Intrinsic value of Invacare Corporation - IVC

Previous Close

$5.81

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$5.81

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of IVC 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 0.2

 

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, %
  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
  991
  1,014
  1,040
  1,070
  1,102
  1,138
  1,176
  1,218
  1,263
  1,312
  1,364
  1,419
  1,478
  1,541
  1,607
  1,678
  1,752
  1,831
  1,914
  2,002
  2,095
  2,193
  2,296
  2,405
  2,519
  2,640
  2,767
  2,900
  3,041
  3,188
Variable operating expenses, $m
  1,031
  1,054
  1,080
  1,109
  1,142
  1,177
  1,216
  1,258
  1,303
  1,351
  1,362
  1,418
  1,477
  1,539
  1,606
  1,676
  1,750
  1,829
  1,912
  2,000
  2,093
  2,191
  2,294
  2,402
  2,517
  2,637
  2,764
  2,897
  3,038
  3,185
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
  1,031
  1,054
  1,080
  1,109
  1,142
  1,177
  1,216
  1,258
  1,303
  1,351
  1,362
  1,418
  1,477
  1,539
  1,606
  1,676
  1,750
  1,829
  1,912
  2,000
  2,093
  2,191
  2,294
  2,402
  2,517
  2,637
  2,764
  2,897
  3,038
  3,185
Operating income, $m
  -40
  -40
  -40
  -40
  -40
  -40
  -40
  -40
  -40
  -40
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
EBITDA, $m
  11
  11
  11
  12
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
Interest expense (income), $m
  6
  29
  30
  32
  33
  35
  37
  39
  42
  44
  47
  50
  53
  57
  60
  64
  68
  73
  77
  82
  87
  93
  99
  105
  111
  118
  125
  132
  140
  148
  157
Earnings before tax, $m
  -69
  -70
  -72
  -73
  -75
  -77
  -79
  -81
  -84
  -87
  -49
  -52
  -55
  -59
  -63
  -67
  -71
  -76
  -80
  -86
  -91
  -97
  -102
  -109
  -115
  -122
  -130
  -137
  -145
  -154
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
  -69
  -70
  -72
  -73
  -75
  -77
  -79
  -81
  -84
  -87
  -49
  -52
  -55
  -59
  -63
  -67
  -71
  -76
  -80
  -86
  -91
  -97
  -102
  -109
  -115
  -122
  -130
  -137
  -145
  -154

