Intrinsic value of Luminex - LMNX

Previous Close

$29.35

  Intrinsic Value

$13.33

stock screener

  Rating & Target

str. sell

-55%

Previous close

$29.35

 
Intrinsic value

$13.33

 
Up/down potential

-55%

 
Rating

str. sell

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 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 1.3

 

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, %
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
Revenue, $m
  319
  333
  347
  362
  378
  395
  412
  431
  451
  472
  494
  518
  542
  568
  595
  624
  654
  686
  719
  754
  791
  830
  871
  914
  959
  1,006
  1,056
  1,108
  1,163
  1,220
Variable operating expenses, $m
  173
  180
  186
  194
  202
  210
  219
  228
  238
  248
  243
  254
  266
  279
  292
  307
  321
  337
  353
  371
  389
  408
  428
  449
  471
  494
  519
  544
  571
  600
Fixed operating expenses, $m
  107
  110
  112
  115
  117
  120
  122
  125
  128
  131
  133
  136
  139
  142
  146
  149
  152
  155
  159
  162
  166
  169
  173
  177
  181
  185
  189
  193
  197
  202
Total operating expenses, $m
  280
  290
  298
  309
  319
  330
  341
  353
  366
  379
  376
  390
  405
  421
  438
  456
  473
  492
  512
  533
  555
  577
  601
  626
  652
  679
  708
  737
  768
  802
Operating income, $m
  39
  43
  48
  53
  59
  65
  71
  78
  86
  94
  118
  127
  136
  147
  157
  169
  181
  194
  207
  221
  237
  253
  270
  288
  307
  327
  348
  370
  394
  419
EBITDA, $m
  70
  75
  80
  86
  93
  99
  107
  114
  123
  132
  141
  151
  162
  173
  185
  198
  211
  225
  240
  256
  273
  291
  310
  330
  351
  373
  397
  422
  448
  476
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
Earnings before tax, $m
  39
  43
  48
  53
  58
  64
  71
  77
  84
  92
  116
  125
  135
  144
  155
  166
  178
  190
  204
  218
  232
  248
  265
  282
  301
  321
  342
  363
  387
  411
Tax expense, $m
  10
  12
  13
  14
  16
  17
  19
  21
  23
  25
  31
  34
  36
  39
  42
  45
  48
  51
  55
  59
  63
  67
  72
  76
  81
  87
  92
  98
  104
  111
Net income, $m
  28
  32
  35
  39
  43
  47
  52
  56
  62
  67
  85
  91
  98
  105
  113
  121
  130
  139
  149
  159
  170
  181
  193
  206
  220
  234
  249
  265
  282
  300

