Intrinsic value of Luminex - LMNX

Previous Close

$26.79

  Intrinsic Value

$22.82

stock screener

  Rating & Target

hold

-15%

Previous close

$26.79

 
Intrinsic value

$22.82

 
Up/down potential

-15%

 
Rating

hold

We calculate the intrinsic value of LMNX 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 1.2

 

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, %
  13.30
  12.47
  11.72
  11.05
  10.45
  9.90
  9.41
  8.97
  8.57
  8.22
  7.89
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.43
  5.39
Revenue, $m
  348
  391
  437
  485
  536
  589
  645
  702
  763
  825
  890
  958
  1,029
  1,102
  1,178
  1,257
  1,339
  1,424
  1,513
  1,606
  1,702
  1,803
  1,908
  2,017
  2,131
  2,251
  2,375
  2,506
  2,642
  2,784
Variable operating expenses, $m
  190
  211
  234
  258
  283
  310
  337
  366
  396
  428
  444
  478
  513
  549
  587
  627
  667
  710
  754
  801
  849
  899
  951
  1,006
  1,063
  1,122
  1,184
  1,249
  1,317
  1,388
Fixed operating expenses, $m
  105
  108
  110
  112
  115
  117
  120
  123
  125
  128
  131
  134
  137
  140
  143
  146
  149
  152
  156
  159
  163
  166
  170
  174
  177
  181
  185
  189
  194
  198
Total operating expenses, $m
  295
  319
  344
  370
  398
  427
  457
  489
  521
  556
  575
  612
  650
  689
  730
  773
  816
  862
  910
  960
  1,012
  1,065
  1,121
  1,180
  1,240
  1,303
  1,369
  1,438
  1,511
  1,586
Operating income, $m
  53
  72
  93
  115
  138
  162
  187
  214
  241
  270
  316
  347
  379
  413
  448
  484
  522
  562
  603
  646
  691
  738
  787
  838
  891
  947
  1,006
  1,067
  1,131
  1,198
EBITDA, $m
  95
  117
  141
  166
  193
  221
  250
  281
  313
  346
  381
  417
  454
  493
  534
  576
  620
  666
  714
  763
  815
  869
  926
  985
  1,047
  1,112
  1,179
  1,250
  1,324
  1,401
Interest expense (income), $m
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
Earnings before tax, $m
  53
  72
  92
  114
  136
  160
  185
  210
  237
  265
  311
  341
  373
  406
  440
  476
  513
  552
  593
  635
  679
  725
  773
  823
  875
  930
  988
  1,048
  1,111
  1,177
Tax expense, $m
  14
  19
  25
  31
  37
  43
  50
  57
  64
  72
  84
  92
  101
  110
  119
  129
  139
  149
  160
  171
  183
  196
  209
  222
  236
  251
  267
  283
  300
  318
Net income, $m
  39
  53
  67
  83
  99
  117
  135
  154
  173
  194
  227
  249
  272
  296
  321
  348
  375
  403
  433
  463
  496
  529
  564
  601
  639
  679
  721
  765
  811
  859