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
  904
  925
  948
  975
  1,005
  1,037
  1,072
  1,111
  1,152
  1,196
  1,243
  1,294
  1,347
  1,404
  1,465
  1,529
  1,597
  1,669
  1,745
  1,825
  1,910
  1,999
  2,093
  2,192
  2,297
  2,406
  2,522
  2,644
  2,772
  2,907
Adjusted assets (=assets-cash), $m
  904
  925
  948
  975
  1,005
  1,037
  1,072
  1,111
  1,152
  1,196
  1,243
  1,294
  1,347
  1,404
  1,465
  1,529
  1,597
  1,669
  1,745
  1,825
  1,910
  1,999
  2,093
  2,192
  2,297
  2,406
  2,522
  2,644
  2,772
  2,907
Revenue / Adjusted assets
  1.096
  1.096
  1.097
  1.097
  1.097
  1.097
  1.097
  1.096
  1.096
  1.097
  1.097
  1.097
  1.097
  1.098
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
  1.097
Average production assets, $m
  292
  299
  307
  316
  325
  336
  347
  359
  373
  387
  402
  419
  436
  455
  474
  495
  517
  540
  565
  591
  618
  647
  677
  709
  743
  779
  816
  856
  897
  941
Working capital, $m
  86
  88
  91
  93
  96
  99
  102
  106
  110
  114
  119
  123
  129
  134
  140
  146
  152
  159
  167
  174
  182
  191
  200
  209
  219
  230
  241
  252
  265
  277
Total debt, $m
  267
  279
  293
  309
  327
  346
  367
  390
  414
  441
  469
  499
  531
  565
  601
  639
  679
  722
  767
  815
  865
  918
  974
  1,033
  1,095
  1,161
  1,230
  1,302
  1,378
  1,458
Total liabilities, $m
  538
  550
  564
  580
  598
  617
  638
  661
  685
  712
  740
  770
  802
  836
  872
  910
  950
  993
  1,038
  1,086
  1,136
  1,189
  1,245
  1,304
  1,366
  1,432
  1,501
  1,573
  1,649
  1,729
Total equity, $m
  366
  374
  384
  395
  407
  420
  434
  450
  466
  484
  503
  524
  546
  569
  593
  619
  647
  676
  707
  739
  773
  810
  848
  888
  930
  975
  1,021
  1,071
  1,123
  1,177
Total liabilities and equity, $m
  904
  924
  948
  975
  1,005
  1,037
  1,072
  1,111
  1,151
  1,196
  1,243
  1,294
  1,348
  1,405
  1,465
  1,529
  1,597
  1,669
  1,745
  1,825
  1,909
  1,999
  2,093
  2,192
  2,296
  2,407
  2,522
  2,644
  2,772
  2,906
Debt-to-equity ratio
  0.730
  0.750
  0.760
  0.780
  0.800
  0.820
  0.840
  0.870
  0.890
  0.910
  0.930
  0.950
  0.970
  0.990
  1.010
  1.030
  1.050
  1.070
  1.090
  1.100
  1.120
  1.130
  1.150
  1.160
  1.180
  1.190
  1.200
  1.220
  1.230
  1.240
Adjusted equity ratio
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -69
  -70
  -72
  -73
  -75
  -77
  -79
  -81
  -84
  -87
  -49
  -52
  -55
  -59
  -63
  -67
  -71
  -76
  -80
  -86
  -91
  -97
  -102
  -109
  -115
  -122
  -130
  -137
  -145
  -154
Depreciation, amort., depletion, $m
  51
  51
  51
  51
  52
  52
  52
  53
  53
  54
  13
  14
  15
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
Funds from operations, $m
  -18
  -19
  -21
  -22
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -38
  -41
  -44
  -47
  -50
  -54
  -58
  -62
  -66
  -70
  -75
  -80
  -85
  -91
  -96
  -102
  -109
  -116
  -123
Change in working capital, $m
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  12
  12
  13
Cash from operations, $m
  -20
  -21
  -23
  -24
  -26
  -28
  -30
  -32
  -35
  -37
  -40
  -43
  -46
  -49
  -53
  -56
  -60
  -65
  -69
  -73
  -78
  -83
  -89
  -95
  -101
  -107
  -113
  -120
  -128
  -136
Maintenance CAPEX, $m
  -10
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
New CAPEX, $m
  -5
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
  -44
Cash from investing activities, $m
  -15
  -17
  -18
  -19
  -21
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -38
  -40
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -63
  -66
  -70
  -74
Free cash flow, $m
  -35
  -38
  -40
  -43
  -46
  -49
  -53
  -56
  -60
  -64
  -68
  -73
  -77
  -82
  -88
  -93
  -99
  -105
  -111
  -118
  -125
  -133
  -141
  -149
  -158
  -167
  -177
  -187
  -198
  -209
Issuance/(repayment) of debt, $m
  11
  12
  14
  16
  18
  19
  21
  23
  25
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
Issuance/(repurchase) of shares, $m
  76
  79
  81
  84
  87
  90
  93
  97
  101
  105
  68
  72
  77
  82
  87
  93
  99
  105
  111
  118
  125
  133
  141
  149
  158
  167
  176
  187
  197
  209
Cash from financing (excl. dividends), $m  
  87
  91
  95
  100
  105
  109
  114
  120
  126
  131
  96
  102
  109
  116
  123
  131
  139
  148
  156
  166
  175
  186
  197
  208
  220
  232
  245
  259
  273
  289
Total cash flow (excl. dividends), $m
  52
  53
  55
  57
  58
  60
  62
  63
  65
  67
  28
  30
  32
  34
  36
  38
  40
  43
  45
  47
  50
  53
  56
  59
  62
  65
  68
  72
  76
  80
Retained Cash Flow (-), $m
  -76
  -79
  -81
  -84
  -87
  -90
  -93
  -97
  -101
  -105
  -68
  -72
  -77
  -82
  -87
  -93
  -99
  -105
  -111
  -118
  -125
  -133
  -141
  -149
  -158
  -167
  -176
  -187
  -197
  -209
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
  -24
  -26
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -48
  -51
  -55
  -58
  -62
  -66
  -71
  -75
  -80
  -85
  -90
  -96
  -102
  -108
  -115
  -122
  -129
Discount rate, %
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.51
  9.99
  10.49
  11.01
  11.57
  12.14
  12.75
  13.39
  14.06
  14.76
  15.50
  16.27
  17.09
  17.94
  18.84
  19.78
  20.77
  21.81
  22.90
  24.04
  25.25
  26.51
  27.83
  29.22
PV of cash for distribution, $m
  -23
  -22
  -21
  -20
  -19
  -18
  -17
  -16
  -14
  -13
  -12
  -11
  -10
  -8
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  76.8
  58.8
  44.9
  34.2
  26.0
  19.8
  15.0
  11.4
  8.6
  6.5
  5.4
  4.5
  3.7
  3.1
  2.5
  2.1
  1.7
  1.4
  1.1
  0.9
  0.7
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1

