Intrinsic value of LeMaitre Vascular - LMAT

Previous Close

$36.36

  Intrinsic Value

$22.87

stock screener

  Rating & Target

sell

-37%

Previous close

$36.36

 
Intrinsic value

$22.87

 
Up/down potential

-37%

 
Rating

sell

We calculate the intrinsic value of LMAT 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 0.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
Revenue, $m
  114
  128
  143
  159
  175
  192
  210
  229
  248
  268
  289
  311
  334
  357
  382
  407
  434
  461
  490
  520
  551
  583
  617
  653
  689
  728
  768
  810
  854
  900
Variable operating expenses, $m
  68
  75
  84
  93
  102
  111
  122
  132
  143
  154
  163
  175
  188
  201
  215
  229
  244
  260
  276
  293
  310
  329
  348
  368
  388
  410
  433
  456
  481
  507
Fixed operating expenses, $m
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  27
  27
  28
  28
  29
  30
  30
  31
  32
  32
  33
  34
  34
  35
  36
  37
  38
  38
Total operating expenses, $m
  88
  96
  105
  115
  124
  134
  145
  156
  167
  179
  188
  201
  215
  228
  243
  257
  273
  290
  306
  324
  342
  361
  381
  402
  422
  445
  469
  493
  519
  545
Operating income, $m
  26
  32
  38
  44
  51
  58
  65
  73
  81
  89
  101
  110
  119
  129
  139
  150
  160
  172
  184
  196
  209
  223
  237
  251
  267
  283
  299
  317
  335
  355
EBITDA, $m
  34
  41
  47
  54
  62
  69
  77
  86
  95
  104
  113
  123
  133
  144
  155
  167
  179
  191
  205
  218
  232
  247
  263
  279
  296
  314
  332
  351
  372
  393
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
Earnings before tax, $m
  26
  32
  38
  44
  50
  57
  64
  72
  80
  88
  99
  108
  117
  127
  137
  147
  158
  169
  181
  193
  205
  219
  232
  247
  262
  277
  294
  311
  329
  348
Tax expense, $m
  7
  9
  10
  12
  14
  15
  17
  19
  22
  24
  27
  29
  32
  34
  37
  40
  43
  46
  49
  52
  55
  59
  63
  67
  71
  75
  79
  84
  89
  94
Net income, $m
  19
  23
  28
  32
  37
  42
  47
  52
  58
  64
  73
  79
  86
  93
  100
  107
  115
  123
  132
  141
  150
  160
  170
  180
  191
  203
  215
  227
  240
  254

