Intrinsic value of LivaNova PLC - LIVN

Previous Close

$69.53

  Intrinsic Value

$7.04

stock screener

  Rating & Target

str. sell

-90%

Previous close

$69.53

 
Intrinsic value

$7.04

 
Up/down potential

-90%

 
Rating

str. sell

We calculate the intrinsic value of LIVN 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 3.4

 

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, %
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
Revenue, $m
  1,096
  1,183
  1,274
  1,369
  1,467
  1,568
  1,674
  1,785
  1,899
  2,018
  2,142
  2,272
  2,407
  2,547
  2,694
  2,847
  3,006
  3,173
  3,348
  3,530
  3,721
  3,920
  4,129
  4,347
  4,576
  4,816
  5,067
  5,330
  5,606
  5,895
Variable operating expenses, $m
  1,049
  1,122
  1,198
  1,277
  1,359
  1,444
  1,533
  1,625
  1,721
  1,820
  1,792
  1,901
  2,013
  2,131
  2,253
  2,381
  2,515
  2,655
  2,801
  2,953
  3,113
  3,279
  3,454
  3,637
  3,828
  4,029
  4,239
  4,459
  4,689
  4,931
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
  1,049
  1,122
  1,198
  1,277
  1,359
  1,444
  1,533
  1,625
  1,721
  1,820
  1,792
  1,901
  2,013
  2,131
  2,253
  2,381
  2,515
  2,655
  2,801
  2,953
  3,113
  3,279
  3,454
  3,637
  3,828
  4,029
  4,239
  4,459
  4,689
  4,931
Operating income, $m
  47
  61
  76
  92
  108
  124
  142
  160
  178
  198
  350
  371
  393
  416
  440
  465
  491
  519
  547
  577
  608
  641
  675
  711
  748
  787
  828
  871
  916
  963
EBITDA, $m
  230
  249
  268
  287
  308
  329
  352
  375
  399
  424
  450
  477
  506
  535
  566
  598
  632
  667
  703
  742
  782
  823
  867
  913
  961
  1,012
  1,064
  1,120
  1,178
  1,238
Interest expense (income), $m
  0
  8
  12
  15
  19
  23
  26
  30
  35
  39
  44
  48
  53
  58
  64
  69
  75
  81
  87
  94
  101
  108
  115
  123
  132
  140
  149
  159
  169
  179
  190
Earnings before tax, $m
  39
  50
  61
  73
  85
  98
  111
  125
  139
  154
  302
  318
  335
  353
  371
  390
  410
  431
  453
  476
  500
  525
  551
  579
  608
  638
  669
  703
  737
  774
Tax expense, $m
  10
  13
  16
  20
  23
  26
  30
  34
  38
  42
  82
  86
  90
  95
  100
  105
  111
  116
  122
  129
  135
  142
  149
  156
  164
  172
  181
  190
  199
  209
Net income, $m
  28
  36
  45
  53
  62
  71
  81
  91
  102
  113
  220
  232
  245
  258
  271
  285
  300
  315
  331
  348
  365
  383
  403
  423
  444
  466
  489
  513
  538
  565

