Intrinsic value of Inogen - INGN

Previous Close

$232.65

  Intrinsic Value

$36.68

stock screener

  Rating & Target

str. sell

-84%

Previous close

$232.65

 
Intrinsic value

$36.68

 
Up/down potential

-84%

 
Rating

str. sell

We calculate the intrinsic value of INGN 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 2017), $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 4.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  23.00
  21.20
  19.58
  18.12
  16.81
  15.63
  14.57
  13.61
  12.75
  11.97
  11.28
  10.65
  10.08
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
  6.05
  5.94
  5.85
Revenue, $m
  306
  371
  444
  524
  612
  708
  811
  922
  1,039
  1,164
  1,295
  1,433
  1,577
  1,728
  1,886
  2,050
  2,221
  2,399
  2,583
  2,775
  2,975
  3,182
  3,398
  3,622
  3,855
  4,098
  4,350
  4,613
  4,887
  5,173
Variable operating expenses, $m
  271
  329
  393
  464
  542
  626
  717
  815
  919
  1,028
  1,144
  1,265
  1,393
  1,526
  1,666
  1,811
  1,962
  2,118
  2,282
  2,451
  2,627
  2,811
  3,001
  3,199
  3,405
  3,619
  3,842
  4,074
  4,316
  4,569
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
  271
  329
  393
  464
  542
  626
  717
  815
  919
  1,028
  1,144
  1,265
  1,393
  1,526
  1,666
  1,811
  1,962
  2,118
  2,282
  2,451
  2,627
  2,811
  3,001
  3,199
  3,405
  3,619
  3,842
  4,074
  4,316
  4,569
Operating income, $m
  35
  43
  51
  61
  71
  82
  94
  107
  121
  135
  151
  167
  184
  202
  220
  239
  259
  280
  302
  324
  348
  372
  397
  423
  450
  479
  508
  539
  571
  604
EBITDA, $m
  39
  47
  57
  67
  78
  90
  103
  117
  132
  148
  165
  182
  201
  220
  240
  261
  283
  305
  329
  353
  379
  405
  433
  461
  491
  522
  554
  587
  622
  659
Interest expense (income), $m
  0
  0
  1
  1
  2
  3
  4
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  19
  21
  22
  24
  26
  28
  31
  33
  35
  38
  40
  43
  45
  48
Earnings before tax, $m
  35
  42
  50
  59
  68
  78
  89
  101
  114
  127
  142
  156
  172
  188
  205
  222
  241
  260
  279
  300
  321
  343
  366
  390
  415
  441
  468
  496
  525
  556
Tax expense, $m
  9
  11
  13
  16
  18
  21
  24
  27
  31
  34
  38
  42
  46
  51
  55
  60
  65
  70
  75
  81
  87
  93
  99
  105
  112
  119
  126
  134
  142
  150
Net income, $m
  26
  31
  36
  43
  50
  57
  65
  74
  83
  93
  103
  114
  126
  137
  150
  162
  176
  190
  204
  219
  234
  251
  267
  285
  303
  322
  342
  362
  384
  406

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
  166
  201
  240
  284
  332
  383
  439
  499
  563
  630
  701
  776
  854
  936
  1,021
  1,110
  1,202
  1,299
  1,399
  1,503
  1,611
  1,723
  1,840
  1,961
  2,087
  2,218
  2,355
  2,498
  2,646
  2,801
Adjusted assets (=assets-cash), $m
  166
  201
  240
  284
  332
  383
  439
  499
  563
  630
  701
  776
  854
  936
  1,021
  1,110
  1,202
  1,299
  1,399
  1,503
  1,611
  1,723
  1,840
  1,961
  2,087
  2,218
  2,355
  2,498
  2,646
  2,801
Revenue / Adjusted assets
  1.843
  1.846
  1.850
  1.845
  1.843
  1.849
  1.847
  1.848
  1.845
  1.848
  1.847
  1.847
  1.847
  1.846
  1.847
  1.847
  1.848
  1.847
  1.846
  1.846
  1.847
  1.847
  1.847
  1.847
  1.847
  1.848
  1.847
  1.847
  1.847
  1.847
Average production assets, $m
  32
  39
  47
  55
  64
  74
  85
  97
  109
  122
  136
  150
  166
  181
  198
  215
  233
  252
  271
  291
  312
  334
  357
  380
  405
  430
  457
  484
  513
  543
Working capital, $m
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -29
  -30
  -32
  -34
  -36
Total debt, $m
  11
  23
  37
  53
  70
  88
  108
  130
  152
  176
  202
  228
  256
  285
  315
  347
  380
  414
  450
  487
  525
  565
  607
  650
  695
  742
  790
  841
  894
  949
Total liabilities, $m
  59
  72
  86
  101
  118
  136
  156
  178
  200
  224
  250
  276
  304
  333
  363
  395
  428
  462
  498
  535
  573
  613
  655
  698
  743
  790
  838
  889
  942
  997
Total equity, $m
  107
  129
  155
  183
  214
  247
  283
  321
  362
  406
  452
  500
  550
  603
  658
  715
  774
  836
  901
  968
  1,037
  1,110
  1,185
  1,263
  1,344
  1,429
  1,517
  1,608
  1,704
  1,804
Total liabilities and equity, $m
  166
  201
  241
  284
  332
  383
  439
  499
  562
  630
  702
  776
  854
  936
  1,021
  1,110
  1,202
  1,298
  1,399
  1,503
  1,610
  1,723
  1,840
  1,961
  2,087
  2,219
  2,355
  2,497
  2,646
  2,801
Debt-to-equity ratio
  0.100
  0.180
  0.240
  0.290
  0.330
  0.360
  0.380
  0.400
  0.420
  0.430
  0.450
  0.460
  0.470
  0.470
  0.480
  0.490
  0.490
  0.500
  0.500
  0.500
  0.510
  0.510
  0.510
  0.510
  0.520
  0.520
  0.520
  0.520
  0.520
  0.530
Adjusted equity ratio
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644
  0.644