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
  111
  124
  139
  154
  170
  186
  204
  222
  241
  260
  281
  302
  324
  347
  370
  395
  421
  448
  475
  504
  534
  566
  599
  633
  669
  706
  745
  786
  828
  873
Adjusted assets (=assets-cash), $m
  111
  124
  139
  154
  170
  186
  204
  222
  241
  260
  281
  302
  324
  347
  370
  395
  421
  448
  475
  504
  534
  566
  599
  633
  669
  706
  745
  786
  828
  873
Revenue / Adjusted assets
  1.027
  1.032
  1.029
  1.032
  1.029
  1.032
  1.029
  1.032
  1.029
  1.031
  1.028
  1.030
  1.031
  1.029
  1.032
  1.030
  1.031
  1.029
  1.032
  1.032
  1.032
  1.030
  1.030
  1.032
  1.030
  1.031
  1.031
  1.031
  1.031
  1.031
Average production assets, $m
  49
  55
  61
  67
  74
  82
  89
  97
  105
  114
  123
  132
  142
  152
  162
  173
  184
  196
  208
  221
  234
  248
  262
  277
  293
  309
  326
  344
  363
  383
Working capital, $m
  22
  25
  28
  31
  34
  37
  41
  44
  48
  52
  56
  60
  64
  69
  74
  79
  84
  89
  95
  100
  106
  113
  119
  126
  133
  140
  148
  156
  165
  174
Total debt, $m
  2
  5
  7
  10
  12
  15
  18
  21
  24
  28
  31
  35
  38
  42
  46
  50
  55
  59
  64
  69
  74
  79
  85
  91
  97
  103
  110
  116
  124
  131
Total liabilities, $m
  19
  21
  23
  26
  29
  32
  34
  37
  41
  44
  47
  51
  55
  59
  63
  67
  71
  76
  80
  85
  90
  96
  101
  107
  113
  119
  126
  133
  140
  148
Total equity, $m
  92
  103
  115
  128
  141
  155
  169
  184
  200
  216
  233
  251
  269
  288
  308
  328
  350
  372
  395
  419
  444
  470
  498
  526
  556
  587
  619
  653
  688
  725
Total liabilities and equity, $m
  111
  124
  138
  154
  170
  187
  203
  221
  241
  260
  280
  302
  324
  347
  371
  395
  421
  448
  475
  504
  534
  566
  599
  633
  669
  706
  745
  786
  828
  873
Debt-to-equity ratio
  0.030
  0.050
  0.060
  0.080
  0.090
  0.100
  0.110
  0.110
  0.120
  0.130
  0.130
  0.140
  0.140
  0.150
  0.150
  0.150
  0.160
  0.160
  0.160
  0.160
  0.170
  0.170
  0.170
  0.170
  0.170
  0.180
  0.180
  0.180
  0.180
  0.180
Adjusted equity ratio
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  19
  23
  28
  32
  37
  42
  47
  52
  58
  64
  73
  79
  86
  93
  100
  107
  115
  123
  132
  141
  150
  160
  170
  180
  191
  203
  215
  227
  240
  254
Depreciation, amort., depletion, $m
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  34
  36
  38
Funds from operations, $m
  27
  32
  37
  42
  47
  53
  59
  65
  72
  79
  85
  92
  100
  108
  116
  125
  134
  143
  153
  163
  173
  184
  196
  208
  220
  233
  247
  262
  277
  292
Change in working capital, $m
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
Cash from operations, $m
  25
  29
  34
  39
  44
  50
  56
  62
  68
  75
  81
  88
  95
  103
  111
  120
  128
  138
  147
  157
  167
  178
  189
  201
  213
  226
  239
  253
  268
  283
Maintenance CAPEX, $m
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -34
  -36
New CAPEX, $m
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
Cash from investing activities, $m
  -10
  -11
  -11
  -13
  -14
  -14
  -16
  -17
  -18
  -20
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -44
  -45
  -48
  -51
  -53
  -56
Free cash flow, $m
  15
  18
  22
  26
  31
  35
  40
  45
  50
  56
  61
  66
  73
  79
  86
  93
  100
  107
  115
  123
  132
  141
  150
  160
  170
  180
  191
  203
  215
  228
Issuance/(repayment) of debt, $m
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  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
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
Total cash flow (excl. dividends), $m
  18
  21
  25
  29
  33
  38
  43
  48
  53
  59
  64
  70
  76
  83
  90
  97
  104
  112
  120
  128
  137
  146
  156
  166
  176
  187
  198
  210
  222
  235
Retained Cash Flow (-), $m
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
Prev. year cash balance distribution, $m
  28
  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
  2
  3
  3
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
Cash available for distribution, $m
  35
  9
  13
  16
  20
  24
  28
  33
  38
  43
  47
  52
  58
  64
  70
  76
  83
  90
  97
  104
  112
  120
  128
  137
  146
  156
  166
  176
  187
  198
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
  34
  9
  11
  13
  16
  18
  19
  21
  22
  22
  22
  22
  22
  21
  21
  19
  18
  17
  15
  13
  12
  10
  8
  7
  6
  5
  4
  3
  2
  1
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

LeMaitre Vascular, Inc. is a provider of medical devices for the treatment of peripheral vascular disease. The Company develops, manufactures and markets medical devices and implants used primarily in the field of vascular surgery. It is engaged in the design, marketing, sales and technical support of medical devices and implants for the treatment of peripheral vascular disease industry segment. The Company's product lines include valvulotomes, balloon catheters, carotid shunts, biologic vascular patches, radiopaque marking tape, anastomotic clips, remote endarterectomy devices, laparoscopic cholecystectomy devices, prosthetic vascular grafts, biologic vascular grafts and powered phlebectomy devices. Its portfolio of peripheral vascular devices consists of brand name products that are used in arteries and veins outside of the heart, including the Expandable LeMaitre Valvulotome, the Pruitt F3 Carotid Shunt, VascuTape Radiopaque Tape and the XenoSure biologic patch.

