Intrinsic value of Impax Laboratories - IPXL

Previous Close

$18.30

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$18.30

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of IPXL 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 1.3

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  792
  810
  831
  854
  880
  908
  939
  973
  1,009
  1,047
  1,089
  1,133
  1,180
  1,230
  1,283
  1,339
  1,399
  1,462
  1,528
  1,599
  1,673
  1,751
  1,833
  1,920
  2,011
  2,108
  2,209
  2,315
  2,428
  2,545
Variable operating expenses, $m
  1,265
  1,294
  1,326
  1,362
  1,401
  1,445
  1,493
  1,544
  1,600
  1,659
  1,676
  1,744
  1,817
  1,894
  1,975
  2,062
  2,153
  2,250
  2,353
  2,461
  2,575
  2,695
  2,822
  2,956
  3,096
  3,244
  3,400
  3,564
  3,737
  3,919
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
  1,265
  1,294
  1,326
  1,362
  1,401
  1,445
  1,493
  1,544
  1,600
  1,659
  1,676
  1,744
  1,817
  1,894
  1,975
  2,062
  2,153
  2,250
  2,353
  2,461
  2,575
  2,695
  2,822
  2,956
  3,096
  3,244
  3,400
  3,564
  3,737
  3,919
Operating income, $m
  -474
  -484
  -495
  -508
  -522
  -537
  -554
  -572
  -591
  -612
  -587
  -611
  -637
  -664
  -692
  -722
  -755
  -789
  -824
  -862
  -902
  -944
  -989
  -1,036
  -1,085
  -1,137
  -1,192
  -1,249
  -1,310
  -1,373
EBITDA, $m
  -343
  -350
  -359
  -370
  -381
  -393
  -406
  -421
  -436
  -453
  -471
  -490
  -511
  -532
  -555
  -580
  -605
  -633
  -661
  -692
  -724
  -758
  -793
  -831
  -870
  -912
  -956
  -1,002
  -1,050
  -1,102
Interest expense (income), $m
  18
  52
  53
  55
  57
  60
  62
  65
  68
  71
  75
  79
  83
  87
  92
  97
  102
  108
  114
  120
  126
  133
  141
  148
  157
  165
  174
  184
  194
  204
  215
Earnings before tax, $m
  -526
  -537
  -550
  -565
  -581
  -599
  -619
  -640
  -663
  -687
  -666
  -694
  -724
  -755
  -789
  -825
  -862
  -902
  -944
  -989
  -1,036
  -1,085
  -1,137
  -1,192
  -1,250
  -1,311
  -1,375
  -1,443
  -1,514
  -1,589
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
  -526
  -537
  -550
  -565
  -581
  -599
  -619
  -640
  -663
  -687
  -666
  -694
  -724
  -755
  -789
  -825
  -862
  -902
  -944
  -989
  -1,036
  -1,085
  -1,137
  -1,192
  -1,250
  -1,311
  -1,375
  -1,443
  -1,514
  -1,589

