Intrinsic value of nLIGHT - LASR

Previous Close

$19.11

  Intrinsic Value

$104.31

stock screener

  Rating & Target

str. buy

+446%

Previous close

$19.11

 
Intrinsic value

$104.31

 
Up/down potential

+446%

 
Rating

str. buy

We calculate the intrinsic value of LASR 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 0.7

 

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, %
  36.80
  33.62
  30.76
  28.18
  25.86
  23.78
  21.90
  20.21
  18.69
  17.32
  16.09
  14.98
  13.98
  13.08
  12.27
  11.55
  10.89
  10.30
  9.77
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.28
  7.05
  6.85
  6.66
  6.50
Revenue, $m
  190
  253
  331
  425
  534
  661
  806
  969
  1,150
  1,350
  1,567
  1,801
  2,053
  2,322
  2,607
  2,908
  3,225
  3,557
  3,905
  4,268
  4,646
  5,040
  5,450
  5,876
  6,319
  6,779
  7,257
  7,754
  8,271
  8,808
Variable operating expenses, $m
  97
  129
  169
  216
  272
  337
  410
  493
  586
  687
  797
  916
  1,044
  1,181
  1,326
  1,479
  1,640
  1,809
  1,986
  2,171
  2,363
  2,564
  2,772
  2,989
  3,214
  3,448
  3,692
  3,944
  4,207
  4,481
Fixed operating expenses, $m
  61
  63
  64
  65
  67
  68
  70
  71
  73
  75
  76
  78
  80
  81
  83
  85
  87
  89
  91
  93
  95
  97
  99
  101
  103
  106
  108
  110
  113
  115
Total operating expenses, $m
  158
  192
  233
  281
  339
  405
  480
  564
  659
  762
  873
  994
  1,124
  1,262
  1,409
  1,564
  1,727
  1,898
  2,077
  2,264
  2,458
  2,661
  2,871
  3,090
  3,317
  3,554
  3,800
  4,054
  4,320
  4,596
Operating income, $m
  32
  61
  98
  143
  195
  256
  326
  404
  492
  588
  694
  807
  929
  1,059
  1,198
  1,344
  1,498
  1,659
  1,828
  2,004
  2,188
  2,379
  2,579
  2,786
  3,001
  3,225
  3,458
  3,700
  3,951
  4,213
EBITDA, $m
  34
  65
  103
  149
  203
  266
  338
  418
  508
  607
  716
  832
  958
  1,092
  1,234
  1,385
  1,543
  1,709
  1,882
  2,064
  2,253
  2,450
  2,655
  2,868
  3,090
  3,320
  3,559
  3,808
  4,067
  4,336
Interest expense (income), $m
  0
  3
  5
  8
  12
  16
  22
  28
  35
  43
  52
  61
  72
  83
  95
  108
  122
  137
  152
  168
  185
  203
  221
  240
  260
  281
  302
  325
  348
  372
  397
Earnings before tax, $m
  29
  56
  90
  131
  179
  235
  298
  370
  449
  537
  632
  735
  846
  964
  1,089
  1,222
  1,361
  1,507
  1,659
  1,819
  1,985
  2,158
  2,338
  2,526
  2,720
  2,923
  3,133
  3,352
  3,579
  3,816
Tax expense, $m
  8
  15
  24
  35
  48
  63
  80
  100
  121
  145
  171
  199
  228
  260
  294
  330
  367
  407
  448
  491
  536
  583
  631
  682
  735
  789
  846
  905
  966
  1,030
Net income, $m
  21
  41
  66
  96
  131
  171
  218
  270
  328
  392
  462
  537
  618
  704
  795
  892
  993
  1,100
  1,211
  1,328
  1,449
  1,576
  1,707
  1,844
  1,986
  2,134
  2,287
  2,447
  2,613
  2,785

