Intrinsic value of iRadimed Corporation - IRMD

Previous Close

$25.55

  Intrinsic Value

$48.11

stock screener

  Rating & Target

str. buy

+88%

Previous close

$25.55

 
Intrinsic value

$48.11

 
Up/down potential

+88%

 
Rating

str. buy

We calculate the intrinsic value of IRMD 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 0.3

 

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, %
  24.40
  22.46
  20.71
  19.14
  17.73
  16.46
  15.31
  14.28
  13.35
  12.52
  11.76
  11.09
  10.48
  9.93
  9.44
  8.99
  8.59
  8.24
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.02
  5.91
Revenue, $m
  37
  46
  55
  66
  77
  90
  104
  119
  135
  151
  169
  188
  208
  228
  250
  272
  296
  320
  346
  372
  399
  428
  457
  488
  520
  553
  588
  624
  661
  700
Variable operating expenses, $m
  14
  17
  20
  24
  28
  33
  38
  43
  49
  55
  61
  68
  75
  82
  90
  98
  107
  115
  125
  134
  144
  154
  165
  176
  187
  199
  212
  225
  238
  252
Fixed operating expenses, $m
  13
  14
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  17
  18
  18
  18
  19
  19
  20
  20
  21
  21
  21
  22
  22
  23
  23
  24
  24
  25
Total operating expenses, $m
  27
  31
  34
  38
  42
  48
  53
  58
  65
  71
  78
  85
  92
  100
  108
  116
  126
  134
  145
  154
  165
  175
  186
  198
  209
  222
  235
  249
  262
  277
Operating income, $m
  10
  15
  21
  28
  35
  43
  51
  60
  70
  81
  92
  103
  116
  128
  142
  156
  170
  186
  201
  218
  235
  253
  271
  290
  310
  331
  353
  375
  399
  423
EBITDA, $m
  11
  16
  22
  29
  36
  44
  53
  62
  72
  83
  94
  106
  119
  132
  146
  160
  175
  191
  207
  223
  241
  259
  278
  298
  318
  339
  362
  385
  409
  434
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
Earnings before tax, $m
  10
  15
  21
  27
  34
  42
  50
  59
  69
  79
  90
  102
  114
  126
  140
  153
  168
  182
  198
  214
  231
  248
  266
  285
  305
  325
  346
  369
  392
  416
Tax expense, $m
  3
  4
  6
  7
  9
  11
  14
  16
  19
  21
  24
  27
  31
  34
  38
  41
  45
  49
  53
  58
  62
  67
  72
  77
  82
  88
  94
  100
  106
  112
Net income, $m
  8
  11
  15
  20
  25
  31
  37
  43
  50
  58
  66
  74
  83
  92
  102
  112
  122
  133
  145
  156
  169
  181
  194
  208
  222
  237
  253
  269
  286
  303

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
  23
  29
  34
  41
  48
  56
  65
  74
  84
  95
  106
  118
  130
  143
  156
  170
  185
  200
  216
  232
  250
  267
  286
  305
  325
  346
  367
  390
  413
  438
Adjusted assets (=assets-cash), $m
  23
  29
  34
  41
  48
  56
  65
  74
  84
  95
  106
  118
  130
  143
  156
  170
  185
  200
  216
  232
  250
  267
  286
  305
  325
  346
  367
  390
  413
  438
Revenue / Adjusted assets
  1.609
  1.586
  1.618
  1.610
  1.604
  1.607
  1.600
  1.608
  1.607
  1.589
  1.594
  1.593
  1.600
  1.594
  1.603
  1.600
  1.600
  1.600
  1.602
  1.603
  1.596
  1.603
  1.598
  1.600
  1.600
  1.598
  1.602
  1.600
  1.600
  1.598
Average production assets, $m
  3
  4
  4
  5
  6
  7
  8
  9
  10
  12
  13
  14
  16
  18
  19
  21
  23
  25
  27
  29
  31
  33
  35
  38
  40
  43
  45
  48
  51
  54
Working capital, $m
  7
  8
  10
  12
  14
  16
  19
  22
  24
  28
  31
  34
  38
  42
  45
  50
  54
  58
  63
  68
  73
  78
  83
  89
  95
  101
  107
  114
  120
  127
Total debt, $m
  2
  3
  5
  8
  10
  13
  16
  19
  23
  26
  30
  34
  38
  43
  48
  52
  57
  63
  68
  74
  80
  86
  92
  99
  106
  113
  121
  128
  136
  145
Total liabilities, $m
  8
  10
  12
  14
  17
  19
  22
  26
  29
  33
  37
  41
  45
  49
  54
  59
  64
  69
  75
  80
  86
  92
  99
  106
  112
  120
  127
  135
  143
  151
Total equity, $m
  15
  19
  23
  27
  32
  37
  42
  49
  55
  62
  69
  77
  85
  93
  102
  111
  121
  131
  141
  152
  163
  175
  187
  199
  212
  226
  240
  255
  270
  286
Total liabilities and equity, $m
  23
  29
  35
  41
  49
  56
  64
  75
  84
  95
  106
  118
  130
  142
  156
  170
  185
  200
  216
  232
  249
  267
  286
  305
  324
  346
  367
  390
  413
  437
Debt-to-equity ratio
  0.100
  0.180
  0.240
  0.290
  0.320
  0.350
  0.380
  0.400
  0.410
  0.420
  0.440
  0.440
  0.450
  0.460
  0.470
  0.470
  0.480
  0.480
  0.480
  0.490
  0.490
  0.490
  0.490
  0.500
  0.500
  0.500
  0.500
  0.500
  0.510
  0.510
Adjusted equity ratio
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  11
  15
  20
  25
  31
  37
  43
  50
  58
  66
  74
  83
  92
  102
  112
  122
  133
  145
  156
  169
  181
  194
  208
  222
  237
  253
  269
  286
  303
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
Funds from operations, $m
  8
  12
  16
  21
  26
  32
  39
  45
  53
  60
  69
  77
  86
  96
  106
  116
  127
  138
  150
  162
  175
  188
  201
  216
  231
  246
  262
  279
  296
  314
Change in working capital, $m
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Cash from operations, $m
  7
  11
  15
  19
  24
  30
  36
  43
  50
  57
  65
  74
  83
  92
  102
  112
  123
  134
  145
  157
  170
  183
  196
  210
  225
  240
  256
  272
  289
  307
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
Cash from investing activities, $m
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -13
Free cash flow, $m
  6
  9
  13
  18
  22
  28
  34
  40
  47
  54
  62
  70
  78
  87
  97
  106
  117
  127
  138
  150
  162
  174
  187
  201
  215
  229
  244
  260
  277
  294
Issuance/(repayment) of debt, $m
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
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  
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
Total cash flow (excl. dividends), $m
  7
  11
  15
  20
  25
  31
  37
  43
  50
  58
  65
  74
  83
  92
  101
  111
  122
  133
  144
  156
  168
  180
  194
  207
  222
  236
  252
  268
  285
  302
Retained Cash Flow (-), $m
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
Prev. year cash balance distribution, $m
  30
  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
  34
  8
  11
  16
  20
  25
  31
  37
  44
  51
  58
  66
  74
  83
  92
  102
  112
  123
  133
  145
  157
  169
  182
  195
  209
  223
  238
  253
  269
  286
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
  33
  7
  10
  13
  16
  18
  21
  23
  25
  27
  28
  28
  28
  28
  27
  26
  24
  23
  21
  18
  16
  14
  12
  10
  8
  7
  5
  4
  3
  2
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

