332
  355
  378
  403
  428
  454
  482
  511
  541
  572
  604
  638
  674
  711
  750
  791
  833
Earnings before tax, $m
  941
  1,119
  1,306
  1,502
  1,707
  1,921
  2,145
  2,377
  2,619
  2,872
  3,241
  3,514
  3,798
  4,094
  4,401
  4,722
  5,056
  5,405
  5,768
  6,148
  6,544
  6,958
  7,390
  7,843
  8,316
  8,811
  9,330
  9,873
  10,442
  11,038
Tax expense, $m
  254
  302
  353
  406
  461
  519
  579
  642
  707
  775
  875
  949
  1,025
  1,105
  1,188
  1,275
  1,365
  1,459
  1,557
  1,660
  1,767
  1,879
  1,995
  2,117
  2,245
  2,379
  2,519
  2,666
  2,819
  2,980
Net income, $m
  687
  817
  953
  1,096
  1,246
  1,403
  1,566
  1,735
  1,912
  2,096
  2,366
  2,565
  2,773
  2,988
  3,213
  3,447
  3,691
  3,945
  4,211
  4,488
  4,777
  5,079
  5,395
  5,725
  6,071
  6,432
  6,811
  7,207
  7,622
  8,058

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
  4,626
  5,133
  5,664
  6,219
  6,799
  7,404
  8,034
  8,690
  9,371
  10,079
  10,815
  11,580
  12,375
  13,201
  14,061
  14,955
  15,885
  16,854
  17,864
  18,916
  20,014
  21,159
  22,355
  23,603
  24,908
  26,271
  27,697
  29,188
  30,748
  32,381
Adjusted assets (=assets-cash), $m
  4,626
  5,133
  5,664
  6,219
  6,799
  7,404
  8,034
  8,690
  9,371
  10,079
  10,815
  11,580
  12,375
  13,201
  14,061
  14,955
  15,885
  16,854
  17,864
  18,916
  20,014
  21,159
  22,355
  23,603
  24,908
  26,271
  27,697
  29,188
  30,748
  32,381
Revenue / Adjusted assets
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
  0.804
Average production assets, $m
  1,666
  1,849
  2,040
  2,240
  2,449
  2,667
  2,894
  3,130
  3,375
  3,630
  3,896
  4,171
  4,457
  4,755
  5,064
  5,387
  5,722
  6,071
  6,434
  6,814
  7,209
  7,621
  8,052
  8,502
  8,972
  9,463
  9,976
  10,513
  11,075
  11,663
Working capital, $m
  312
  347
  382
  420
  459
  500
  543
  587
  633
  681
  730
  782
  836
  892
  950
  1,010
  1,073
  1,138
  1,206
  1,278
  1,352
  1,429
  1,510
  1,594
  1,682
  1,774
  1,871
  1,971
  2,077
  2,187
Total debt, $m
  2,239
  2,495
  2,763
  3,044
  3,337
  3,642
  3,960
  4,291
  4,635
  4,993
  5,365
  5,751
  6,152
  6,570
  7,004
  7,455
  7,925
  8,414
  8,924
  9,456
  10,010
  10,588
  11,192
  11,823
  12,481
  13,170
  13,890
  14,643
  15,431
  16,255
Total liabilities, $m
  2,336
  2,592
  2,860
  3,141
  3,434
  3,739
  4,057
  4,388
  4,732
  5,090
  5,462
  5,848
  6,249
  6,667
  7,101
  7,552
  8,022
  8,511
  9,021
  9,553
  10,107
  10,685
  11,289
  11,920
  12,578
  13,267
  13,987
  14,740
  15,528
  16,352
Total equity, $m
  2,290
  2,541
  2,803
  3,079
  3,366
  3,665
  3,977
  4,301
  4,639
  4,989
  5,354
  5,732
  6,126
  6,535
  6,960
  7,403
  7,863
  8,343
  8,843
  9,364
  9,907
  10,474
  11,066
  11,684
  12,329
  13,004
  13,710
  14,448
  15,220
  16,029
Total liabilities and equity, $m
  4,626
  5,133
  5,663
  6,220
  6,800
  7,404
  8,034
  8,689
  9,371
  10,079
  10,816
  11,580
  12,375
  13,202
  14,061
  14,955
  15,885
  16,854
  17,864
  18,917
  20,014
  21,159
  22,355
  23,604
  24,907
  26,271
  27,697
  29,188
  30,748
  32,381
Debt-to-equity ratio
  0.980
  0.980
  0.990
  0.990
  0.990
  0.990
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.000
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
Adjusted equity ratio
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  687
  817
  953
  1,096
  1,246
  1,403
  1,566
  1,735
  1,912
  2,096
  2,366
  2,565
  2,773
  2,988
  3,213
  3,447
  3,691
  3,945
  4,211
  4,488
  4,777
