Intrinsic value of Luminex - LMNX

Previous Close

$20.33

  Intrinsic Value

$7.42

stock screener

  Rating & Target

str. sell

-63%

Previous close

$20.33

 
Intrinsic value

$7.42

 
Up/down potential

-63%

 
Rating

str. sell

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

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Luminex (LMNX) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  13.87
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.57
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
Revenue, $m
  271
  282
  294
  307
  321
  335
  350
  366
  383
  401
  420
  440
  461
  483
  506
  530
  556
  583
  611
  641
  672
  705
  740
  776
  815
  855
  897
  942
  988
  1,037
  1,089
Variable operating expenses, $m
 
  244
  255
  265
  277
  289
  301
  315
  329
  344
  359
  368
  385
  403
  423
  443
  465
  487
  511
  536
  562
  589
  618
  649
  681
  714
  750
  787
  826
  867
  910
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
  251
  244
  255
  265
  277
  289
  301
  315
  329
  344
  359
  368
  385
  403
  423
  443
  465
  487
  511
  536
  562
  589
  618
  649
  681
  714
  750
  787
  826
  867
  910
Operating income, $m
  19
  38
  40
  42
  44
  47
  49
  52
  55
  57
  61
  72
  76
  79
  83
  87
  91
  96
  100
  105
  111
  116
  122
  128
  134
  141
  147
  155
  162
  170
  179
EBITDA, $m
  39
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  112
  118
  123
  129
  136
  142
  149
  157
  164
  173
  181
  190
  199
  209
  220
  231
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
Earnings before tax, $m
  20
  38
  40
  42
  44
  46
  49
  51
  54
  57
  60
  71
  75
  78
  82
  86
  90
  94
  99
  103
  108
  114
  119
  125
  131
  137
  144
  151
  158
  166
  174
Tax expense, $m
  6
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
Net income, $m
  14
  28
  29
  31
  32
  34
  36
  37
  39
  41
  44
  52
  55
  57
  60
  63
  66
  69
  72
  75
  79
  83
  87
  91
  96
  100
  105
  110
  116
  121
  127

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  93
  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
  451
  373
  389
  406
  424
  443
  463
  484
  506
  530
  555
  581
  609
  638
  668
  700
  734
  770
  807
  847
  888
  932
  978
  1,026
  1,076
  1,129
  1,185
  1,244
  1,305
  1,370
  1,438
Adjusted assets (=assets-cash), $m
  358
  373
  389
  406
  424
  443
  463
  484
  506
  530
  555
  581
  609
  638
  668
  700
  734
  770
  807
  847
  888
  932
  978
  1,026
  1,076
  1,129
  1,185
  1,244
  1,305
  1,370
  1,438
Revenue / Adjusted assets
  0.757
  0.756
  0.756
  0.756
  0.757
  0.756
  0.756
  0.756
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.756
  0.757
  0.756
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
  0.757
Average production assets, $m
  124
  129
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  210
  220
  231
  242
  253
  266
  279
  292
  307
  322
  337
  354
  372
  390
  409
  429
  451
  473
  496
Working capital, $m
  134
  43
  44
  46
  48
  51
  53
  55
  58
  61
  63
  66
  70
  73
  76
  80
  84
  88
  92
  97
  102
  107
  112
  117
  123
  129
  135
  142
  149
  157
  164
Total debt, $m
  0
  2
  4
  6
  9
  11
  14
  16
  19
  22
  26
  29
  33
  37
  41
  45
  49
  54
  59
  64
  69
  75
  81
  87
  94
  101
  108
  116
  124
  132
  141
Total liabilities, $m
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  73
  76
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122
  128
  134
  141
  148
  155
  163
  171
  179
  188
Total equity, $m
  404
  324
  338
  353
  368
  385
  402
  421
  440
  461
  482
  505
  529
  554
  581
  609
  638
  669
  702
  736
  772
  810
  849
  891
  935
  981
  1,030
  1,081
  1,134
  1,191
  1,250
Total liabilities and equity, $m
  451
  373
  389
  406
  424
  443
  463
  484
  506
  530
  555
  581
  609
  638
  669
  701
  734
  770
  808
  847
  888
  932
  977
  1,025
  1,076
  1,129
  1,185
  1,244
  1,305
  1,370
  1,438
Debt-to-equity ratio
  0.000
  0.010
  0.010
  0.020
  0.020
  0.030
  0.030
  0.040
  0.040
  0.050
  0.050
  0.060
  0.060
  0.070
  0.070
  0.070
  0.080
  0.080
  0.080
  0.090
  0.090
  0.090
  0.100
  0.100
  0.100
  0.100
  0.110
  0.110
  0.110
  0.110
  0.110
Adjusted equity ratio
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869
  0.869

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  28
  29
  31
  32
  34
  36
  37
  39
  41
  44
  52
  55
  57
  60
  63
  66
  69
  72
  75
  79
  83
  87
  91
  96
  100
  105
  110
  116
  121
  127
Depreciation, amort., depletion, $m
  20
  22
  22
  23
  24
  24
  25
  26
  27
  28
  28
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  52
Funds from operations, $m
  51
  50
  52
  54
  56
  58
  61
  63
  66
  69
  72
  73
  76
  80
  84
  88
  92
  96
  101
  106
  111
  116
  122
  128
  134
  141
  148
  155
  163
  171
  179
Change in working capital, $m
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
Cash from operations, $m
  50
  48
  50
  52
  54
  56
  58
  61
  64
  66
  69
  70
  73
  77
  80
  84
  88
  92
  97
  101
  106
  111
  117
  122
  128
  135
  141
  148
  156
  163
  171
Maintenance CAPEX, $m
  0
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
New CAPEX, $m
  -13
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
Cash from investing activities, $m
  -63
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -38
  -41
  -43
  -44
  -47
  -50
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
Free cash flow, $m
  -13
  30
  31
  32
  33
  34
  36
  37
  38
  40
  42
  41
  43
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  71
  74
  78
  81
  85
  90
  94
  98
Issuance/(repayment) of debt, $m
  -25
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Issuance/(repurchase) of shares, $m
  3
  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  
  -22
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Total cash flow (excl. dividends), $m
  -35
  32
  33
  34
  35
  37
  38
  40
  41
  43
  45
  44
  46
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
  77
  81
  85
  89
  93
  98
  102
  107
Retained Cash Flow (-), $m
  -35
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
Prev. year cash balance distribution, $m
 
  93
  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
 
  111
  19
  19
  20
  20
  21
  21
  22
  23
  23
  22
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
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
 
  107
  17
  17
  16
  16
  15
  14
  14
  13
  12
  10
  10
  9
  8
  7
  7
  6
  5
  5
  4
  3
  3
  2
  2
  1
  1
  1
  1
  1
  0
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
  100.0
  100.0
  100.0
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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 62.2
Price to Sales 3.2
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 17.4
Price to Free Cash Flow 23.5
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 $271 million for the last fiscal year's total revenue generated by Luminex. The default revenue input number comes from 2016 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 4.2% 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 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 86.7%.

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 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 3.5% 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 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 LMNX are equal to 45.6%.

Life of production assets of 9.6 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 15.1%. 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 - $404 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 44.234 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 $0.9 billion.

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COMPANY NEWS

▶ 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]
▶ ETFs with exposure to Luminex Corp. : November 3, 2017   [Nov-03-17 12:17PM  Capital Cube]
Financial statements of LMNX
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