IRADIMED CORPORATION (IRADIMED) develops, manufactures, markets and distributes Magnetic Resonance Imaging (MRI) compatible products, and provides non-magnetic intravenous (IV) infusion pump systems. The Company operates through development, manufacture and sale of MRI compatible products and IV infusion pump systems for use by hospitals and acute care facilities during MRI procedures segment. Its MRidium MRI compatible IV infusion pump system has been designed with a non-magnetic ultrasonic motor, non-ferrous part and other features in order to deliver anesthesia and other IV fluids during various MRI procedures. MRI compatible IV infusion pump system includes the 3860+ MRI compatible IV infusion pump, single-use IV tubing sets, a non-magnetic pole and a lithium battery. In addition, it offers optional upgrade systems, including the 3865 Remote Display/Control, 3861 Side Car, Dose Error Reduction System (DERS) and SpO2 monitor.

FINANCIAL RATIOS  of  iRadimed Corporation (IRMD)

Valuation Ratios
P/E Ratio 39.1
Price to Sales 8.3
Price to Book 8.6
Price to Tangible Book
Price to Cash Flow 30.4
Price to Free Cash Flow 39.1
Growth Rates
Sales Growth Rate 3.1%
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 NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 19.4%
Ret/ On Assets - 3 Yr. Avg. 20.1%
Return On Total Capital 21.9%
Ret/ On T. Cap. - 3 Yr. Avg. 22.5%
Return On Equity 21.9%
Return On Equity - 3 Yr. Avg. 22.5%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 78.8%
Gross Margin - 3 Yr. Avg. 78.3%
EBITDA Margin 33.3%
EBITDA Margin - 3 Yr. Avg. 29.9%
Operating Margin 33.3%
Oper. Margin - 3 Yr. Avg. 29.9%
Pre-Tax Margin 33.3%
Pre-Tax Margin - 3 Yr. Avg. 29.9%
Net Profit Margin 21.2%
Net Profit Margin - 3 Yr. Avg. 19.6%
Effective Tax Rate 36.4%
Eff/ Tax Rate - 3 Yr. Avg. 34.3%
Payout Ratio 0%

IRMD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IRMD stock intrinsic value calculation we used $30 million for the last fiscal year's total revenue generated by iRadimed Corporation. The default revenue input number comes from 0001 income statement of iRadimed Corporation. 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 IRMD stock valuation model: a) initial revenue growth rate of 24.4% 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 IRMD is calculated based on our internal credit rating of iRadimed Corporation, 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 iRadimed Corporation.
    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 IRMD stock the variable cost ratio is equal to 36.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $13 million in the base year in the intrinsic value calculation for IRMD 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 iRadimed Corporation.

Corporate tax rate of 27% is the nominal tax rate for iRadimed Corporation. 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 IRMD 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 IRMD are equal to 7.7%.

Life of production assets of 2.5 years is the average useful life of capital assets used in iRadimed Corporation 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 IRMD is equal to 18.2%. 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 - $41.945733 million for iRadimed Corporation - 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 10.997 million for iRadimed Corporation 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 iRadimed Corporation at the current share price and the inputted number of shares is $0.3 billion.

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