Intrinsic value of LRAD Corporation - LRAD

Previous Close

$2.84

  Intrinsic Value

$0.23

stock screener

  Rating & Target

str. sell

-92%

Previous close

$2.84

 
Intrinsic value

$0.23

 
Up/down potential

-92%

 
Rating

str. sell

We calculate the intrinsic value of LRAD 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 0.1

 

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, %
  33.40
  30.56
  28.00
  25.70
  23.63
  21.77
  20.09
  18.58
  17.23
  16.00
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.27
  7.04
  6.83
  6.65
  6.49
  6.34
Revenue, $m
  35
  45
  58
  73
  90
  110
  132
  156
  183
  212
  244
  278
  314
  353
  393
  436
  481
  527
  576
  627
  680
  735
  793
  852
  914
  978
  1,045
  1,115
  1,187
  1,262
Variable operating expenses, $m
  36
  47
  60
  75
  93
  113
  135
  160
  188
  218
  250
  284
  321
  361
  402
  446
  491
  539
  589
  641
  696
  752
  811
  871
  935
  1,001
  1,069
  1,140
  1,214
  1,291
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
  36
  47
  60
  75
  93
  113
  135
  160
  188
  218
  250
  284
  321
  361
  402
  446
  491
  539
  589
  641
  696
  752
  811
  871
  935
  1,001
  1,069
  1,140
  1,214
  1,291
Operating income, $m
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -24
  -25
  -27
  -29
EBITDA, $m
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
Earnings before tax, $m
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -16
  -18
  -20
  -21
  -23
  -25
  -28
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -48
Tax expense, $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
Net income, $m
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -16
  -18
  -20
  -21
  -23
  -25
  -28
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -48

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
  44
  58
  74
  93
  115
  140
  168
  199
  233
  270
  311
  354
  400
  449
  500
  555
  611
  671
  733
  798
  865
  935
  1,008
  1,084
  1,163
  1,245
  1,330
  1,418
  1,510
  1,606
Adjusted assets (=assets-cash), $m
  44
  58
  74
  93
  115
  140
  168
  199
  233
  270
  311
  354
  400
  449
  500
  555
  611
  671
  733
  798
  865
  935
  1,008
  1,084
  1,163
  1,245
  1,330
  1,418
  1,510
  1,606
Revenue / Adjusted assets
  0.795
  0.776
  0.784
  0.785
  0.783
  0.786
  0.786
  0.784
  0.785
  0.785
  0.785
  0.785
  0.785
  0.786
  0.786
  0.786
  0.787
  0.785
  0.786
  0.786
  0.786
  0.786
  0.787
  0.786
  0.786
  0.786
  0.786
  0.786
  0.786
  0.786
Average production assets, $m
  3
  4
  6
  7
  9
  11
  13
  15
  18
  20
  23
  27
  30
  34
  38
  42
  46
  51
  55
  60
  65
  71
  76
  82
  88
  94
  100
  107
  114
  121
Working capital, $m
  8
  11
  14
  18
  22
  27
  32
  38
  44
  52
  59
  68
  76
  86
  96
  106
  117
  128
  140
  152
  165
  179
  193
  207
  222
  238
  254
  271
  288
  307
Total debt, $m
  3
  6
  10
  15
  20
  26
  33
  41
  49
  58
  68
  79
  90
  102
  114
  128
  141
  156
  171
  187
  203
  221
  238
  257
  276
  296
  317
  338
  361
  384
Total liabilities, $m
  11
  14
  18
  23
  28
  34
  41
  48
  57
  66
  76
  86
  98
  109
  122
  135
  149
  164
  179
  195
  211
  228
  246
  265
  284
  304
  325
  346
  369
  392
Total equity, $m
  33
  44
  56
  70
  87
  106
  127
  150
  176
  204
  235
  267
  302
  339
  378
  419
  462
  507
  554
  603
  654
  707
  762
  820
  879
  941
  1,005
  1,072
  1,142
  1,214
Total liabilities and equity, $m
  44
  58
  74
  93
  115
  140
  168
  198
  233
  270
  311
  353
  400
  448
  500
  554
  611
  671
  733
  798
  865
  935
  1,008
  1,085
  1,163
  1,245
  1,330
  1,418
  1,511
  1,606
Debt-to-equity ratio
  0.090
  0.150
  0.180
  0.210
  0.230
  0.250
  0.260
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.300
  0.300
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
Adjusted equity ratio
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756
  0.756