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  26
  31
  36
  43
  50
  57
  65
  74
  83
  93
  103
  114
  126
  137
  150
  162
  176
  190
  204
  219
  234
  251
  267
  285
  303
  322
  342
  362
  384
  406
Depreciation, amort., depletion, $m
  4
  5
  5
  6
  7
  8
  9
  10
  12
  13
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  31
  33
  36
  38
  40
  43
  46
  48
  51
  54
Funds from operations, $m
  30
  35
  42
  49
  57
  65
  74
  84
  95
  106
  117
  129
  142
  155
  169
  184
  199
  215
  231
  248
  266
  284
  303
  323
  344
  365
  387
  411
  435
  460
Change in working capital, $m
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  30
  36
  42
  49
  57
  66
  75
  85
  95
  107
  118
  130
  143
  156
  170
  185
  200
  216
  232
  249
  267
  286
  305
  325
  345
  367
  389
  412
  437
  462
Maintenance CAPEX, $m
  -3
  -3
  -4
  -5
  -6
  -6
  -7
  -9
  -10
  -11
  -12
  -14
  -15
  -17
  -18
  -20
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -36
  -38
  -40
  -43
  -46
  -48
  -51
New CAPEX, $m
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -24
  -25
  -27
  -28
  -29
  -30
Cash from investing activities, $m
  -9
  -10
  -12
  -13
  -15
  -16
  -18
  -21
  -22
  -24
  -26
  -28
  -30
  -33
  -35
  -37
  -40
  -42
  -44
  -47
  -50
  -53
  -56
  -60
  -62
  -65
  -70
  -74
  -77
  -81
Free cash flow, $m
  21
  26
  31
  36
  43
  49
  57
  65
  73
  83
  92
  102
  113
  124
  136
  148
  161
  174
  188
  202
  217
  233
  249
  265
  283
  301
  320
  339
  360
  381
Issuance/(repayment) of debt, $m
  11
  13
  14
  16
  17
  18
  20
  21
  23
  24
  25
  27
  28
  29
  30
  32
  33
  34
  36
  37
  38
  40
  42
  43
  45
  47
  49
  51
  53
  55
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  
  11
  13
  14
  16
  17
  18
  20
  21
  23
  24
  25
  27
  28
  29
  30
  32
  33
  34
  36
  37
  38
  40
  42
  43
  45
  47
  49
  51
  53
  55
Total cash flow (excl. dividends), $m
  32
  38
  45
  52
  60
  68
  77
  86
  96
  107
  117
  129
  141
  153
  166
  180
  194
  208
  223
  239
  255
  272
  290
  309
  328
  348
  368
  390
  412
  436
Retained Cash Flow (-), $m
  -20
  -23
  -25
  -28
  -31
  -33
  -36
  -38
  -41
  -43
  -46
  -48
  -50
  -53
  -55
  -57
  -60
  -62
  -64
  -67
  -70
  -72
  -75
  -78
  -81
  -85
  -88
  -92
  -96
  -100
Prev. year cash balance distribution, $m
  140
  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
  10
  12
  14
  17
  20
  24
  28
  32
  36
  41
  45
  51
  56
  62
  67
  74
  80
  87
  94
  101
  108
  116
  124
  133
  141
  150
  160
  170
  180
  191
Cash available for distribution, $m
  153
  16
  19
  24
  29
  35
  41
  48
  55
  63
  72
  81
  90
  101
  111
  122
  134
  146
  159
  172
  186
  200
  215
  230
  246
  263
  280
  298
  317
  336
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
  146
  14
  17
  20
  22
  25
  28
  30
  32
  33
  34
  34
  34
  34
  33
  31
  29
  27
  24
  22
  19
  17
  14
  12
  10
  8
  6
  5
  3
  3
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
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Inogen, Inc. is a medical technology company. The Company develops, manufactures and markets portable oxygen concentrators used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions. The Company's Inogen One systems concentrate the air around the patient to offer a single source of supplemental oxygen anytime, anywhere with a portable device. Its three portable product offerings, the Inogen One G4, Inogen One G3 and Inogen One G2, at approximately 2.8, 4.8 and 7.0 pounds with a single battery, respectively. Its Inogen One G4, Inogen One G3 and Inogen One G2 are sub-3, sub-5 and sub-10 pound portable oxygen concentrators, respectively. All of its Inogen One systems are equipped with Intelligent Delivery Technology. The Inogen At Home stationary oxygen concentrator allows it to access the non-ambulatory oxygen patient market and serves as a backup to its Inogen One system for ambulatory patients on its rental service.

