Intrinsic value of LeMaitre Vascular - LMAT

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$31.69

  Intrinsic Value

$30.26

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  Rating & Target

hold

-5%

Previous close

$31.69

 
Intrinsic value

$30.26

 
Up/down potential

-5%

 
Rating

hold

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

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 2016), $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 0.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  14.10
  18.20
  16.88
  15.69
  14.62
  13.66
  12.79
  12.02
  11.31
  10.68
  10.11
  9.60
  9.14
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
Revenue, $m
  89
  105
  123
  142
  163
  185
  209
  234
  261
  288
  318
  348
  380
  413
  448
  484
  521
  560
  600
  642
  685
  731
  778
  827
  878
  931
  986
  1,044
  1,104
  1,167
  1,233
Variable operating expenses, $m
 
  58
  67
  77
  88
  100
  112
  125
  139
  154
  169
  183
  200
  217
  235
  254
  274
  294
  315
  337
  360
  384
  408
  434
  461
  489
  518
  548
  580
  613
  647
Fixed operating expenses, $m
 
  26
  26
  27
  28
  28
  29
  30
  30
  31
  32
  33
  34
  34
  35
  36
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  48
  49
  50
  51
  52
Total operating expenses, $m
  73
  84
  93
  104
  116
  128
  141
  155
  169
  185
  201
  216
  234
  251
  270
  290
  311
  332
  354
  377
  401
  426
  451
  478
  506
  535
  566
  597
  630
  664
  699
Operating income, $m
  16
  22
  30
  38
  48
  57
  68
  79
  91
  103
  117
  133
  147
  162
  177
  193
  210
  228
  246
  265
  285
  305
  326
  348
  372
  396
  421
  447
  474
  503
  533
EBITDA, $m
  20
  26
  34
  43
  53
  63
  74
  86
  98
  111
  125
  139
  154
  170
  186
  203
  220
  239
  258
  277
  298
  319
  341
  364
  389
  414
  440
  467
  496
  526
  557
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
Earnings before tax, $m
  16
  22
  30
  38
  47
  57
  67
  79
  90
  103
  115
  131
  145
  160
  175
  191
  208
  225
  243
  262
  281
  302
  323
  345
  368
  391
  416
  442
  469
  497
  527
Tax expense, $m
  5
  6
  8
  10
  13
  15
  18
  21
  24
  28
  31
  35
  39
  43
  47
  52
  56
  61
  66
  71
  76
  81
  87
  93
  99
  106
  112
  119
  127
  134
  142
Net income, $m
  11
  16
  22
  28
  34
  42
  49
  57
  66
  75
  84
  96
  106
  117
  128
  140
  152
  165
  178
  191
  205
  220
  236
  252
  268
  286
  304
  323
  343
  363
  385