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
  136
  182
  238
  305
  384
  476
  580
  697
  828
  971
  1,127
  1,296
  1,477
  1,670
  1,876
  2,092
  2,320
  2,559
  2,809
  3,070
  3,342
  3,626
  3,921
  4,227
  4,546
  4,877
  5,221
  5,579
  5,950
  6,337
Adjusted assets (=assets-cash), $m
  136
  182
  238
  305
  384
  476
  580
  697
  828
  971
  1,127
  1,296
  1,477
  1,670
  1,876
  2,092
  2,320
  2,559
  2,809
  3,070
  3,342
  3,626
  3,921
  4,227
  4,546
  4,877
  5,221
  5,579
  5,950
  6,337
Revenue / Adjusted assets
  1.397
  1.390
  1.391
  1.393
  1.391
  1.389
  1.390
  1.390
  1.389
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
  1.390
Average production assets, $m
  13
  18
  23
  30
  37
  46
  56
  68
  81
  94
  110
  126
  144
  163
  182
  204
  226
  249
  273
  299
  325
  353
  381
  411
  442
  475
  508
  543
  579
  617
Working capital, $m
  29
  39
  51
  65
  82
  102
  124
  149
  177
  208
  241
  277
  316
  358
  401
  448
  497
  548
  601
  657
  715
  776
  839
  905
  973
  1,044
  1,118
  1,194
  1,274
  1,357
Total debt, $m
  34
  56
  82
  113
  150
  192
  241
  295
  356
  422
  495
  574
  658
  748
  843
  944
  1,050
  1,161
  1,277
  1,399
  1,525
  1,657
  1,794
  1,937
  2,085
  2,239
  2,399
  2,565
  2,738
  2,918
Total liabilities, $m
  63
  85
  111
  142
  179
  221
  270
  324
  385
  452
  524
  603
  687
  777
  872
  973
  1,079
  1,190
  1,306
  1,428
  1,554
  1,686
  1,823
  1,966
  2,114
  2,268
  2,428
  2,594
  2,767
  2,947
Total equity, $m
  73
  97
  127
  163
  206
  255
  310
  373
  443
  519
  603
  693
  790
  894
  1,003
  1,119
  1,241
  1,369
  1,503
  1,643
  1,788
  1,940
  2,098
  2,262
  2,432
  2,609
  2,793
  2,985
  3,183
  3,390
Total liabilities and equity, $m
  136
  182
  238
  305
  385
  476
  580
  697
  828
  971
  1,127
  1,296
  1,477
  1,671
  1,875
  2,092
  2,320
  2,559
  2,809
  3,071
  3,342
  3,626
  3,921
  4,228
  4,546
  4,877
  5,221
  5,579
  5,950
  6,337
Debt-to-equity ratio
  0.470
  0.570
  0.640
  0.690
  0.730
  0.760
  0.780
  0.790
  0.800
  0.810
  0.820
  0.830
  0.830
  0.840
  0.840
  0.840
  0.850
  0.850
  0.850
  0.850
  0.850
  0.850
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
Adjusted equity ratio
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  21
  41
  66
  96
  131
  171
  218
  270
  328
  392
  462
  537
  618
  704
  795
  892
  993
  1,100
  1,211
  1,328
  1,449
  1,576
  1,707
  1,844
  1,986
  2,134
  2,287
  2,447
  2,613
  2,785
Depreciation, amort., depletion, $m
  3
  4
  5
  6
  8
  10
  12
  14
  16
  19
  22
  25
  29
  33
  36
  41
  45
  50
  55
  60
  65
  71
  76
  82
  88
  95
  102
  109
  116
  123
Funds from operations, $m
  24
  45
  71
  102
  138
  181
  229
  284
  344
  411
  484
  562
  646
  736
  832
  932
  1,038
  1,150
  1,266
  1,388
  1,514
  1,646
  1,783
  1,926
  2,074
  2,229
  2,389
  2,555
  2,729
  2,909
Change in working capital, $m
  8
  10
  12
  14
  17
  20
  22
  25
  28
  31
  33
  36
  39
  41
  44
  46
  49
  51
  54
  56
  58
  61
  63
  66
  68
  71
  74
  77
  80
  83
Cash from operations, $m
  16
  35
  59
  87
  122
  161
  207
  259
  316
  380
  450
  526
  608
  695
  788
  886
  990
  1,099
  1,213
  1,332
  1,456
  1,585
  1,720
  1,860
  2,006
  2,158
  2,315
  2,479
  2,649
  2,826
Maintenance CAPEX, $m
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -11
  -14
  -16
  -19
  -22
  -25
  -29
  -33
  -36
  -41
  -45
  -50
  -55
  -60
  -65
  -71
  -76
  -82
  -88
  -95
  -102
  -109
  -116
New CAPEX, $m
  -3
  -4
  -5
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
Cash from investing activities, $m
  -5
  -7
  -9
  -12
  -14
  -16
  -19
  -22
  -27
  -30
  -34
  -38
  -43
  -48
  -53
  -57
  -63
  -68
  -74
  -80
  -86
  -93
  -100
  -106
  -113
  -120
  -128
  -137
  -145
  -154
Free cash flow, $m
  11
  28
  50
  76
  108
  145
  188
  236
  290
  350
  416
  488
  565
  647
  735
  829
  927
  1,030
  1,138
  1,252
  1,370
  1,493
  1,621
  1,754
  1,893
  2,037
  2,187
  2,342
  2,504
  2,673
Issuance/(repayment) of debt, $m
  17
  21
  26
  31
  37
  43
  48
  55
  61
  67
  73
  79
  84
  90
  95
  101
  106
  111
  116
  121
  127
  132
  137
  143
  148
  154
  160
  166
  173
  180
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  
  17
  21
  26
  31
  37
  43
  48
  55
  61
  67
  73
  79
  84
  90
  95
  101
  106
  111
  116
  121
  127
  132
  137
  143
  148
  154
  160
  166
  173
  180
Total cash flow (excl. dividends), $m
  28
  49
  76
  108
  145
  187
  236
  290
  351
  417
  489
  566
  649
  737
  831
  929
  1,033
  1,141
  1,255
  1,373
  1,496
  1,625
  1,758
  1,897
  2,041
  2,191
  2,347
  2,509
  2,677
  2,852
Retained Cash Flow (-), $m
  -19
  -25
  -30
  -36
  -42
  -49
  -56
  -63
  -70
  -77
  -84
  -90
  -97
  -103
  -110
  -116
  -122
  -128
  -134
  -140
  -146
  -152
  -158
  -164
  -170
  -177
  -184
  -191
  -199
  -207
Prev. year cash balance distribution, $m
  8
  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
  16
  25
  46
  72
  102
  138
  180
  228
  281
  340
  405
  476
  552
  634
  721
  813
  911
  1,013
  1,121
  1,233
  1,351
  1,473
  1,600
  1,733
  1,871
  2,014
  2,163
  2,317
  2,478
  2,645
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
  15
  23
  40
  59
  79
  101
  122
  142
  161
  178
  192
  203
  210
  213
  212
  207
  198
  187
  173
  157
  140
  122
  105
  88
  73
  59
  46
  36
  27
  20
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

