Intrinsic value of Cesca Therapeutics - KOOL

Previous Close

$2.64

  Intrinsic Value

$2.37

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  Rating & Target

hold

-10%

Previous close

$2.64

 
Intrinsic value

$2.37

 
Up/down potential

-10%

 
Rating

hold

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

We calculate the intrinsic value of KOOL 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 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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, %
  25.00
  33.30
  30.47
  27.92
  25.63
  23.57
  21.71
  20.04
  18.54
  17.18
  15.96
  14.87
  13.88
  12.99
  12.19
  11.47
  10.83
  10.24
  9.72
  9.25
  8.82
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
Revenue, $m
  15
  20
  26
  33
  42
  52
  63
  76
  90
  105
  122
  140
  159
  180
  202
  225
  250
  275
  302
  330
  359
  390
  421
  454
  488
  523
  560
  598
  638
  679
  723
Variable operating expenses, $m
 
  8
  9
  12
  14
  18
  21
  25
  29
  34
  40
  44
  50
  56
  63
  71
  78
  86
  95
  103
  113
  122
  132
  142
  153
  164
  176
  187
  200
  213
  226
Fixed operating expenses, $m
 
  19
  20
  20
  21
  21
  22
  23
  23
  24
  24
  25
  26
  26
  27
  28
  28
  29
  30
  30
  31
  32
  33
  34
  34
  35
  36
  37
  38
  39
  40
Total operating expenses, $m
  24
  27
  29
  32
  35
  39
  43
  48
  52
  58
  64
  69
  76
  82
  90
  99
  106
  115
  125
  133
  144
  154
  165
  176
  187
  199
  212
  224
  238
  252
  266
Operating income, $m
  -9
  -7
  -3
  1
  7
  13
  20
  28
  37
  47
  58
  71
  84
  98
  112
  127
  143
  160
  178
  196
  216
  236
  256
  278
  301
  324
  349
  374
  400
  428
  456
EBITDA, $m
  -8
  -5
  -1
  4
  10
  16
  24
  33
  43
  53
  65
  78
  91
  106
  121
  138
  155
  173
  192
  211
  232
  253
  276
  299
  323
  348
  374
  401
  429
  459
  489
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  2
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  25
Earnings before tax, $m
  -30
  -7
  -4
  1
  6
  12
  18
  26
  35
  44
  55
  67
  79
  92
  106
  120
  135
  151
  168
  185
  204
  223
  242
  263
  284
  306
  329
  353
  378
  404
  431
Tax expense, $m
  -1
  0
  0
  0
  2
  3
  5
  7
  9
  12
  15
  18
  21
  25
  29
  32
  37
  41
  45
  50
  55
  60
  65
  71
  77
  83
  89
  95
  102
  109
  116
Net income, $m
  -29
  -7
  -4
  0
  4
  8
  13
  19
  25
  32
  40
  49
  58
  67
  77
  88
  99
  110
  123
  135
  149
  162
  177
  192
  207
  224
  240
  258
  276
  295
  315