  5,079
  5,395
  5,725
  6,071
  6,432
  6,811
  7,207
  7,622
  8,058
Depreciation, amort., depletion, $m
  258
  274
  291
  309
  328
  348
  368
  389
  412
  435
  351
  376
  402
  428
  456
  485
  515
  547
  580
  614
  649
  687
  725
  766
  808
  852
  899
  947
  998
  1,051
Funds from operations, $m
  945
  1,091
  1,245
  1,406
  1,574
  1,750
  1,934
  2,125
  2,324
  2,531
  2,717
  2,941
  3,174
  3,417
  3,669
  3,932
  4,207
  4,492
  4,790
  5,102
  5,426
  5,766
  6,120
  6,491
  6,879
  7,285
  7,709
  8,154
  8,620
  9,108
Change in working capital, $m
  32
  34
  36
  38
  39
  41
  43
  44
  46
  48
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  77
  81
  84
  88
  92
  96
  101
  105
  110
Cash from operations, $m
  912
  1,057
  1,209
  1,368
  1,535
  1,709
  1,891
  2,081
  2,278
  2,483
  2,667
  2,889
  3,120
  3,361
  3,611
  3,872
  4,144
  4,427
  4,722
  5,030
  5,352
  5,688
  6,040
  6,407
  6,791
  7,193
  7,613
  8,054
  8,515
  8,998
Maintenance CAPEX, $m
  -135
  -150
  -167
  -184
  -202
  -221
  -240
  -261
  -282
  -304
  -327
  -351
  -376
  -402
  -428
  -456
  -485
  -515
  -547
  -580
  -614
  -649
  -687
  -725
  -766
  -808
  -852
  -899
  -947
  -998
New CAPEX, $m
  -173
  -182
  -191
  -200
  -209
  -218
  -227
  -236
  -245
  -255
  -265
  -275
  -286
  -298
  -310
  -322
  -335
  -349
  -364
  -379
  -395
  -413
  -431
  -450
  -470
  -491
  -513
  -537
  -562
  -588
Cash from investing activities, $m
  -308
  -332
  -358
  -384
  -411
  -439
  -467
  -497
  -527
  -559
  -592
  -626
  -662
  -700
  -738
  -778
  -820
  -864
  -911
  -959
  -1,009
  -1,062
  -1,118
  -1,175
  -1,236
  -1,299
  -1,365
  -1,436
  -1,509
  -1,586
Free cash flow, $m
  605
  724
  851
  984
  1,124
  1,271
  1,424
  1,584
  1,750
  1,924
  2,075
  2,263
  2,458
  2,662
  2,873
  3,094
  3,323
  3,562
  3,812
  4,072
  4,343
  4,626
  4,922
  5,232
  5,555
  5,893
  6,247
  6,618
  7,006
  7,412
Issuance/(repayment) of debt, $m
  242
  256
  268
  281
  293
  306
  318
  331
  344
  358
  372
  386
  401
  417
  434
  452
  470
  489
  510
  531
  554
  578
  604
  630
  659
  689
  720
  753
  788
  825
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  
  242
  256
  268
  281
  293
  306
  318
  331
  344
  358
  372
  386
  401
  417
  434
  452
  470
  489
  510
  531
  554
  578
  604
  630
  659
  689
  720
  753
  788
  825
Total cash flow (excl. dividends), $m
  847
  980
  1,119
  1,265
  1,417
  1,576
  1,742
  1,915
  2,094
  2,281
  2,447
  2,649
  2,860
  3,079
  3,307
  3,545
  3,793
  4,052
  4,322
  4,603
  4,897
  5,205
  5,526
  5,862
  6,214
  6,582
  6,967
  7,371
  7,794
  8,237
Retained Cash Flow (-), $m
  -240
  -251
  -263
  -275
  -287
  -299
  -312
  -324
  -337
  -351
  -364
  -379
  -393
  -409
  -425
  -443
  -461
  -480
  -500
  -521
  -543
  -567
  -592
  -618
  -646
  -675
  -706
  -738
  -772
  -808
Prev. year cash balance distribution, $m
  1,708
  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
  2,315
  729
  856
  990
  1,130
  1,277
  1,430
  1,590
  1,757
  1,931
  2,083
  2,271
  2,466
  2,670
  2,882
  3,103
  3,333
  3,572
  3,822
  4,082
  4,354
  4,638
  4,934
  5,244
  5,568
  5,907
  6,261
  6,633
  7,021
  7,428
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
  2,219
  668
  745
  815
  876
  927
  966
  994
  1,009
  1,012
  989
  969
  938
  896
  846
  788
  725
  658
  588
  519
  450
  385
  323
  267
  217
  172
  134
  103
  77
  56
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

