Intrinsic value of Intellipharmaceutics International - IPCI

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$0.50

  Intrinsic Value

$0.00

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  Rating & Target

str. sell

-100%

Previous close

$0.50

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of IPCI 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 0.0

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  9
  14
  20
  30
  42
  57
  77
  101
  130
  164
  204
  249
  300
  357
  420
  489
  563
  643
  728
  818
  914
  1,014
  1,120
  1,231
  1,346
  1,467
  1,592
  1,723
  1,858
  1,999
Variable operating expenses, $m
  9
  14
  20
  30
  42
  57
  77
  101
  130
  164
  204
  249
  300
  357
  420
  489
  563
  643
  728
  818
  914
  1,014
  1,120
  1,231
  1,346
  1,467
  1,592
  1,723
  1,858
  1,999
Fixed operating expenses, $m
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  18
  18
  18
  19
  19
Total operating expenses, $m
  19
  24
  31
  41
  53
  68
  89
  113
  142
  176
  217
  262
  313
  371
  434
  503
  577
  658
  743
  833
  930
  1,030
  1,136
  1,248
  1,363
  1,485
  1,610
  1,741
  1,877
  2,018
Operating income, $m
  -10
  -10
  -11
  -11
  -11
  -11
  -12
  -12
  -12
  -12
  -13
  -13
  -13
  -14
  -14
  -14
  -14
  -15
  -15
  -15
  -16
  -16
  -16
  -17
  -17
  -18
  -18
  -18
  -19
  -19
EBITDA, $m
  -9
  -9
  -9
  -8
  -8
  -6
  -5
  -3
  -1
  2
  5
  8
  13
  17
  22
  28
  34
  40
  47
  55
  63
  71
  80
  89
  99
  109
  119
  130
  141
  153
Interest expense (income), $m
  0
  0
  1
  3
  5
  8
  11
  16
  22
  30
  38
  49
  61
  75
  91
  109
  128
  149
  172
  197
  223
  251
  280
  311
  344
  378
  414
  451
  490
  530
  572
Earnings before tax, $m
  -11
  -12
  -13
  -16
  -19
  -23
  -28
  -34
  -42
  -51
  -62
  -74
  -89
  -105
  -122
  -142
  -164
  -187
  -212
  -238
  -267
  -296
  -328
  -361
  -395
  -431
  -469
  -508
  -549
  -591
Tax expense, $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
Net income, $m
  -11
  -12
  -13
  -16
  -19
  -23
  -28
  -34
  -42
  -51
  -62
  -74
  -89
  -105
  -122
  -142
  -164
  -187
  -212
  -238
  -267
  -296
  -328
  -361
  -395
  -431
  -469
  -508
  -549
  -591