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4
  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
  47
  57
  75
  96
  120
  148
  181
  217
  257
  301
  349
  401
  457
  516
  579
  646
  716
  789
  866
  946
  1,029
  1,116
  1,206
  1,300
  1,398
  1,499
  1,605
  1,715
  1,828
  1,947
  2,070
Adjusted assets (=assets-cash), $m
  43
  57
  75
  96
  120
  148
  181
  217
  257
  301
  349
  401
  457
  516
  579
  646
  716
  789
  866
  946
  1,029
  1,116
  1,206
  1,300
  1,398
  1,499
  1,605
  1,715
  1,828
  1,947
  2,070
Revenue / Adjusted assets
  0.349
  0.351
  0.347
  0.344
  0.350
  0.351
  0.348
  0.350
  0.350
  0.349
  0.350
  0.349
  0.348
  0.349
  0.349
  0.348
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
Average production assets, $m
  21
  27
  36
  46
  57
  71
  86
  103
  123
  144
  167
  191
  218
  246
  276
  308
  341
  376
  413
  451
  491
  532
  576
  620
  667
  715
  766
  818
  872
  929
  988
Working capital, $m
  6
  3
  3
  4
  6
  7
  8
  10
  12
  14
  16
  19
  21
  24
  27
  30
  33
  37
  40
  44
  48
  52
  56
  60
  65
  70
  74
  80
  85
  90
  96
Total debt, $m
  4
  9
  16
  24
  33
  43
  55
  69
  84
  100
  118
  137
  158
  180
  204
  228
  254
  282
  310
  340
  371
  403
  437
  472
  508
  546
  585
  626
  668
  712
  758
Total liabilities, $m
  16
  21
  28
  36
  45
  55
  67
  81
  96
  112
  130
  149
  170
  192
  216
  240
  266
  294
  322
  352
  383
  415
  449
  484
  520
  558
  597
  638
  680
  724
  770
Total equity, $m
  31
  36
  47
  60
  75
  93
  113
  136
  161
  189
  219
  252
  287
  324
  364
  406
  449
  496
  544
  594
  646
  701
  758
  817
  878
  942
  1,008
  1,077
  1,148
  1,223
  1,300
Total liabilities and equity, $m
  47
  57
  75
  96
  120
  148
  180
  217
  257
  301
  349
  401
  457
  516
  580
  646
  715
  790
  866
  946
  1,029
  1,116
  1,207
  1,301
  1,398
  1,500
  1,605
  1,715
  1,828
  1,947
  2,070
Debt-to-equity ratio
  0.129
  0.260
  0.340
  0.390
  0.430
  0.460
  0.490
  0.500
  0.520
  0.530
  0.540
  0.540
  0.550
  0.560
  0.560
  0.560
  0.570
  0.570
  0.570
  0.570
  0.570
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
Adjusted equity ratio
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -29
  -7
  -4
  0
  4
  8
  13
  19
  25
  32
  40
  49
  58
  67
  77
  88
  99
  110
  123
  135
  149
  162
  177
  192
  207
  224
  240
  258
  276
  295
  315
Depreciation, amort., depletion, $m
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  6
  7
  8
  9
  10
  11
  13
  14
  15
  16
  18
  19
  21
  22
  24
  26
  27
  29
  31
  33
Funds from operations, $m
  -8
  -5
  -1
  3
  7
  12
  18
  24
  31
  38
  47
  55
  65
  75
  86
  98
  110
  123
  136
  150
  165
  180
  196
  213
  230
  247
  266
  285
  305
  326
  348
Change in working capital, $m
  -1
  1
  1
  1
  1
  1
  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
Cash from operations, $m
  -7
  -6
  -2
  2
  6
  11
  16
  22
  29
  36
  44
  53
  62
  73
  83
  95
  107
  120
  133
  147
  161
  176
  192
  208
  225
  243
  261
  280
  300
  321
  342
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -27
  -29
  -31
New CAPEX, $m
  0
  -7
  -8
  -10
  -12
  -14
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -48
  -50
  -52
  -54
  -57
  -59
Cash from investing activities, $m
  0
  -8
  -9
  -11
  -14
  -16
  -17
  -20
  -22
  -25
  -28
  -31
  -33
  -35
  -38
  -41
  -43
  -46
  -50
  -52
  -55
  -57
  -61
  -64
  -68
  -70
  -74
  -78
  -81
  -86
  -90
Free cash flow, $m
  -7
  -13
  -11
  -9
  -7
  -5
  -2
  2
  6
  11
  17
  23
  30
  37
  45
  54
  63
  73
  84
  95
  106
  118
  131
  144
  158
  172
  187
  202
  218
  235
  252
Issuance/(repayment) of debt, $m
  3
  5
  6
  8
  9
  11
  12
  13
  15
  16
  18
  19
  21
  22
  23
  25
  26
  27
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
  46
Issuance/(repurchase) of shares, $m
  2
  16
  15
  13
  11
  9
  7
  4
  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  
  5
  21
  21
  21
  20
  20
  19
  17
  15
  16
  18
  19
  21
  22
  23
  25
  26
  27
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
  46
Total cash flow (excl. dividends), $m
  -2
  8
  10
  12
  13
  15
  17
  19
  21
  28
  35
  42
  50
  59
  69
  79
  89
  100
  112
  125
  137
  151
  165
  179
  194
  210
  226
  243
  261
  279
  298
Retained Cash Flow (-), $m
  1
  -16
  -15
  -13
  -15
  -18
  -20
  -23
  -25
  -28
  -30
  -33
  -35
  -37
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
  -59
  -61
  -64
  -66
  -69
  -72
  -74
  -77
Prev. year cash balance distribution, $m
 
  4
  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
 
  -4
  -5
  -2
  -2
  -3
  -3
  -4
  -4
  0
  4
  9
  15
  22
  29
  37
  45
  54
  64
  74
  85
  96
  108
  120
  133
  146
  160
  174
  189
  205
  221
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
 