Illumina, Inc. (Illumina) is a provider of sequencing- and array-based solutions for genetic analysis. The Company operates through two segments: Core Illumina and the consolidated variable interest entities (VIEs), which include the activities of GRAIL, Inc. (GRAIL) and Helix Holdings I, LLC (Helix). Core Illumina consists of its core operations. Core Illumina's products and services serve customers in the research, clinical and applied markets, and enable the adoption of a range of genomic solutions. The Company's portfolio of integrated systems, consumables and analysis tools addresses the range of genomic complexity, price points, and throughput, enabling customers to select the solution for their research or clinical challenge. The Company provides reproductive-health solutions, including noninvasive prenatal testing (NIPT), preimplantation genetic screening and diagnosis, and neonatal and genetic health testing.

FINANCIAL RATIOS  of  Illumina, Inc. (ILMN)

Valuation Ratios
P/E Ratio 90.4
Price to Sales 17.4
Price to Book 19
Price to Tangible Book
Price to Cash Flow 60.9
Price to Free Cash Flow 100.6
Growth Rates
Sales Growth Rate 8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 89.5%
Cap. Spend. - 3 Yr. Gr. Rate 24.4%
Financial Strength
Quick Ratio 1559
Current Ratio 0
LT Debt to Equity 47.7%
Total Debt to Equity 47.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.6%
Ret/ On Assets - 3 Yr. Avg. 12%
Return On Total Capital 15%
Ret/ On T. Cap. - 3 Yr. Avg. 14.8%
Return On Equity 22.9%
Return On Equity - 3 Yr. Avg. 24.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 69.5%
Gross Margin - 3 Yr. Avg. 69.7%
EBITDA Margin 29.3%
EBITDA Margin - 3 Yr. Avg. 30.5%
Operating Margin 24.5%
Oper. Margin - 3 Yr. Avg. 26.6%
Pre-Tax Margin 23.4%
Pre-Tax Margin - 3 Yr. Avg. 24.6%
Net Profit Margin 19.3%
Net Profit Margin - 3 Yr. Avg. 19.7%
Effective Tax Rate 23.7%
Eff/ Tax Rate - 3 Yr. Avg. 22.2%
Payout Ratio 0%

ILMN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ILMN stock intrinsic value calculation we used $3333 million for the last fiscal year's total revenue generated by Illumina, Inc.. The default revenue input number comes from 0001 income statement of Illumina, 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 ILMN stock valuation model: a) initial revenue growth rate of 11.6% 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 ILMN is calculated based on our internal credit rating of Illumina, 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 Illumina, 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 ILMN stock the variable cost ratio is equal to 52.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $722 million in the base year in the intrinsic value calculation for ILMN 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 Illumina, Inc..

Corporate tax rate of 27% is the nominal tax rate for Illumina, 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 ILMN 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 ILMN are equal to 44.8%.

Life of production assets of 11.1 years is the average useful life of capital assets used in Illumina, 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 ILMN is equal to 8.4%. 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 - $3758 million for Illumina, 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 147.011 million for Illumina, 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 Illumina, Inc. at the current share price and the inputted number of shares is $42.1 billion.

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