FINANCIAL RATIOS  of  LeMaitre Vascular (LMAT)

Valuation Ratios
P/E Ratio 61.4
Price to Sales 7.6
Price to Book 7.7
Price to Tangible Book
Price to Cash Flow 39.8
Price to Free Cash Flow 48.3
Growth Rates
Sales Growth Rate 14.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.4%
Ret/ On Assets - 3 Yr. Avg. 8.7%
Return On Total Capital 13.3%
Ret/ On T. Cap. - 3 Yr. Avg. 10.2%
Return On Equity 13.3%
Return On Equity - 3 Yr. Avg. 10.2%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 70.8%
Gross Margin - 3 Yr. Avg. 69.2%
EBITDA Margin 22.5%
EBITDA Margin - 3 Yr. Avg. 17.7%
Operating Margin 18%
Oper. Margin - 3 Yr. Avg. 13.5%
Pre-Tax Margin 18%
Pre-Tax Margin - 3 Yr. Avg. 13.5%
Net Profit Margin 12.4%
Net Profit Margin - 3 Yr. Avg. 9.4%
Effective Tax Rate 31.3%
Eff/ Tax Rate - 3 Yr. Avg. 30.6%
Payout Ratio 27.3%

LMAT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LMAT stock intrinsic value calculation we used $101 million for the last fiscal year's total revenue generated by LeMaitre Vascular. The default revenue input number comes from 2017 income statement of LeMaitre Vascular. 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 LMAT stock valuation model: a) initial revenue growth rate of 13.1% 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 LMAT is calculated based on our internal credit rating of LeMaitre Vascular, 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 LeMaitre Vascular.
    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 LMAT stock the variable cost ratio is equal to 59.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $20 million in the base year in the intrinsic value calculation for LMAT 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 LeMaitre Vascular.

Corporate tax rate of 27% is the nominal tax rate for LeMaitre Vascular. 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 LMAT stock is equal to 2.2%.

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 LMAT are equal to 42.5%.

Life of production assets of 10 years is the average useful life of capital assets used in LeMaitre Vascular 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 LMAT is equal to 19.3%. 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 - $110 million for LeMaitre Vascular - 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 19 million for LeMaitre Vascular 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 LeMaitre Vascular at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ Here's Why LeMaitre Vascular Inc. Is Falling Today   [Apr-26-18 11:17AM  Motley Fool]
▶ LeMaitre: 1Q Earnings Snapshot   [Apr-25-18 05:43PM  Associated Press]
▶ LeMaitre Vascular Divests General Surgery Product Lines   [Apr-05-18 04:50PM  GlobeNewswire]
▶ LeMaitre beats 4Q profit forecasts   [Feb-21-18 04:27PM  Associated Press]
▶ 3 Top Healthcare Stocks to Buy Right Now   [Jan-16-18 10:47AM  Motley Fool]
▶ Should You Buy LeMaitre Vascular Inc (LMAT) Now?   [Nov-17-17 06:34AM  Simply Wall St.]
▶ 3 Unknown, but Amazing, Dividend Stocks   [Nov-08-17 06:00AM  Motley Fool]
▶ Why LeMaitre Vascular Inc. Is Plunging Today   [Oct-27-17 02:01PM  Motley Fool]
▶ LeMaitre beats 3Q profit forecasts   [Oct-26-17 06:53PM  Associated Press]
▶ Stocks With Rising Relative Strength: Penumbra   [Sep-27-17 03:00AM  Investor's Business Daily]
▶ Stocks With Rising Relative Price Strength: MiMedx   [Sep-25-17 03:00AM  Investor's Business Daily]
▶ 5 MedTech Stocks to Pick for Stellar Returns   [Sep-18-17 10:07AM  Zacks]
▶ 3 Dividend Healthcare Stocks   [Sep-15-17 06:00AM  Motley Fool]
▶ Heart-Felt Buys: 6 Cardiac Opportunities   [Aug-03-17 02:05PM  Forbes]
▶ LeMaitre tops Street 2Q forecasts   [Jul-28-17 08:04PM  Associated Press]
▶ 3 Under-the-Radar Stocks in the Healthcare Sector   [Jul-26-17 08:08AM  Motley Fool]
▶ LeMaitre Vascular Set to Join S&P SmallCap 600   [May-01-17 06:08PM  PR Newswire]
▶ Here's Why LeMaitre Vascular Stock Is Soaring Today   [Apr-27-17 12:45PM  Motley Fool]
▶ LeMaitre tops Street 1Q forecasts   [Apr-26-17 06:02PM  Associated Press]
▶ LeMaitre misses Street 4Q forecasts   [Feb-21-17 05:04PM  Associated Press]
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