FINANCIAL RATIOS  of  Inogen (INGN)

Valuation Ratios
P/E Ratio 225.9
Price to Sales 23.4
Price to Book 26.1
Price to Tangible Book
Price to Cash Flow 153
Price to Free Cash Flow 163.6
Growth Rates
Sales Growth Rate 27.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -7.8%
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 11.2%
Ret/ On Assets - 3 Yr. Avg. 8.5%
Return On Total Capital 13.3%
Ret/ On T. Cap. - 3 Yr. Avg. 10.1%
Return On Equity 13.3%
Return On Equity - 3 Yr. Avg. 10.3%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 47.8%
Gross Margin - 3 Yr. Avg. 48.4%
EBITDA Margin 18.2%
EBITDA Margin - 3 Yr. Avg. 18.6%
Operating Margin 11.3%
Oper. Margin - 3 Yr. Avg. 10.2%
Pre-Tax Margin 11.3%
Pre-Tax Margin - 3 Yr. Avg. 9.9%
Net Profit Margin 10.3%
Net Profit Margin - 3 Yr. Avg. 8%
Effective Tax Rate 8.7%
Eff/ Tax Rate - 3 Yr. Avg. 19.6%
Payout Ratio 0%

INGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the INGN stock intrinsic value calculation we used $249 million for the last fiscal year's total revenue generated by Inogen. The default revenue input number comes from 2017 income statement of Inogen. 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 INGN stock valuation model: a) initial revenue growth rate of 23% 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 INGN is calculated based on our internal credit rating of Inogen, 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 Inogen.
    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 INGN stock the variable cost ratio is equal to 88.6%.

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 INGN 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 Inogen.

Corporate tax rate of 27% is the nominal tax rate for Inogen. 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 INGN stock is equal to 3.9%.

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 INGN are equal to 10.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Inogen 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 INGN is equal to -0.7%. 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 - $227 million for Inogen - 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 21 million for Inogen 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 Inogen at the current share price and the inputted number of shares is $4.9 billion.

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COMPANY NEWS

▶ Inogen: 2Q Earnings Snapshot   [06:07PM  Associated Press]
▶ This Top-Rated Medtech Just Crushed Second-Quarter Views   [05:11PM  Investor's Business Daily]
▶ Why Inogen Inc (NASDAQ:INGN) Could Be A Buy   [Jun-25-18 08:34AM  Simply Wall St.]
▶ 7 A-Rated Stocks to Buy for the Second Half of 2018   [Jun-08-18 03:00PM  InvestorPlace]
▶ After-hours buzz: CGNX, AKAM & more   [Apr-30-18 05:37PM  CNBC]
▶ Inogen: 1Q Earnings Snapshot   [04:36PM  Associated Press]
▶ Inogen, Inc. to Host Earnings Call   [12:00PM  ACCESSWIRE]
▶ Inogen reports 4Q loss   [Feb-27-18 07:23PM  Associated Press]
▶ Inogen, Inc. to Host Earnings Call   [12:50PM  ACCESSWIRE]
▶ ETFs with exposure to Inogen, Inc. : December 28, 2017   [Dec-28-17 12:16PM  Capital Cube]
▶ Inogen tops Street 3Q forecasts   [Nov-07-17 05:43PM  Associated Press]
▶ Top-Rated Stocks Near Buy Point With Earnings Due: Inogen   [Oct-27-17 03:00AM  Investor's Business Daily]
▶ ETFs with exposure to Inogen, Inc. : October 20, 2017   [Oct-20-17 10:15AM  Capital Cube]
▶ ETFs with exposure to Inogen, Inc. : October 9, 2017   [Oct-09-17 11:40AM  Capital Cube]
▶ 1 Little Known Healthcare Stock to Put on Your Radar   [Aug-29-17 08:08AM  Motley Fool]
▶ Cramer's lightning round: Don't touch this pharma play   [Aug-15-17 06:58PM  CNBC Videos]
▶ Inogen beats 2Q profit forecasts   [Aug-03-17 11:53PM  Associated Press]
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