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
  2,713
  2,929
  3,154
  3,387
  3,630
  3,882
  4,145
  4,417
  4,701
  4,996
  5,303
  5,623
  5,957
  6,305
  6,668
  7,046
  7,442
  7,855
  8,286
  8,738
  9,209
  9,703
  10,220
  10,761
  11,327
  11,920
  12,542
  13,193
  13,875
  14,591
Adjusted assets (=assets-cash), $m
  2,713
  2,929
  3,154
  3,387
  3,630
  3,882
  4,145
  4,417
  4,701
  4,996
  5,303
  5,623
  5,957
  6,305
  6,668
  7,046
  7,442
  7,855
  8,286
  8,738
  9,209
  9,703
  10,220
  10,761
  11,327
  11,920
  12,542
  13,193
  13,875
  14,591
Revenue / Adjusted assets
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
Average production assets, $m
  879
  949
  1,022
  1,098
  1,176
  1,258
  1,343
  1,431
  1,523
  1,619
  1,718
  1,822
  1,930
  2,043
  2,160
  2,283
  2,411
  2,545
  2,685
  2,831
  2,984
  3,144
  3,311
  3,487
  3,670
  3,862
  4,064
  4,275
  4,496
  4,727
Working capital, $m
  492
  531
  572
  614
  658
  704
  752
  801
  853
  906
  962
  1,020
  1,081
  1,144
  1,209
  1,278
  1,350
  1,425
  1,503
  1,585
  1,671
  1,760
  1,854
  1,952
  2,055
  2,162
  2,275
  2,393
  2,517
  2,647
Total debt, $m
  203
  263
  325
  389
  456
  525
  597
  672
  750
  831
  916
  1,004
  1,096
  1,191
  1,291
  1,395
  1,504
  1,617
  1,736
  1,860
  1,990
  2,126
  2,268
  2,417
  2,572
  2,735
  2,906
  3,085
  3,273
  3,470
Total liabilities, $m
  746
  805
  867
  932
  998
  1,068
  1,140
  1,215
  1,293
  1,374
  1,458
  1,546
  1,638
  1,734
  1,834
  1,938
  2,046
  2,160
  2,279
  2,403
  2,533
  2,668
  2,810
  2,959
  3,115
  3,278
  3,449
  3,628
  3,816
  4,012
Total equity, $m
  1,967
  2,124
  2,287
  2,456
  2,632
  2,815
  3,005
  3,202
  3,408
  3,622
  3,845
  4,077
  4,319
  4,571
  4,834
  5,108
  5,395
  5,695
  6,008
  6,335
  6,677
  7,035
  7,409
  7,802
  8,212
  8,642
  9,093
  9,565
  10,060
  10,578
Total liabilities and equity, $m
  2,713
  2,929
  3,154
  3,388
  3,630
  3,883
  4,145
  4,417
  4,701
  4,996
  5,303
  5,623
  5,957
  6,305
  6,668
  7,046
  7,441
  7,855
  8,287
  8,738
  9,210
  9,703
  10,219
  10,761
  11,327
  11,920
  12,542
  13,193
  13,876
  14,590
Debt-to-equity ratio
  0.100
  0.120
  0.140
  0.160
  0.170
  0.190
  0.200
  0.210
  0.220
  0.230
  0.240
  0.250
  0.250
  0.260
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.330
  0.330
Adjusted equity ratio
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  28
  36
  45
  53
  62
  71
  81
  91
  102
  113
  220
  232
  245
  258
  271
  285
  300
  315
  331
  348
  365
  383
  403
  423
  444
  466
  489
  513
  538
  565
Depreciation, amort., depletion, $m
  183
  187
  191
  196
  200
  205
  210
  215
  221
  226
  100
  106
  112
  119
  126
  133
  140
  148
  156
  165
  173
  183
  193
  203
  213
  225
  236
  249
  261
  275
Funds from operations, $m
  211
  223
  236
  249
  263
  277
  291
  306
  322
  339
  320
  338
  357
  376
  397
  418
  440
  463
  487
  512
  539
  566
  595
  625
  657
  690
  725
  761
  800
  840
Change in working capital, $m
  38
  39
  41
  42
  44
  46
  48
  49
  51
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
  118
  124
  130
Cash from operations, $m
  174
  184
  195
  207
  218
  231
  244
  257
  271
  285
  265
  280
  296
  313
  331
  349
  368
  388
  409
  430
  453
  477
  501
  527
  554
  583
  612
  643
  676
  710
Maintenance CAPEX, $m
  -47
  -51
  -55
  -59
  -64
  -68
  -73
  -78
  -83
  -89
  -94
  -100
  -106
  -112
  -119
  -126
  -133
  -140
  -148
  -156
  -165
  -173
  -183
  -193
  -203
  -213
  -225
  -236
  -249
  -261
New CAPEX, $m
  -68
  -70
  -73
  -76
  -79
  -82
  -85
  -88
  -92
  -96
  -100
  -104
  -108
  -113
  -118
  -123
  -128
  -134
  -140
  -146
  -153
  -160
  -167
  -175
  -184
  -192
  -201
  -211
  -221
  -232
Cash from investing activities, $m
  -115
  -121
  -128
  -135
  -143
  -150
  -158
  -166
  -175
  -185
  -194
  -204
  -214
  -225
  -237
  -249
  -261
  -274
  -288
  -302
  -318
  -333
  -350
  -368
  -387
  -405
  -426
  -447
  -470
  -493
Free cash flow, $m
  59
  63
  67
  72
  76
  81
  86
  91
  96
  101
  71
  77
  82
  88
  94
  101
  107
  114
  121
  128
  136
  143
  151
  159
  168
  177
  186
  196
  206
  217
Issuance/(repayment) of debt, $m
  57
  59
  62
  64
  67
  69
  72
  75
  78
  81
  85
  88
  92
  96
  100
  104
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
Issuance/(repurchase) of shares, $m
  123
  121
  118
  116
  114
  111
  109
  106
  104
  101
  2
  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  
  180
  180
  180
  180
  181
  180
  181
  181
  182
  182
  87
  88
  92
  96
  100
  104
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
Total cash flow (excl. dividends), $m
  239
  243
  247
  252
  257
  262
  267
  272
  278
  284
  158
  165
  174
  184
  194
  205
  216
  228
  240
  252
  265
  279
  293
  308
  324
  340
  357
  375
  394
  413
Retained Cash Flow (-), $m
  -152
  -157
  -163
  -169
  -176
  -183
  -190
  -198
  -206
  -214
  -223
  -232
  -242
  -252
  -263
  -275
  -287
  -299
  -313
  -327
  -342
  -358
  -375
  -392
  -411
  -430
  -451
  -472
  -495
  -519
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
  88
  86
  84
  83
  81
  79
  77
  74
  72
  70
  -65
  -68
  -68
  -68
  -69
  -70
  -71
  -72
  -73
  -75
  -77
  -79
  -81
  -84
  -87
  -90
  -93
  -97
  -101
  -105
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
  84
  79
  73
  68
  63
  57
  52
  46
  41
  36
  -31
  -29
  -26
  -23
  -20
  -18
  -15
  -13
  -11
  -10
  -8
  -7
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
Current shareholders' claim on cash, %
  96.5
  93.4
  90.7
  88.3
  86.2
  84.3
  82.5
  81.0
  79.6
  78.4
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3
  78.3