  -4
  -4
  -1
  -2
  -2
  -2
  -2
  -3
  0
  2
  4
  7
  8
  10
  11
  12
  12
  12
  11
  11
  10
  9
  8
  7
  6
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  100
  58.6
  39.6
  30.0
  24.6
  21.5
  19.8
  19.0
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Cesca Therapeutics Inc. is clinical-stage biotechnology company. The Company develops and markets integrated cellular therapies and delivery systems. The Company is engaged in developing and manufacturing of automated blood and bone marrow processing systems that enable the separation, processing and preservation of cell and tissue therapy products. The Company focuses on the business of research, development and commercialization of autologous cell-based therapeutics for use in the regenerative medicine industry. The Company's therapeutic development initiatives focuses on the fields of cardiovascular medicine and orthopedic regeneration. The Company offers a range of products, such as SurgWerks System, CellWerks System, AutoXpress System (AXP), MarrowXpress System (MXP), BioArchive System, and manual bag sets for use in the processing and cryogenic storage of cord blood.

FINANCIAL RATIOS  of  Cesca Therapeutics (KOOL)

Valuation Ratios
P/E Ratio -0.9
Price to Sales 1.7
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow -3.7
Price to Free Cash Flow -3.7
Growth Rates
Sales Growth Rate 25%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -100%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 12.9%
Total Debt to Equity 12.9%
Interest Coverage 0
Management Effectiveness
Return On Assets -59.8%
Ret/ On Assets - 3 Yr. Avg. -41.2%
Return On Total Capital -84.1%
Ret/ On T. Cap. - 3 Yr. Avg. -58.3%
Return On Equity -92.1%
Return On Equity - 3 Yr. Avg. -61.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 40%
Gross Margin - 3 Yr. Avg. 32.1%
EBITDA Margin -193.3%
EBITDA Margin - 3 Yr. Avg. -143.6%
Operating Margin -60%
Oper. Margin - 3 Yr. Avg. -84.6%
Pre-Tax Margin -200%
Pre-Tax Margin - 3 Yr. Avg. -150.7%
Net Profit Margin -193.3%
Net Profit Margin - 3 Yr. Avg. -148.5%
Effective Tax Rate 3.3%
Eff/ Tax Rate - 3 Yr. Avg. 1.1%
Payout Ratio 0%

KOOL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KOOL stock intrinsic value calculation we used $15 million for the last fiscal year's total revenue generated by Cesca Therapeutics. The default revenue input number comes from 2017 income statement of Cesca Therapeutics. 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 KOOL stock valuation model: a) initial revenue growth rate of 33.3% 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 KOOL is calculated based on our internal credit rating of Cesca Therapeutics, 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 Cesca Therapeutics.
    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 KOOL stock the variable cost ratio is equal to 40%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $19 million in the base year in the intrinsic value calculation for KOOL 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 Cesca Therapeutics.

Corporate tax rate of 27% is the nominal tax rate for Cesca Therapeutics. 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 KOOL 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 KOOL are equal to 136.7%.

Life of production assets of 33.5 years is the average useful life of capital assets used in Cesca Therapeutics 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 KOOL is equal to 13.3%. 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 - $31 million for Cesca Therapeutics - 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 9.947 million for Cesca Therapeutics 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 Cesca Therapeutics at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ How Financially Strong Is Cesca Therapeutics Inc (KOOL)?   [Dec-07-17 01:03PM  Simply Wall St.]
▶ Cesca Therapeutics aims to raise nearly $3 million with share offering   [Nov-29-17 06:10PM  American City Business Journals]
▶ Distribution deal could help Rancho Cordova's Cesca expand into growing Asian markets   [Aug-29-17 03:35PM  American City Business Journals]
▶ Company News for July 11, 2017   [Jul-11-17 10:19AM  Zacks]
▶ Rancho Cordova's Cesca Therapeutics acquiring Sacramento-based SynGen   [Jul-10-17 03:21PM  American City Business Journals]
▶ Cesca Therapeutics Set to Join Russell Microcap® Index   [Jun-23-17 10:00AM  GlobeNewswire]
▶ Cesca Therapeutics Announces Senior Management Promotions   [Apr-03-17 06:00AM  GlobeNewswire]
▶ Wednesdays Biggest Biopharma Movers   [Mar-15-17 12:10PM  24/7 Wall St.]
▶ [$$] Four Biotech Picks for Cures Law   [Jan-26-17 04:20PM  at Barrons.com]
▶ Cesca Submits IDE Supplement for CLI Pivotal Trial   [Dec-05-16 06:00AM  GlobeNewswire]
▶ Why Are Traders Piling Into These Five Stocks?   [Oct-24-16 01:52PM  at Insider Monkey]
Financial statements of KOOL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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