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -16
  -18
  -20
  -21
  -23
  -25
  -28
  -30
  -32
  -35
  -37
  -40
  -42
  -45
  -48
Depreciation, amort., depletion, $m
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
Funds from operations, $m
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -23
  -24
  -26
  -28
  -30
  -31
Change in working capital, $m
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
Cash from operations, $m
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -13
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -38
  -40
  -42
  -45
  -47
  -50
Maintenance CAPEX, $m
  0
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
New CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
Cash from investing activities, $m
  -1
  -1
  -2
  -2
  -3
  -3
  -3
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -10
  -12
  -13
  -13
  -14
  -16
  -16
  -17
  -18
  -19
  -21
  -22
  -23
Free cash flow, $m
  -4
  -5
  -6
  -7
  -8
  -10
  -12
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -28
  -30
  -32
  -35
  -37
  -40
  -43
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -69
  -73
Issuance/(repayment) of debt, $m
  3
  3
  4
  5
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  22
  23
Issuance/(repurchase) of shares, $m
  10
  12
  14
  17
  20
  23
  26
  29
  33
  36
  39
  43
  46
  50
  53
  57
  61
  65
  68
  72
  76
  81
  85
  89
  94
  99
  104
  109
  115
  120
Cash from financing (excl. dividends), $m  
  13
  15
  18
  22
  25
  29
  33
  37
  41
  45
  49
  54
  57
  62
  66
  70
  75
  80
  83
  88
  92
  98
  103
  107
  113
  119
  125
  131
  137
  143
Total cash flow (excl. dividends), $m
  9
  10
  12
  15
  17
  19
  21
  24
  26
  28
  30
  32
  34
  36
  38
  40
  42
  44
  46
  48
  50
  52
  54
  56
  59
  61
  63
  66
  68
  71
Retained Cash Flow (-), $m
  -10
  -12
  -14
  -17
  -20
  -23
  -26
  -29
  -33
  -36
  -39
  -43
  -46
  -50
  -53
  -57
  -61
  -65
  -68
  -72
  -76
  -81
  -85
  -89
  -94
  -99
  -104
  -109
  -115
  -120
Prev. year cash balance distribution, $m
  8
  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
  8
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -13
  -15
  -17
  -18
  -20
  -22
  -24
  -26
  -28
  -31
  -33
  -35
  -38
  -41
  -43
  -46
  -49
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
  7
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -4
  -4
  -4
  -4
  -3
  -3
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
Current shareholders' claim on cash, %
  87.9
  77.9
  69.7
  62.8
  57.0
  52.0
  47.8
  44.1
  40.9
  38.0
  35.6
  33.4
  31.4
  29.7
  28.1
  26.6
  25.3
  24.1
  23.0
  21.9
  21.0
  20.1
  19.2
  18.4
  17.7
  17.0
  16.4
  15.7
  15.2
  14.6

LRAD Corporation is engaged in the design, development and commercialization of directed sound technologies and products. The Company develops and delivers directed acoustic products that beam, focus and control sound over relatively short and long distances. Its long range acoustic device (LRAD) offers directional long-range acoustic hailing devices (AHDs). The LRAD Directional Products include LRAD 100X, LRAD 300X, LRAD 450XL, LRAD 500X, LRAD 500RX, LRAD RXL, LRAD 1000X, LRAD 1000RX and LRAD 2000X. The Company's LRAD Omnidirectional Products include LRAD 360X, LRAD 360Xm, LRAD 360XT, LRAD DS-60, LRAD SOUND SHIELD and SoundSaber. The Company's LRAD is deployed by the United States Army, Navy, Marine Corps and Coast Guard, as well as international military services and commercial maritime, commercial security, and public safety organizations around the globe. Its LRAD product line provides a range of systems from single user portable to permanently installed, remotely operated units.

FINANCIAL RATIOS  of  LRAD Corporation (LRAD)

Valuation Ratios
P/E Ratio -91.3
Price to Sales 4.6
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow -91.3
Price to Free Cash Flow -91.3
Growth Rates
Sales Growth Rate 25%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
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 -2.6%
Ret/ On Assets - 3 Yr. Avg. 7.3%
Return On Total Capital -2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 8.1%
Return On Equity -2.9%
Return On Equity - 3 Yr. Avg. 8.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 51%
EBITDA Margin -5%
EBITDA Margin - 3 Yr. Avg. -1.8%
Operating Margin -5%
Oper. Margin - 3 Yr. Avg. -3.9%
Pre-Tax Margin -5%
Pre-Tax Margin - 3 Yr. Avg. -1.8%
Net Profit Margin -5%
Net Profit Margin - 3 Yr. Avg. 15.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -300%
Payout Ratio 0%

LRAD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LRAD stock intrinsic value calculation we used $26 million for the last fiscal year's total revenue generated by LRAD Corporation. The default revenue input number comes from 0001 income statement of LRAD Corporation. 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 LRAD stock valuation model: a) initial revenue growth rate of 33.4% 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 LRAD is calculated based on our internal credit rating of LRAD Corporation, 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 LRAD Corporation.
    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 LRAD stock the variable cost ratio is equal to 103.8%.

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 LRAD 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 LRAD Corporation.

Corporate tax rate of 27% is the nominal tax rate for LRAD Corporation. 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 LRAD 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 LRAD are equal to 9.6%.

Life of production assets of 7.3 years is the average useful life of capital assets used in LRAD Corporation 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 LRAD is equal to 24.3%. 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 - $33.489207 million for LRAD Corporation - 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 32.616 million for LRAD Corporation 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 LRAD Corporation at the current share price and the inputted number of shares is $0.1 billion.

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