LivaNova PLC is a medical device company focused on the development and delivery of therapeutic solutions. The Company's segments include Cardiac Surgery, Cardiac Rhythm Management, Neuromodulation and Other. The Cardiac Surgery segment is engaged in the development, production and sale of cardiovascular surgery products. Cardiac Surgery products include oxygenators, heart-lung machines, autotransfusion, mechanical heart valves and tissue heart valves. The Cardiac Rhythm Management segment is engaged in the development, manufacturing and marketing of products for the diagnosis, treatment, and management of heart rhythm disorders and heart failure. Cardiac Rhythm Management products include high-voltage defibrillators Cardiac Resynchronization Therapy device (CRT-D) and low-voltage pacemakers. The Neuromodulation segment is engaged in the design, development and marketing of neuromodulation therapy for the treatment of drug-resistant epilepsy and treatment resistant depression.

FINANCIAL RATIOS  of  LivaNova PLC (LIVN)

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%

LIVN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LIVN stock intrinsic value calculation we used $1012 million for the last fiscal year's total revenue generated by LivaNova PLC. The default revenue input number comes from 0001 income statement of LivaNova PLC. 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 LIVN stock valuation model: a) initial revenue growth rate of 8.3% 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 LIVN is calculated based on our internal credit rating of LivaNova PLC, 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 LivaNova PLC.
    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 LIVN stock the variable cost ratio is equal to 96.7%.

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 LIVN 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 5.8% for LivaNova PLC.

Corporate tax rate of 27% is the nominal tax rate for LivaNova PLC. 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 LIVN 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 LIVN are equal to 80.2%.

Life of production assets of 17.2 years is the average useful life of capital assets used in LivaNova PLC 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 LIVN is equal to 44.9%. 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 - $1815.314 million for LivaNova PLC - 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 48.727 million for LivaNova PLC 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 LivaNova PLC at the current share price and the inputted number of shares is $3.4 billion.

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