Intrinsic value of Inogen - INGN

Previous Close

$114.99

  Intrinsic Value

$47.86

stock screener

  Rating & Target

str. sell

-58%

Previous close

$114.99

 
Intrinsic value

$47.86

 
Up/down potential

-58%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  27.67
  27.80
  25.52
  23.47
  21.62
  19.96
  18.46
  17.12
  15.91
  14.81
  13.83
  12.95
  12.15
  11.44
  10.80
  10.22
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.07
Revenue, $m
  203
  259
  326
  402
  489
  587
  695
  814
  943
  1,083
  1,233
  1,392
  1,562
  1,740
  1,928
  2,125
  2,331
  2,546
  2,771
  3,004
  3,247
  3,499
  3,761
  4,034
  4,317
  4,611
  4,917
  5,235
  5,567
  5,911
  6,271
Variable operating expenses, $m
 
  212
  266
  329
  400
  480
  568
  666
  772
  886
  1,008
  1,139
  1,278
  1,424
  1,577
  1,738
  1,907
  2,083
  2,266
  2,457
  2,656
  2,862
  3,077
  3,300
  3,531
  3,772
  4,022
  4,283
  4,554
  4,836
  5,129
Fixed operating expenses, $m
 
  14
  15
  15
  15
  16
  16
  17
  17
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  24
  24
  25
  25
  26
  27
  27
  28
  29
  29
Total operating expenses, $m
  180
  226
  281
  344
  415
  496
  584
  683
  789
  903
  1,026
  1,157
  1,297
  1,443
  1,597
  1,758
  1,928
  2,104
  2,288
  2,479
  2,679
  2,886
  3,101
  3,325
  3,556
  3,798
  4,049
  4,310
  4,582
  4,865
  5,158
Operating income, $m
  23
  33
  45
  58
  74
  91
  110
  131
  155
  180
  206
  235
  265
  297
  331
  367
  404
  442
  482
  524
  568
  613
  660
  709
  760
  813
  868
  926
  985
  1,047
  1,112
EBITDA, $m
  37
  40
  53
  69
  87
  107
  129
  153
  180
  209
  240
  273
  308
  344
  383
  424
  466
  511
  557
  605
  656
  708
  762
  818
  877
  938
  1,001
  1,067
  1,135
  1,207
  1,281
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  7
  8
  10
  11
  12
  13
  14
  15
  17
  18
  20
  21
  23
  24
  26
  28
  30
  31
Earnings before tax, $m
  23
  33
  44
  57
  72
  89
  108
  129
  151
  176
  202
  229
  259
  290
  323
  357
  393
  430
  469
  510
  552
  596
  642
  690
  739
  791
  844
  900
  957
  1,018
  1,080
Tax expense, $m
  2
  9
  12
  16
  20
  24
  29
  35
  41
  47
  54
  62
  70
  78
  87
  96
  106
  116
  127
  138
  149
  161
  173
  186
  200
  213
  228
  243
  259
  275
  292
Net income, $m
  21
  24
  32
  42
  53
  65
  79
  94
  110
  128
  147
  167
  189
  212
  236
  261
  287
  314
  343
  372
  403
  435
  469
  504
  540
  577
  616
  657
  699
  743
  789