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
  11
  17
  25
  36
  51
  71
  95
  124
  160
  202
  251
  307
  370
  440
  518
  602
  694
  792
  897
  1,009
  1,127
  1,251
  1,381
  1,517
  1,660
  1,808
  1,963
  2,124
  2,291
  2,465
Adjusted assets (=assets-cash), $m
  11
  17
  25
  36
  51
  71
  95
  124
  160
  202
  251
  307
  370
  440
  518
  602
  694
  792
  897
  1,009
  1,127
  1,251
  1,381
  1,517
  1,660
  1,808
  1,963
  2,124
  2,291
  2,465
Revenue / Adjusted assets
  0.818
  0.824
  0.800
  0.833
  0.824
  0.803
  0.811
  0.815
  0.813
  0.812
  0.813
  0.811
  0.811
  0.811
  0.811
  0.812
  0.811
  0.812
  0.812
  0.811
  0.811
  0.811
  0.811
  0.811
  0.811
  0.811
  0.811
  0.811
  0.811
  0.811
Average production assets, $m
  4
  6
  9
  13
  18
  25
  33
  43
  56
  71
  88
  107
  129
  154
  181
  210
  242
  276
  313
  352
  393
  436
  482
  529
  579
  631
  685
  741
  799
  860
Working capital, $m
  -2
  -4
  -6
  -8
  -12
  -16
  -22
  -28
  -37
  -46
  -57
  -70
  -85
  -101
  -118
  -138
  -159
  -181
  -205
  -231
  -258
  -286
  -316
  -347
  -380
  -414
  -449
  -486
  -524
  -564
Total debt, $m
  4
  9
  17
  27
  41
  58
  80
  106
  138
  176
  220
  271
  327
  391
  460
  536
  619
  707
  802
  902
  1,008
  1,120
  1,237
  1,360
  1,488
  1,622
  1,761
  1,906
  2,057
  2,213
Total liabilities, $m
  10
  15
  23
  33
  46
  64
  85
  112
  144
  182
  226
  276
  333
  396
  466
  542
  625
  713
  808
  908
  1,014
  1,126
  1,243
  1,366
  1,494
  1,628
  1,767
  1,912
  2,062
  2,219
Total equity, $m
  1
  2
  3
  4
  5
  7
  9
  12
  16
  20
  25
  31
  37
  44
  52
  60
  69
  79
  90
  101
  113
  125
  138
  152
  166
  181
  196
  212
  229
  247
Total liabilities and equity, $m
  11
  17
  26
  37
  51
  71
  94
  124
  160
  202
  251
  307
  370
  440
  518
  602
  694
  792
  898
  1,009
  1,127
  1,251
  1,381
  1,518
  1,660
  1,809
  1,963
  2,124
  2,291
  2,466
Debt-to-equity ratio
  3.730
  5.590
  6.720
  7.430
  7.890
  8.190
  8.400
  8.540
  8.640
  8.720
  8.770
  8.810
  8.850
  8.870
  8.890
  8.910
  8.920
  8.930
  8.940
  8.940
  8.950
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
  8.980
  8.980
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
  -11
  -12
  -13
  -16
  -19
  -23
  -28
  -34
  -42
  -51
  -62
  -74
  -89
  -105
  -122
  -142
  -164
  -187
  -212
  -238
  -267
  -296
  -328
  -361
  -395
  -431
  -469
  -508
  -549
  -591
Depreciation, amort., depletion, $m
  1
  1
  2
  3
  4
  5
  7
  9
  11
  14
  18
  21
  26
  31
  36
  42
  48
  55
  63
  70
  79
  87
  96
  106
  116
  126
  137
  148
  160
  172
Funds from operations, $m
  -10
  -10
  -12
  -13
  -15
  -18
  -21
  -25
  -31
  -37
  -44
  -53
  -63
  -74
  -86
  -100
  -115
  -132
  -149
  -168
  -188
  -209
  -232
  -255
  -280
  -305
  -332
  -360
  -389
  -419
Change in working capital, $m
  -1
  -1
  -2
  -3
  -3
  -4
  -6
  -7
  -8
  -10
  -11
  -13
  -14
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
Cash from operations, $m
  -9
  -9
  -10
  -10
  -12
  -13
  -16
  -19
  -22
  -27
  -33
  -40
  -48
  -58
  -69
  -81
  -94
  -109
  -125
  -142
  -161
  -181
  -202
  -224
  -247
  -271
  -297
  -323
  -351
  -379
Maintenance CAPEX, $m
  -1
  -1
  -1
  -2
  -3
  -4
  -5
  -7
  -9
  -11
  -14
  -18
  -21
  -26
  -31
  -36
  -42
  -48
  -55
  -63
  -70
  -79
  -87
  -96
  -106
  -116
  -126
  -137
  -148
  -160
New CAPEX, $m
  -1
  -2
  -3
  -4
  -5
  -7
  -8
  -10
  -12
  -15
  -17
  -19
  -22
  -25
  -27
  -29
  -32
  -34
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -52
  -54
  -56
  -58
  -61
Cash from investing activities, $m
  -2
  -3
  -4
  -6
  -8
  -11
  -13
  -17
  -21
  -26
  -31
  -37
  -43
  -51
  -58
  -65
  -74
  -82
  -92
  -102
  -111
  -122
  -132
  -144
  -156
  -168
  -180
  -193
  -206
  -221
Free cash flow, $m
  -11
  -12
  -14
  -16
  -19
  -24
  -29
  -36
  -44
  -53
  -64
  -77
  -92
  -108
  -126
  -146
  -168
  -192
  -217
  -244
  -273
  -303
  -334
  -368
  -402
  -439
  -477
  -516
  -557
  -600
Issuance/(repayment) of debt, $m
  3
  5
  7
  10
  13
  17
  22
  27
  32
  38
  44
  50
  57
  63
  70
  76
  82
  89
  95
  100
  106
  112
  117
  123
  128
  134
  139
  145
  151
  157
Issuance/(repurchase) of shares, $m
  11
  12
  14
  17
  20
  25
  30
  37
  45
  55
  67
  80
  95
  112
  130
  151
  173
  197
  222
  250
  278
  309
  341
  374
  410
  446
  484
  524
  565
  608
Cash from financing (excl. dividends), $m  
  14
  17
  21
  27
  33
  42
  52
  64
  77
  93
  111
  130
  152
  175
  200
  227
  255
  286
  317
  350
  384
  421
  458
  497
  538
  580
  623
  669
  716
  765
Total cash flow (excl. dividends), $m
  3
  6
  8
  11
  14
  18
  23
  28
  34
  40
  46
  53
  60
  67
  74
  80
  87
  93
  100
  106
  112
  118
  124
  130
  135
  141
  147
  153
  159
  165
Retained Cash Flow (-), $m
  -11
  -12
  -14
  -17
  -20
  -25
  -30
  -37
  -45
  -55
  -67
  -80
  -95
  -112
  -130
  -151
  -173
  -197
  -222
  -250
  -278
  -309
  -341
  -374
  -410
  -446
  -484
  -524
  -565
  -608
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
  -8
  -7
  -6
  -6
  -6
  -6
  -7
  -9
  -11
  -15
  -20
  -27
  -35
  -45
  -57
  -70
  -86
  -103
  -123
  -144
  -166
  -191
  -217
  -245
  -274
  -305
  -337
  -371
  -406
  -443
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
  -8
  -6
  -5
  -5
  -5
  -5
  -5
  -6
  -7
  -8
  -10
  -11
  -13
  -15
  -17
  -18
  -19
  -19
  -19
  -18
  -17
  -16
  -14
  -12
  -11
  -9
  -7
  -6
  -4
  -3
Current shareholders' claim on cash, %
  25.5
  12.0
  6.5
  3.9
  2.5
  1.7
  1.2
  0.9
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Intellipharmaceutics International Inc is a Canada-based pharmaceutical company engaged in the research, development and manufacture of controlled-release and targeted-release oral solid dosage drugs. Its Hypermatrix technology is a multidimensional controlled-release drug delivery platform that is applied to the development of a range of existing and new pharmaceuticals. Based on this technology platform, it has developed various drug delivery systems and a pipeline of products, and product candidates in various stages of development, in therapeutic areas that include neurology and cardiovascular. Its pipeline of products includes Rexista Oxycodone, Regabatin XR, Generic Focalin XR, Generic Effexor XR, Generic Protonix, Generic Glucophage XR, Generic Seroquel XR, Generic Lamictal XR, Generic Keppra XR, Generic Pristiq and Generic Ranexa. Its generic product candidates also include Trazodone hydrochloride extended-release tablets and Carvedilol phosphate extended-release capsules.