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
  1,379
  1,411
  1,447
  1,488
  1,533
  1,582
  1,636
  1,694
  1,757
  1,825
  1,897
  1,974
  2,056
  2,143
  2,235
  2,333
  2,437
  2,547
  2,663
  2,785
  2,914
  3,050
  3,194
  3,345
  3,504
  3,672
  3,848
  4,034
  4,229
  4,435
Adjusted assets (=assets-cash), $m
  1,379
  1,411
  1,447
  1,488
  1,533
  1,582
  1,636
  1,694
  1,757
  1,825
  1,897
  1,974
  2,056
  2,143
  2,235
  2,333
  2,437
  2,547
  2,663
  2,785
  2,914
  3,050
  3,194
  3,345
  3,504
  3,672
  3,848
  4,034
  4,229
  4,435
Revenue / Adjusted assets
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
  0.574
Average production assets, $m
  845
  864
  886
  911
  939
  969
  1,002
  1,038
  1,076
  1,118
  1,162
  1,209
  1,259
  1,312
  1,369
  1,429
  1,493
  1,560
  1,631
  1,706
  1,785
  1,868
  1,956
  2,049
  2,146
  2,249
  2,357
  2,471
  2,590
  2,716
Working capital, $m
  79
  81
  83
  85
  88
  91
  94
  97
  101
  105
  109
  113
  118
  123
  128
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  211
  221
  232
  243
  255
Total debt, $m
  810
  838
  869
  904
  943
  985
  1,032
  1,082
  1,136
  1,194
  1,256
  1,323
  1,393
  1,468
  1,548
  1,632
  1,721
  1,816
  1,916
  2,021
  2,132
  2,249
  2,373
  2,503
  2,640
  2,784
  2,936
  3,096
  3,264
  3,441
Total liabilities, $m
  1,187
  1,215
  1,246
  1,281
  1,320
  1,362
  1,409
  1,459
  1,513
  1,571
  1,633
  1,699
  1,770
  1,845
  1,925
  2,009
  2,098
  2,193
  2,292
  2,398
  2,509
  2,626
  2,750
  2,880
  3,017
  3,161
  3,313
  3,473
  3,641
  3,818
Total equity, $m
  192
  196
  201
  207
  213
  220
  227
  236
  244
  254
  264
  274
  286
  298
  311
  324
  339
  354
  370
  387
  405
  424
  444
  465
  487
  510
  535
  561
  588
  616
Total liabilities and equity, $m
  1,379
  1,411
  1,447
  1,488
  1,533
  1,582
  1,636
  1,695
  1,757
  1,825
  1,897
  1,973
  2,056
  2,143
  2,236
  2,333
  2,437
  2,547
  2,662
  2,785
  2,914
  3,050
  3,194
  3,345
  3,504
  3,671
  3,848
  4,034
  4,229
  4,434
Debt-to-equity ratio
  4.230
  4.270
  4.320
  4.370
  4.430
  4.480
  4.540
  4.590
  4.650
  4.710
  4.760
  4.820
  4.880
  4.930
  4.980
  5.030
  5.080
  5.130
  5.180
  5.220
  5.260
  5.310
  5.350
  5.380
  5.420
  5.460
  5.490
  5.520
  5.550
  5.580
Adjusted equity ratio
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -526
  -537
  -550
  -565
  -581
  -599
  -619
  -640
  -663
  -687
  -666
  -694
  -724
  -755
  -789
  -825
  -862
  -902
  -944
  -989
  -1,036
  -1,085
  -1,137
  -1,192
  -1,250
  -1,311
  -1,375
  -1,443
  -1,514
  -1,589
Depreciation, amort., depletion, $m
  131
  133
  136
  138
  141
  144
  147
  151
  155
  159
  116
  121
  126
  131
  137
  143
  149
  156
  163
  171
  178
  187
  196
  205
  215
  225
  236
  247
  259
  272
Funds from operations, $m
  -394
  -404
  -415
  -427
  -440
  -455
  -471
  -489
  -508
  -528
  -550
  -573
  -598
  -624
  -652
  -682
  -713
  -746
  -781
  -818
  -857
  -898
  -942
  -987
  -1,036
  -1,086
  -1,140
  -1,196
  -1,255
  -1,317
Change in working capital, $m
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
Cash from operations, $m
  -396
  -406
  -417
  -429
  -443
  -458
  -475
  -492
  -512
  -532
  -554
  -578
  -603
  -629
  -657
  -687
  -719
  -752
  -788
  -825
  -865
  -906
  -950
  -996
  -1,045
  -1,096
  -1,150
  -1,206
  -1,266
  -1,329
Maintenance CAPEX, $m
  -83
  -84
  -86
  -89
  -91
  -94
  -97
  -100
  -104
  -108
  -112
  -116
  -121
  -126
  -131
  -137
  -143
  -149
  -156
  -163
  -171
  -178
  -187
  -196
  -205
  -215
  -225
  -236
  -247
  -259
New CAPEX, $m
  -17
  -19
  -22
  -25
  -28
  -30
  -33
  -36
  -38
  -41
  -44
  -47
  -50
  -53
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -83
  -88
  -93
  -98
  -103
  -108
  -114
  -120
  -126
Cash from investing activities, $m
  -100
  -103
  -108
  -114
  -119
  -124
  -130
  -136
  -142
  -149
  -156
  -163
  -171
  -179
  -188
  -197
  -207
  -216
  -227
  -238
  -250
  -261
  -275
  -289
  -303
  -318
  -333
  -350
  -367
  -385
Free cash flow, $m
  -495
  -510
  -525
  -543
  -562
  -582
  -604
  -628
  -654
  -681
  -710
  -741
  -774
  -808
  -845
  -884
  -925
  -969
  -1,015
  -1,063
  -1,114
  -1,168
  -1,225
  -1,284
  -1,347
  -1,413
  -1,483
  -1,556
  -1,633
  -1,714
Issuance/(repayment) of debt, $m
  23
  27
  31
  35
  39
  43
  46
  50
  54
  58
  62
  66
  71
  75
  80
  84
  89
  94
  100
  105
  111
  117
  124
  130
  137
  144
  152
  160
  168
  177
Issuance/(repurchase) of shares, $m
  531
  542
  555
  571
  588
  606
  626
  648
  671
  696
  676
  705
  735
  768
  802
  838
  877
  917
  960
  1,006
  1,054
  1,104
  1,157
  1,213
  1,272
  1,334
  1,400
  1,469
  1,541
  1,617
Cash from financing (excl. dividends), $m  
  554
  569
  586
  606
  627
  649
  672
  698
  725
  754
  738
  771
  806
  843
  882
  922
  966
  1,011
  1,060
  1,111
  1,165
  1,221
  1,281
  1,343
  1,409
  1,478
  1,552
  1,629
  1,709
  1,794
Total cash flow (excl. dividends), $m
  58
  59
  61
  63
  65
  66
  68
  70
  72
  73
  28
  30
  32
  34
  36
  38
  41
  43
  45
  48
  51
  53
  56
  59
  62
  66
  69
  73
  76
  80
Retained Cash Flow (-), $m
  -531
  -542
  -555
  -571
  -588
  -606
  -626
  -648
  -671
  -696
  -676
  -705
  -735
  -768
  -802
  -838
  -877
  -917
  -960
  -1,006
  -1,054
  -1,104
  -1,157
  -1,213
  -1,272
  -1,334
  -1,400
  -1,469
  -1,541
  -1,617
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
  26
  27
  28
  28
  29
  30
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  54
  57
  60
  62
  65
  68
  72
  75
  79
  83
Cash available for distribution, $m
  -473
  -482
  -494
  -508
  -523
  -540
  -558
  -578
  -600
  -623
  -648
  -675
  -703
  -733
  -766
  -800
  -836
  -874
  -915
  -958
  -1,003
  -1,051
  -1,101
  -1,154
  -1,210
  -1,269
  -1,331
  -1,396
  -1,465
  -1,537
Discount rate, %
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
  -435
  -405
  -375
  -346
  -316
  -287
  -258
  -229
  -202
  -176
  -151
  -128
  -107
  -87
  -71
  -56
  -44
  -33
  -25
  -18
  -13
  -9
  -6
  -4
  -2
  -2
  -1
  -1
  0
  0
Current shareholders' claim on cash, %
  71.3
  50.9
  36.3
  25.9
  18.4
  13.1
  9.4
  6.7
  4.7
  3.4
  2.5
  1.8
  1.3
  0.9
  0.7
  0.5
  0.4
  0.3
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Impax Laboratories, Inc. is a specialty pharmaceutical company. The Company is engaged in the development, manufacture and marketing of bioequivalent pharmaceutical products (generics), in addition to the development and marketing of branded products. Its segments include Impax Generics and Impax Specialty Pharma. The Impax Generics segment is focused on the development, manufacture, sale and distribution of its generic products, which are the pharmaceutical and therapeutic equivalents of brand-name drug products and are marketed under their established drug names. The Impax Specialty Pharma segment is engaged in the promotion, sale and distribution of several branded products, including its branded pharmaceutical product, Rytary, an extended release oral capsule formulation of carbidopa-levodopa for the treatment of Parkinson's disease, post-encephalitic Parkinsonism and Parkinsonism, and Zomig (zolmitriptan) products, indicated for the treatment of migraine headaches.