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
  464
  522
  583
  647
  715
  786
  859
  937
  1,017
  1,100
  1,187
  1,278
  1,371
  1,469
  1,570
  1,676
  1,785
  1,899
  2,018
  2,141
  2,270
  2,404
  2,544
  2,690
  2,842
  3,001
  3,167
  3,341
  3,522
  3,712
Adjusted assets (=assets-cash), $m
  464
  522
  583
  647
  715
  786
  859
  937
  1,017
  1,100
  1,187
  1,278
  1,371
  1,469
  1,570
  1,676
  1,785
  1,899
  2,018
  2,141
  2,270
  2,404
  2,544
  2,690
  2,842
  3,001
  3,167
  3,341
  3,522
  3,712
Revenue / Adjusted assets
  0.750
  0.749
  0.750
  0.750
  0.750
  0.749
  0.751
  0.749
  0.750
  0.750
  0.750
  0.750
  0.751
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
  0.750
Average production assets, $m
  254
  286
  319
  354
  391
  430
  471
  513
  557
  602
  650
  699
  751
  804
  860
  917
  977
  1,040
  1,105
  1,172
  1,243
  1,316
  1,393
  1,473
  1,556
  1,643
  1,734
  1,829
  1,928
  2,032
Working capital, $m
  40
  45
  50
  55
  61
  67
  73
  80
  87
  94
  102
  109
  117
  126
  134
  143
  153
  162
  173
  183
  194
  206
  217
  230
  243
  257
  271
  286
  301
  317
Total debt, $m
  7
  15
  23
  31
  40
  49
  58
  68
  79
  89
  101
  112
  124
  137
  150
  164
  178
  192
  208
  224
  240
  258
  276
  294
  314
  335
  356
  378
  402
  426
Total liabilities, $m
  60
  67
  75
  83
  92
  101
  111
  121
  131
  142
  153
  165
  177
  189
  203
  216
  230
  245
  260
  276
  293
  310
  328
  347
  367
  387
  409
  431
  454
  479
Total equity, $m
  404
  454
  508
  564
  623
  684
  749
  816
  886
  958
  1,034
  1,113
  1,194
  1,279
  1,368
  1,459
  1,555
  1,654
  1,757
  1,865
  1,977
  2,094
  2,216
  2,343
  2,475
  2,614
  2,759
  2,910
  3,068
  3,233
Total liabilities and equity, $m
  464
  521
  583
  647
  715
  785
  860
  937
  1,017
  1,100
  1,187
  1,278
  1,371
  1,468
  1,571
  1,675
  1,785
  1,899
  2,017
  2,141
  2,270
  2,404
  2,544
  2,690
  2,842
  3,001
  3,168
  3,341
  3,522
  3,712
Debt-to-equity ratio
  0.020
  0.030
  0.040
  0.050
  0.060
  0.070
  0.080
  0.080
  0.090
  0.090
  0.100
  0.100
  0.100
  0.110
  0.110
  0.110
  0.110
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
Adjusted equity ratio
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871
  0.871

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  39
  53
  67
  83
  99
  117
  135
  154
  173
  194
  227
  249
  272
  296
  321
  348
  375
  403
  433
  463
  496
  529
  564
  601
  639
  679
  721
  765
  811
  859
Depreciation, amort., depletion, $m
  41
  45
  48
  52
  55
  59
  63
  67
  72
  76
  65
  70
  75
  80
  86
  92
  98
  104
  110
  117
  124
  132
  139
  147
  156
  164
  173
  183
  193
  203
Funds from operations, $m
  80
  97
  115
  135
  155
  176
  198
  221
  245
  270
  292
  319
  347
  377
  407
  439
  472
  507
  543
  581
  620
  661
  703
  748
  795
  843
  894
  948
  1,004
  1,062
Change in working capital, $m
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
Cash from operations, $m
  76
  92
  110
  129
  149
  170
  192
  214
  238
  263
  284
  311
  339
  368
  399
  430
  463
  497
  533
  570
  609
  649
  691
  736
  782
  830
  880
  933
  988
  1,046
Maintenance CAPEX, $m
  -22
  -25
  -29
  -32
  -35
  -39
  -43
  -47
  -51
  -56
  -60
  -65
  -70
  -75
  -80
  -86
  -92
  -98
  -104
  -110
  -117
  -124
  -132
  -139
  -147
  -156
  -164
  -173
  -183
  -193
New CAPEX, $m
  -30
  -32
  -33
  -35
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -49
  -51
  -53
  -55
  -58
  -60
  -62
  -65
  -68
  -70
  -73
  -77
  -80
  -83
  -87
  -91
  -95
  -99
  -104
Cash from investing activities, $m
  -52
  -57
  -62
  -67
  -72
  -78
  -83
  -89
  -95
  -102
  -108
  -114
  -121
  -128
  -135
  -144
  -152
  -160
  -169
  -178
  -187
  -197
  -209
  -219
  -230
  -243
  -255
  -268
  -282
  -297
Free cash flow, $m
  23
  35
  48
  62
  76
  92
  108
  125
  143
  162
  177
  197
  218
  240
  263
  287
  311
  337
  364
  392
  421
  452
  483
  516
  551
  587
  625
  664
  706
  749
Issuance/(repayment) of debt, $m
  7
  7
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  24
Issuance/(repurchase) of shares, $m
  9
  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  
  16
  7
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  21
  22
  23
  24
Total cash flow (excl. dividends), $m
  39
  43
  56
  70
  85
  101
  118
  135
  153
  172
  188
  209
  230
  253
  276
  300
  326
  352
  379
  408
  438
  469
  501
  535
  571
  608
  646
  687
  729
  774
Retained Cash Flow (-), $m
  -48
  -50
  -53
  -56
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -85
  -88
  -92
  -95
  -99
  -103
  -108
  -112
  -117
  -122
  -127
  -133
  -139
  -145
  -151
  -158
  -165
Prev. year cash balance distribution, $m
  82
  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
  13
  14
  16
  18
  20
  22
  24
  26
  29
  31
  34
  37
  39
  42
  45
  48
  52
  55
  58
  62
  66
  70
  74
  78
  83
  87
  92
  97
  103
  108
Cash available for distribution, $m
  73
  -8
  3
  14
  26
  39
  53
  68
  83
  100
  112
  130
  148
  168
  188
  208
  230
  253
  276
  300
  326
  352
  380
  408
  438
  469
  502
  536
  571
  608
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
  70
  -7
  2
  12
  20
  29
  36
  42
  48
  52
  53
  55
  56
  56
  55
  53
  50
  47
  43
  38
  34
  29
  25
  21
  17
  14
  11
  8
  6
  5
Current shareholders' claim on cash, %
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
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Luminex Corporation develops, manufactures and sells biological testing technologies with applications throughout the diagnostics, pharmaceutical and life sciences industries. The Company's products are focused on the molecular diagnostic testing market, which includes human genetics, personalized medicine and infectious disease segments. The Company has a range of instruments using its xMAP technology, which includes its LUMINEX 100/200 systems offer 100-plex testing; the Company's FLEXMAP 3D system is its high-throughput, 500-plex testing system, and its MAGPIX system provides 50-plex testing using imaging rather than flow cytometry. By using its xMAP technology, the end users are able to generate multiple simultaneous results per sample. The Company primarily serves the diagnostics, pharmaceutical and life sciences industries by marketing products, including its testing equipment and assays, to a range of testing laboratories.