Invacare Corporation is a manufacturer and distributor for medical equipment used in non-acute care settings. The Company's geographical segments are Europe; North America, which includes North America/Home Medical Equipment (North America/HME) and Institutional Products Group (IPG) segments, and Asia/Pacific. The Company manufactures and distributes three product categories: mobility and seating, lifestyle and respiratory therapy. It provides medical device solutions for congenital (cerebral palsy, muscular dystrophy and spina bifida), acquired (stroke, spinal cord injury, traumatic brain injury, post-acute recovery and pressure ulcers) and degenerative (amyotrophic lateral sclerosis, multiple sclerosis, chronic obstructive pulmonary disease (COPD), elderly and bariatric) ailments. The Company sells its products to home medical equipment providers with retail and e-commerce channels, residential living operators, distributors and government health services.

FINANCIAL RATIOS  of  Invacare Corporation (IVC)

Valuation Ratios
P/E Ratio -4.4
Price to Sales 0.2
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow -3.3
Price to Free Cash Flow -2.8
Growth Rates
Sales Growth Rate -8.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 25%
Cap. Spend. - 3 Yr. Gr. Rate -6.5%
Financial Strength
Quick Ratio 8
Current Ratio 0
LT Debt to Equity 34.6%
Total Debt to Equity 38.2%
Interest Coverage -4
Management Effectiveness
Return On Assets -3.9%
Ret/ On Assets - 3 Yr. Avg. -3.7%
Return On Total Capital -7.9%
Ret/ On T. Cap. - 3 Yr. Avg. -7.1%
Return On Equity -9.7%
Return On Equity - 3 Yr. Avg. -7.9%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 27.1%
Gross Margin - 3 Yr. Avg. 27.3%
EBITDA Margin -0.9%
EBITDA Margin - 3 Yr. Avg. -0.8%
Operating Margin -2.9%
Oper. Margin - 3 Yr. Avg. -3%
Pre-Tax Margin -2.9%
Pre-Tax Margin - 3 Yr. Avg. -3%
Net Profit Margin -4.1%
Net Profit Margin - 3 Yr. Avg. -3.6%
Effective Tax Rate -43.3%
Eff/ Tax Rate - 3 Yr. Avg. -56.5%
Payout Ratio -4.7%

IVC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IVC stock intrinsic value calculation we used $972 million for the last fiscal year's total revenue generated by Invacare Corporation. The default revenue input number comes from 0001 income statement of Invacare 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 IVC 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 7.1%, whose default value for IVC is calculated based on our internal credit rating of Invacare 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 Invacare 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 IVC stock the variable cost ratio is equal to 104.1%.

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 IVC 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 11.4% for Invacare Corporation.

Corporate tax rate of 27% is the nominal tax rate for Invacare 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 IVC 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 IVC are equal to 29.5%.

Life of production assets of 31.9 years is the average useful life of capital assets used in Invacare 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 IVC is equal to 8.7%. 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 - $359.147 million for Invacare 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 33.254 million for Invacare 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 Invacare Corporation at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
HRC Hill-Rom Holdi 106.22 57.85  sell
AHPI Allied Healthc 1.43 0.87  str.sell
INGN Inogen, Inc 43.67 75.51  sell
ALQA Alliqua BioMed 2.69 0.41  str.sell

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.