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  24
  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
  102
  92
  108
  125
  143
  162
  183
  205
  228
  253
  278
  305
  333
  362
  392
  424
  457
  491
  526
  563
  601
  640
  682
  725
  769
  816
  864
  915
  968
  1,023
  1,080
Adjusted assets (=assets-cash), $m
  78
  92
  108
  125
  143
  162
  183
  205
  228
  253
  278
  305
  333
  362
  392
  424
  457
  491
  526
  563
  601
  640
  682
  725
  769
  816
  864
  915
  968
  1,023
  1,080
Revenue / Adjusted assets
  1.141
  1.141
  1.139
  1.136
  1.140
  1.142
  1.142
  1.141
  1.145
  1.138
  1.144
  1.141
  1.141
  1.141
  1.143
  1.142
  1.140
  1.141
  1.141
  1.140
  1.140
  1.142
  1.141
  1.141
  1.142
  1.141
  1.141
  1.141
  1.140
  1.141
  1.142
Average production assets, $m
  16
  18
  21
  25
  28
  32
  36
  41
  45
  50
  55
  61
  66
  72
  78
  84
  91
  97
  104
  112
  119
  127
  135
  144
  153
  162
  172
  182
  192
  203
  214
Working capital, $m
  49
  30
  35
  40
  46
  52
  59
  66
  73
  81
  89
  98
  107
  116
  126
  136
  146
  157
  169
  180
  193
  205
  219
  232
  247
  262
  277
  293
  310
  328
  346
Total debt, $m
  0
  3
  5
  8
  12
  15
  19
  23
  27
  31
  36
  41
  46
  51
  56
  62
  68
  74
  80
  87
  94
  101
  108
  116
  124
  132
  141
  150
  159
  169
  179
Total liabilities, $m
  14
  17
  19
  22
  26
  29
  33
  37
  41
  45
  50
  55
  60
  65
  70
  76
  82
  88
  94
  101
  108
  115
  122
  130
  138
  146
  155
  164
  173
  183
  193
Total equity, $m
  88
  76
  88
  102
  117
  133
  150
  168
  188
  208
  229
  251
  273
  297
  322
  348
  375
  403
  432
  462
  493
  526
  560
  595
  632
  670
  710
  751
  795
  840
  887
Total liabilities and equity, $m
  102
  93
  107
  124
  143
  162
  183
  205
  229
  253
  279
  306
  333
  362
  392
  424
  457
  491
  526
  563
  601
  641
  682
  725
  770
  816
  865
  915
  968
  1,023
  1,080
Debt-to-equity ratio
  0.000
  0.030
  0.060
  0.080
  0.100
  0.110
  0.120
  0.130
  0.140
  0.150
  0.160
  0.160
  0.170
  0.170
  0.170
  0.180
  0.180
  0.180
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
Adjusted equity ratio
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  16
  22
  28
  34
  42
  49
  57
  66
  75
  84
  96
  106
  117
  128
  140
  152
  165
  178
  191
  205
  220
  236
  252
  268
  286
  304
  323
  343
  363
  385
Depreciation, amort., depletion, $m
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
Funds from operations, $m
  17
  20
  26
  33
  40
  47
  56
  64
  73
  83
  93
  103
  113
  125
  137
  149
  162
  175
  189
  204
  219
  234
  251
  268
  285
  304
  323
  343
  364
  386
  409
Change in working capital, $m
  0
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
Cash from operations, $m
  17
  16
  21
  27
  34
  41
  49
  57
  66
  75
  85
  94
  105
  116
  127
  139
  151
  164
  178
  192
  206
  222
  237
  254
  271
  289
  307
  327
  347
  368
  390
Maintenance CAPEX, $m
  0
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
New CAPEX, $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
Cash from investing activities, $m
  -17
  -5
  -5
  -5
  -7
  -7
  -8
  -8
  -10
  -10
  -11
  -11
  -13
  -13
  -14
  -15
  -15
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -34
Free cash flow, $m
  0
  11
  16
  22
  28
  34
  41
  49
  57
  65
  74
  83
  92
  102
  113
  124
  136
  148
  160
  173
  187
  201
  215
  230
  246
  263
  280
  298
  316
  336
  356
Issuance/(repayment) of debt, $m
  0
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
Issuance/(repurchase) of shares, $m
  1
  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  
  0
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
Total cash flow (excl. dividends), $m
  0
  14
  19
  25
  31
  38
  45
  53
  61
  69
  78
  87
  97
  108
  118
  130
  141
  154
  166
  180
  193
  208
  222
  238
  254
  271
  288
  307
  326
  346
  366
Retained Cash Flow (-), $m
  -10
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
Prev. year cash balance distribution, $m
 
  24
  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
 
  26
  6
  11
  16
  22
  28
  35
  42
  49
  57
  65
  74
  84
  94
  104
  115
  126
  137
  149
  162
  175
  189
  203
  217
  233
  249
  265
  282
  300
  319
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
 
  25
  6
  9
  13
  17
  20
  23
  26
  28
  30
  31
  32
  32
  31
  31
  29
  27
  25
  23
  21
  18
  16
  13
  11
  9
  7
  6
  4
  3
  2
Current shareholders' claim on cash, %
  100
  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
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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 53.6
Price to Sales 6.6
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow 34.7
Price to Free Cash Flow 42.1
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 $89 million for the last fiscal year's total revenue generated by LeMaitre Vascular. The default revenue input number comes from 2016 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 18.2% 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 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 55.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $25 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 3.5% 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 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 LMAT are equal to 17.4%.

Life of production assets of 9 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 28.1%. 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 - $88 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 19.023 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 $0.6 billion.

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COMPANY NEWS

▶ 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]
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▶ 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]
▶ How LeMaitre Vascular Inc (LMAT) Stacks Up Against Its Peers   [Dec-13-16 03:54AM  at Insider Monkey]
Financial statements of LMAT
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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