FINANCIAL RATIOS  of  Impax Laboratories (IPXL)

Valuation Ratios
P/E Ratio -2.9
Price to Sales 1.6
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 18
Price to Free Cash Flow 61.3
Growth Rates
Sales Growth Rate -4.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 71%
Cap. Spend. - 3 Yr. Gr. Rate 3.3%
Financial Strength
Quick Ratio 10
Current Ratio 0
LT Debt to Equity 130.3%
Total Debt to Equity 133.2%
Interest Coverage -31
Management Effectiveness
Return On Assets -24.4%
Ret/ On Assets - 3 Yr. Avg. -5.2%
Return On Total Capital -32.1%
Ret/ On T. Cap. - 3 Yr. Avg. -7.4%
Return On Equity -56%
Return On Equity - 3 Yr. Avg. -15.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin -18.3%
Gross Margin - 3 Yr. Avg. 25.5%
EBITDA Margin -57%
EBITDA Margin - 3 Yr. Avg. -6.5%
Operating Margin -64.9%
Oper. Margin - 3 Yr. Avg. -14.6%
Pre-Tax Margin -69.9%
Pre-Tax Margin - 3 Yr. Avg. -15.9%
Net Profit Margin -57.3%
Net Profit Margin - 3 Yr. Avg. -14.4%
Effective Tax Rate 18.1%
Eff/ Tax Rate - 3 Yr. Avg. 29.8%
Payout Ratio 0%

IPXL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IPXL stock intrinsic value calculation we used $776 million for the last fiscal year's total revenue generated by Impax Laboratories. The default revenue input number comes from 2017 income statement of Impax Laboratories. 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 IPXL stock valuation model: a) initial revenue growth rate of 2% 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 8.7%, whose default value for IPXL is calculated based on our internal credit rating of Impax Laboratories, 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 Impax Laboratories.
    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 IPXL stock the variable cost ratio is equal to 160%.

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 IPXL 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 6.6% for Impax Laboratories.

Corporate tax rate of 27% is the nominal tax rate for Impax Laboratories. 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 IPXL stock is equal to 3.4%.

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 IPXL are equal to 106.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Impax Laboratories 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 IPXL is equal to 10%. 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 - $187 million for Impax Laboratories - 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 72 million for Impax Laboratories 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 Impax Laboratories at the current share price and the inputted number of shares is $1.3 billion.

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