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  114
  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
  214
  128
  160
  198
  241
  289
  342
  401
  465
  534
  607
  686
  769
  857
  950
  1,047
  1,148
  1,254
  1,365
  1,480
  1,599
  1,724
  1,853
  1,987
  2,127
  2,272
  2,422
  2,579
  2,742
  2,912
  3,089
Adjusted assets (=assets-cash), $m
  100
  128
  160
  198
  241
  289
  342
  401
  465
  534
  607
  686
  769
  857
  950
  1,047
  1,148
  1,254
  1,365
  1,480
  1,599
  1,724
  1,853
  1,987
  2,127
  2,272
  2,422
  2,579
  2,742
  2,912
  3,089
Revenue / Adjusted assets
  2.030
  2.023
  2.038
  2.030
  2.029
  2.031
  2.032
  2.030
  2.028
  2.028
  2.031
  2.029
  2.031
  2.030
  2.029
  2.030
  2.030
  2.030
  2.030
  2.030
  2.031
  2.030
  2.030
  2.030
  2.030
  2.029
  2.030
  2.030
  2.030
  2.030
  2.030
Average production assets, $m
  28
  35
  44
  54
  66
  79
  94
  110
  127
  146
  166
  188
  211
  235
  260
  287
  315
  344
  374
  406
  438
  472
  508
  545
  583
  623
  664
  707
  752
  798
  847
Working capital, $m
  139
  32
  40
  49
  60
  72
  85
  100
  116
  133
  152
  171
  192
  214
  237
  261
  287
  313
  341
  369
  399
  430
  463
  496
  531
  567
  605
  644
  685
  727
  771
Total debt, $m
  0
  9
  19
  31
  45
  60
  78
  96
  117
  139
  162
  188
  214
  242
  272
  303
  335
  369
  405
  442
  480
  520
  561
  604
  648
  695
  743
  793
  846
  900
  956
Total liabilities, $m
  32
  41
  51
  63
  77
  92
  110
  128
  149
  171
  194
  220
  246
  274
  304
  335
  367
  401
  437
  474
  512
  552
  593
  636
  680
  727
  775
  825
  878
  932
  988
Total equity, $m
  182
  87
  109
  135
  164
  196
  233
  273
  316
  363
  413
  466
  523
  583
  646
  712
  781
  853
  928
  1,006
  1,088
  1,172
  1,260
  1,351
  1,446
  1,545
  1,647
  1,754
  1,865
  1,980
  2,100
Total liabilities and equity, $m
  214
  128
  160
  198
  241
  288
  343
  401
  465
  534
  607
  686
  769
  857
  950
  1,047
  1,148
  1,254
  1,365
  1,480
  1,600
  1,724
  1,853
  1,987
  2,126
  2,272
  2,422
  2,579
  2,743
  2,912
  3,088
Debt-to-equity ratio
  0.000
  0.100
  0.180
  0.230
  0.280
  0.310
  0.330
  0.350
  0.370
  0.380
  0.390
  0.400
  0.410
  0.420
  0.420
  0.430
  0.430
  0.430
  0.440
  0.440
  0.440
  0.440
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.460
Adjusted equity ratio
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  21
  24
  32
  42
  53
  65
  79
  94
  110
  128
  147
  167
  189
  212
  236
  261
  287
  314
  343
  372
  403
  435
  469
  504
  540
  577
  616
  657
  699
  743
  789
Depreciation, amort., depletion, $m
  14
  7
  9
  11
  13
  16
  19
  22
  25
  29
  33
  38
  42
  47
  52
  57
  63
  69
  75
  81
  88
  94
  102
  109
  117
  125
  133
  141
  150
  160
  169
Funds from operations, $m
  -3
  31
  41
  53
  66
  81
  98
  116
  136
  157
  180
  205
  231
  259
  288
  318
  350
  383
  418
  454
  491
  530
  570
  612
  656
  702
  749
  798
  849
  902
  958
Change in working capital, $m
  -34
  7
  8
  9
  11
  12
  13
  15
  16
  17
  18
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
Cash from operations, $m
  31
  24
  33
  43
  55
  69
  84
  101
  120
  140
  162
  185
  210
  237
  265
  294
  324
  356
  390
  425
  461
  499
  538
  579
  621
  665
  711
  759
  808
  860
  914
Maintenance CAPEX, $m
  0
  -6
  -7
  -9
  -11
  -13
  -16
  -19
  -22
  -25
  -29
  -33
  -38
  -42
  -47
  -52
  -57
  -63
  -69
  -75
  -81
  -88
  -94
  -102
  -109
  -117
  -125
  -133
  -141
  -150
  -160
New CAPEX, $m
  -2
  -8
  -9
  -10
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -48
Cash from investing activities, $m
  -12
  -14
  -16
  -19
  -23
  -26
  -31
  -35
  -39
  -44
  -49
  -55
  -61
  -66
  -72
  -79
  -85
  -92
  -99
  -107
  -114
  -122
  -129
  -139
  -147
  -157
  -166
  -176
  -186
  -197
  -208
Free cash flow, $m
  19
  11
  17
  24
  33
  43
  54
  67
  81
  96
  113
  131
  150
  170
  192
  215
  239
  265
  291
  319
  347
  377
  408
  441
  474
  509
  545
  583
  622
  663
  706
Issuance/(repayment) of debt, $m
  0
  9
  10
  12
  14
  15
  17
  19
  20
  22
  24
  25
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  41
  43
  45
  46
  48
  50
  52
  54
  57
Issuance/(repurchase) of shares, $m
  7
  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  
  8
  9
  10
  12
  14
  15
  17
  19
  20
  22
  24
  25
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  41
  43
  45
  46
  48
  50
  52
  54
  57
Total cash flow (excl. dividends), $m
  27
  20
  27
  36
  47
  58
  71
  85
  101
  118
  136
  156
  177
  199
  222
  246
  272
  298
  326
  355
  386
  417
  450
  484
  519
  556
  594
  633
  675
  718
  762
Retained Cash Flow (-), $m
  -48
  -19
  -22
  -26
  -29
  -33
  -36
  -40
  -43
  -47
  -50
  -53
  -57
  -60
  -63
  -66
  -69
  -72
  -75
  -78
  -81
  -85
  -88
  -91
  -95
  -99
  -103
  -107
  -111
  -115
  -120
Prev. year cash balance distribution, $m
 
  114
  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
 
  115
  5
  11
  17
  25
  35
  45
  58
  71
  86
  102
  120
  139
  159
  180
  203
  226
  251
  277
  304
  332
  362
  392
  424
  457
  491
  527
  564
  602
  642
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
 
  110
  5
  9
  14
  20
  25
  31
  36
  41
  45
  49
  51
  53
  53
  53
  52
  49
  46
  43
  39
  34
  30
  26
  22
  18
  14
  11
  9
  7
  5
Current shareholders' claim on cash, %
  100
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  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 111.6
Price to Sales 11.5
Price to Book 12.9
Price to Tangible Book
Price to Cash Flow 75.6
Price to Free Cash Flow 80.8
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 $203 million for the last fiscal year's total revenue generated by Inogen. The default revenue input number comes from 2016 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 27.8% 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 81.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $14 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 3.5% 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 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 INGN are equal to 13.5%.

Life of production assets of 2 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 12.3%. 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 - $182 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 21.078 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 $2.4 billion.

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COMPANY NEWS

▶ 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]
Financial statements of INGN
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