FINANCIAL RATIOS  of  nLIGHT (LASR)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
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 NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

LASR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LASR stock intrinsic value calculation we used $138.58 million for the last fiscal year's total revenue generated by nLIGHT. The default revenue input number comes from 0001 income statement of nLIGHT. 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 LASR stock valuation model: a) initial revenue growth rate of 36.8% 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 LASR is calculated based on our internal credit rating of nLIGHT, 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 nLIGHT.
    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 LASR stock the variable cost ratio is equal to 51.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $60 million in the base year in the intrinsic value calculation for LASR 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 14.5% for nLIGHT.

Corporate tax rate of 27% is the nominal tax rate for nLIGHT. 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 LASR 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 LASR are equal to 7%.

Life of production assets of 1.3 years is the average useful life of capital assets used in nLIGHT 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 LASR is equal to 15.4%. 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 - $61.283 million for nLIGHT - 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 34.801 million for nLIGHT 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 nLIGHT at the current share price and the inputted number of shares is $0.7 billion.

COMPANY NEWS

▶ nLIGHT, Inc. Announces Third Quarter 2018 Results   [Nov-05-18 04:05PM  GlobeNewswire]
▶ nLIGHT Launches 5kW Corona Fiber Laser   [Oct-22-18 06:00AM  GlobeNewswire]
▶ A Closer Look At nLIGHT Incs (NASDAQ:LASR) Uninspiring ROE   [Oct-21-18 10:21AM  Simply Wall St.]
▶ nLIGHT, Inc. Announces Pricing of Follow-On Public Offering   [Sep-06-18 07:54PM  GlobeNewswire]
▶ Are nLIGHT Incs (NASDAQ:LASR) Interest Costs Too High?   [Sep-05-18 03:01PM  Simply Wall St.]
▶ nLIGHT, Inc. Launches Follow-On Offering   [Sep-04-18 06:18AM  GlobeNewswire]
▶ Here's how Eventbrite's IPO fared compared to other tech offerings   [Aug-23-18 02:50PM  American City Business Journals]
▶ Recent IPO NLight Tops Second-Quarter Views In First Public Report   [Aug-08-18 04:26PM  Investor's Business Daily]
▶ nLIGHT, Inc. to Host Earnings Call   [03:00PM  ACCESSWIRE]
▶ Why the trade war looms large over Portland region's newest public company   [Jul-19-18 03:40PM  American City Business Journals]
▶ 6 IPOs Bringing Rich Profits To Stock Investors   [Jul-03-18 01:45PM  Investopedia]
▶ A wave of investment money defines Portland's Q2 2018   [Jun-05-18 06:00PM  American City Business Journals]
▶ Laser maker nLight sees steep revenue jump in first earnings as public company   [May-23-18 05:01PM  American City Business Journals]
▶ DocuSign IPO Prices Above Range As Stock Jumps By Double-Digits   [Apr-27-18 05:01PM  Investor's Business Daily]
▶ NLight stock jumps on first day of trading   [Apr-26-18 12:40PM  MarketWatch]
▶ nLIGHT, Inc. Announces Pricing of Initial Public Offering   [Apr-25-18 10:13PM  GlobeNewswire]

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