FINANCIAL RATIOS  of  Intellipharmaceutics International (IPCI)

Valuation Ratios
P/E Ratio -1.5
Price to Sales 7.4
Price to Book 14.9
Price to Tangible Book
Price to Cash Flow -2.5
Price to Free Cash Flow -2.1
Growth Rates
Sales Growth Rate -50%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 100%
Total Debt to Equity 200%
Interest Coverage 0
Management Effectiveness
Return On Assets -153.8%
Ret/ On Assets - 3 Yr. Avg. -109.4%
Return On Total Capital -400%
Ret/ On T. Cap. - 3 Yr. Avg. -325%
Return On Equity -2000%
Return On Equity - 3 Yr. Avg. -493.3%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -500%
EBITDA Margin - 3 Yr. Avg. -239.8%
Operating Margin -500%
Oper. Margin - 3 Yr. Avg. -236.1%
Pre-Tax Margin -500%
Pre-Tax Margin - 3 Yr. Avg. -239.8%
Net Profit Margin -500%
Net Profit Margin - 3 Yr. Avg. -239.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IPCI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IPCI stock intrinsic value calculation we used $5.504452 million for the last fiscal year's total revenue generated by Intellipharmaceutics International. The default revenue input number comes from 0001 income statement of Intellipharmaceutics International. 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 IPCI stock valuation model: a) initial revenue growth rate of 60% 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 IPCI is calculated based on our internal credit rating of Intellipharmaceutics International, 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 Intellipharmaceutics International.
    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 IPCI stock the variable cost ratio is equal to 100%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $10 million in the base year in the intrinsic value calculation for IPCI 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 27.8% for Intellipharmaceutics International.

Corporate tax rate of 27% is the nominal tax rate for Intellipharmaceutics International. 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 IPCI 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 IPCI are equal to 43%.

Life of production assets of 5 years is the average useful life of capital assets used in Intellipharmaceutics International 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 IPCI is equal to -28.2%. 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 - $0.386383 million for Intellipharmaceutics International - 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 43.538 million for Intellipharmaceutics International 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 Intellipharmaceutics International at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Don't Fixate On Market Woes, Just Make Your Trades   [Oct-12-18 03:09PM  Benzinga]
▶ Intellipharmaceutics: Fiscal 2Q Earnings Snapshot   [Jul-17-18 05:05AM  Associated Press]
▶ Intellipharmaceutics Reports Director Election Results   [May-16-18 08:00AM  ACCESSWIRE]
▶ Intellipharmaceutics Provides Operational Update   [Jan-24-18 08:00AM  GlobeNewswire]
▶ Intellipharmaceutics Announces Receipt of Nasdaq Notice   [Dec-05-17 08:00AM  GlobeNewswire]
▶ New Strong Sell Stocks for October 11th   [Oct-11-17 09:05AM  Zacks]
▶ Intellipharmaceutics reports 3Q loss   [Oct-10-17 05:26PM  Associated Press]

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