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
  425
  443
  462
  482
  503
  525
  549
  574
  601
  629
  658
  689
  722
  756
  793
  831
  871
  913
  958
  1,004
  1,053
  1,105
  1,159
  1,216
  1,276
  1,339
  1,406
  1,475
  1,548
  1,625
Adjusted assets (=assets-cash), $m
  425
  443
  462
  482
  503
  525
  549
  574
  601
  629
  658
  689
  722
  756
  793
  831
  871
  913
  958
  1,004
  1,053
  1,105
  1,159
  1,216
  1,276
  1,339
  1,406
  1,475
  1,548
  1,625
Revenue / Adjusted assets
  0.751
  0.752
  0.751
  0.751
  0.751
  0.752
  0.750
  0.751
  0.750
  0.750
  0.751
  0.752
  0.751
  0.751
  0.750
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.751
  0.752
  0.752
  0.752
  0.751
  0.751
  0.751
  0.751
  0.751
Average production assets, $m
  146
  153
  159
  166
  173
  181
  189
  198
  207
  217
  227
  238
  249
  261
  273
  286
  300
  315
  330
  346
  363
  381
  400
  419
  440
  462
  485
  508
  534
  560
Working capital, $m
  54
  57
  59
  62
  64
  67
  70
  73
  77
  80
  84
  88
  92
  97
  101
  106
  111
  117
  122
  128
  134
  141
  148
  155
  163
  171
  179
  188
  198
  207
Total debt, $m
  2
  5
  7
  10
  12
  15
  18
  21
  25
  28
  32
  36
  41
  45
  50
  55
  60
  65
  71
  77
  83
  90
  97
  104
  112
  120
  129
  138
  147
  157
Total liabilities, $m
  55
  57
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  98
  102
  107
  112
  118
  124
  130
  136
  143
  150
  157
  165
  173
  181
  190
  200
  210
Total equity, $m
  370
  386
  402
  420
  438
  458
  478
  500
  523
  548
  573
  600
  629
  659
  690
  724
  759
  795
  834
  875
  918
  963
  1,010
  1,060
  1,112
  1,167
  1,224
  1,285
  1,348
  1,415
Total liabilities and equity, $m
  425
  443
  462
  482
  503
  526
  549
  574
  601
  629
  658
  689
  722
  757
  792
  831
  871
  913
  958
  1,005
  1,054
  1,106
  1,160
  1,217
  1,277
  1,340
  1,405
  1,475
  1,548
  1,625
Debt-to-equity ratio
  0.010
  0.010
  0.020
  0.020
  0.030
  0.030
  0.040
  0.040
  0.050
  0.050
  0.060
  0.060
  0.060
  0.070
  0.070
  0.080
  0.080
  0.080
  0.090
  0.090
  0.090
  0.090
  0.100
  0.100
  0.100
  0.100
  0.110
  0.110
  0.110
  0.110
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
  28
  32
  35
  39
  43
  47
  52
  56
  62
  67
  85
  91
  98
  105
  113
  121
  130
  139
  149
  159
  170
  181
  193
  206
  220
  234
  249
  265
  282
  300
Depreciation, amort., depletion, $m
  31
  32
  32
  33
  34
  34
  35
  36
  37
  38
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  38
  40
  42
  44
  47
  49
  51
  54
  57
Funds from operations, $m
  59
  63
  67
  72
  76
  81
  87
  93
  99
  105
  108
  115
  123
  132
  141
  150
  160
  171
  182
  194
  206
  220
  234
  249
  264
  281
  298
  317
  336
  357
Change in working capital, $m
  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
  9
  10
Cash from operations, $m
  57
  61
  65
  69
  74
  78
  84
  89
  95
  102
  104
  111
  119
  127
  136
  145
  155
  165
  176
  188
  200
  213
  227
  241
  257
  273
  290
  308
  327
  347
Maintenance CAPEX, $m
  -14
  -15
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -47
  -49
  -51
  -54
New CAPEX, $m
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
Cash from investing activities, $m
  -20
  -21
  -22
  -23
  -24
  -26
  -26
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -55
  -57
  -60
  -63
  -66
  -70
  -73
  -76
  -80
Free cash flow, $m
  37
  40
  43
  46
  49
  53
  57
  62
  66
  71
  72
  78
  84
  90
  97
  104
  112
  120
  129
  138
  148
  159
  170
  181
  194
  207
  220
  235
  250
  267
Issuance/(repayment) of debt, $m
  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
  9
  9
  9
  10
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
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  9
  10
Total cash flow (excl. dividends), $m
  39
  42
  45
  49
  52
  56
  60
  65
  70
  75
  76
  82
  88
  95
  102
  109
  117
  126
  135
  144
  155
  165
  177
  189
  201
  215
  229
  244
  260
  276
Retained Cash Flow (-), $m
  -14
  -16
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
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
  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
  107
  27
  29
  31
  34
  37
  40
  43
  47
  50
  50
  55
  60
  65
  70
  76
  82
  89
  96
  104
  112
  120
  129
  139
  149
  160
  171
  183
  196
  210
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
  103
  24
  25
  26
  26
  27
  27
  27
  27
  26
  24
  23
  23
  22
  21
  19
  18
  16
  15
  13
  12
  10
  8
  7
  6
  5
  4
  3
  2
  2
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

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 89.7
Price to Sales 4.6
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 25.1
Price to Free Cash Flow 34
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 $306.571 million for the last fiscal year's total revenue generated by Luminex. The default revenue input number comes from 0001 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 4.1% 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 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 54.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $105 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 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 45.9%.

Life of production assets of 9.9 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 17%. 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 - $437.907 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 44.448 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 $1.3 billion.

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COMPANY NEWS

▶ Luminex Corporation Declares Third Quarter Cash Dividend   [Sep-11-18 01:36PM  PR Newswire]
▶ Here are the Austin stocks driving Wall Street's latest bull run   [Aug-23-18 09:03AM  American City Business Journals]
▶ 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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