FINANCIAL RATIOS  of  Luminex (LMNX)

Valuation Ratios
P/E Ratio 81.9
Price to Sales 4.2
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 22.9
Price to Free Cash Flow 31
Growth Rates
Sales Growth Rate 13.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -35%
Cap. Spend. - 3 Yr. Gr. Rate -7.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.3%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 3.6%
Ret/ On T. Cap. - 3 Yr. Avg. 9.2%
Return On Equity 3.6%
Return On Equity - 3 Yr. Avg. 9.2%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 66.4%
Gross Margin - 3 Yr. Avg. 69.3%
EBITDA Margin 14.8%
EBITDA Margin - 3 Yr. Avg. 17.7%
Operating Margin 7.4%
Oper. Margin - 3 Yr. Avg. 11.1%
Pre-Tax Margin 7.4%
Pre-Tax Margin - 3 Yr. Avg. 11.2%
Net Profit Margin 5.2%
Net Profit Margin - 3 Yr. Avg. 12.6%
Effective Tax Rate 30%
Eff/ Tax Rate - 3 Yr. Avg. -7.1%
Payout Ratio 0%

LMNX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LMNX stock intrinsic value calculation we used $307 million for the last fiscal year's total revenue generated by Luminex. The default revenue input number comes from 2017 income statement of Luminex. 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 LMNX stock valuation model: a) initial revenue growth rate of 13.3% 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 LMNX is calculated based on our internal credit rating of Luminex, 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 Luminex.
    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 LMNX 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 $103 million in the base year in the intrinsic value calculation for LMNX 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 Luminex.

Corporate tax rate of 27% is the nominal tax rate for Luminex. 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 LMNX stock is equal to 4.1%.

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 LMNX are equal to 73%.

Life of production assets of 10 years is the average useful life of capital assets used in Luminex 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 LMNX is equal to 11.4%. 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 - $438 million for Luminex - 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 43 million for Luminex 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 Luminex at the current share price and the inputted number of shares is $1.2 billion.

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COMPANY NEWS

▶ Luminex: 2Q Earnings Snapshot   [04:33PM  Associated Press]
▶ Luminex: 1Q Earnings Snapshot   [May-07-18 04:41PM  Associated Press]
▶ Luminex reports 4Q loss   [Feb-12-18 07:03PM  Associated Press]
▶ 9 Stocks Ken Fisher Continues to Buy   [Jan-31-18 03:34PM  GuruFocus.com]
▶ Luminex Corporation Declares First Quarter Cash Dividend   [Jan-24-18 04:05PM  PR Newswire]
▶ Whats the Competitive Landscape for Accelerate Diagnostics?   [Jan-12-18 12:20PM  Market Realist]
▶ Five Scorching Hot Strong Buy Stocks   [Nov-21-17 04:57PM  Zacks]
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