Intrinsic value of Masimo - MASI

Previous Close

$122.50

  Intrinsic Value

$135.72

stock screener

  Rating & Target

hold

+11%

Previous close

$122.50

 
Intrinsic value

$135.72

 
Up/down potential

+11%

 
Rating

hold

We calculate the intrinsic value of MASI 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 6.4

 

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, %
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
Revenue, $m
  878
  961
  1,048
  1,139
  1,233
  1,331
  1,433
  1,539
  1,649
  1,764
  1,883
  2,006
  2,135
  2,269
  2,408
  2,553
  2,705
  2,863
  3,027
  3,199
  3,378
  3,566
  3,762
  3,966
  4,181
  4,405
  4,639
  4,884
  5,141
  5,411
Variable operating expenses, $m
  346
  379
  413
  448
  485
  523
  562
  604
  646
  691
  732
  780
  831
  883
  937
  993
  1,052
  1,114
  1,178
  1,244
  1,314
  1,387
  1,463
  1,543
  1,626
  1,713
  1,805
  1,900
  2,000
  2,105
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
  346
  379
  413
  448
  485
  523
  562
  604
  646
  691
  732
  780
  831
  883
  937
  993
  1,052
  1,114
  1,178
  1,244
  1,314
  1,387
  1,463
  1,543
  1,626
  1,713
  1,805
  1,900
  2,000
  2,105
Operating income, $m
  532
  583
  636
  691
  749
  809
  871
  936
  1,003
  1,073
  1,150
  1,226
  1,304
  1,386
  1,471
  1,560
  1,653
  1,749
  1,850
  1,955
  2,064
  2,179
  2,298
  2,423
  2,554
  2,691
  2,834
  2,984
  3,141
  3,306
EBITDA, $m
  556
  609
  664
  721
  781
  843
  907
  974
  1,044
  1,116
  1,192
  1,270
  1,351
  1,436
  1,524
  1,616
  1,712
  1,812
  1,916
  2,025
  2,139
  2,257
  2,381
  2,511
  2,646
  2,788
  2,937
  3,092
  3,255
  3,425
Interest expense (income), $m
  4
  0
  1
  2
  3
  4
  5
  7
  8
  9
  10
  12
  13
  15
  16
  18
  20
  22
  23
  25
  27
  29
  32
  34
  36
  39
  42
  44
  47
  50
  53
Earnings before tax, $m
  532
  582
  634
  688
  745
  803
  864
  928
  994
  1,062
  1,138
  1,213
  1,290
  1,370
  1,453
  1,540
  1,631
  1,726
  1,824
  1,927
  2,035
  2,147
  2,264
  2,387
  2,515
  2,650
  2,790
  2,937
  3,091
  3,253
Tax expense, $m
  144
  157
  171
  186
  201
  217
  233
  251
  268
  287
  307
  327
  348
  370
  392
  416
  440
  466
  493
  520
  549
  580
  611
  644
  679
  715
  753
  793
  835
  878
Net income, $m
  388
  425
  463
  502
  544
  586
  631
  677
  725
  776
  831
  885
  941
  1,000
  1,061
  1,124
  1,191
  1,260
  1,332
  1,407
  1,485
  1,567
  1,653
  1,743
  1,836
  1,934
  2,037
  2,144
  2,257
  2,374

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
  792
  867
  945
  1,027
  1,112
  1,200
  1,292
  1,388
  1,487
  1,590
  1,698
  1,809
  1,925
  2,046
  2,172
  2,302
  2,439
  2,581
  2,730
  2,885
  3,046
  3,215
  3,392
  3,577
  3,770
  3,972
  4,183
  4,404
  4,636
  4,879
Adjusted assets (=assets-cash), $m
  792
  867
  945
  1,027
  1,112
  1,200
  1,292
  1,388
  1,487
  1,590
  1,698
  1,809
  1,925
  2,046
  2,172
  2,302
  2,439
  2,581
  2,730
  2,885
  3,046
  3,215
  3,392
  3,577
  3,770
  3,972
  4,183
  4,404
  4,636
  4,879
Revenue / Adjusted assets
  1.109
  1.108
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
  1.109
Average production assets, $m
  191
  210
  229
  248
  269
  290
  312
  336
  360
  384
  410
  437
  465
  495
  525
  557
  590
  624
  660
  697
  736
  777
  820
  865
  911
  960
  1,011
  1,065
  1,121
  1,180
Working capital, $m
  126
  138
  151
  164
  178
  192
  206
  222
  238
  254
  271
  289
  307
  327
  347
  368
  389
  412
  436
  461
  486
  513
  542
  571
  602
  634
  668
  703
  740
  779
Total debt, $m
  18
  37
  57
  77
  99
  121
  144
  168
  193
  219
  246
  274
  304
  334
  366
  399
  433
  469
  506
  546
  586
  629
  673
  720
  769
  819
  873
  928
  987
  1,048
Total liabilities, $m
  199
  218
  238
  259
  280
  303
  326
  350
  375
  401
  428
  456
  485
  516
  547
  580
  615
  650
  688
  727
  768
  810
  855
  901
  950
  1,001
  1,054
  1,110
  1,168
  1,229
Total equity, $m
  592
  648
  707
  768
  832
  898
  967
  1,038
  1,112
  1,190
  1,270
  1,353
  1,440
  1,530
  1,624
  1,722
  1,824
  1,931
  2,042
  2,158
  2,279
  2,405
  2,537
  2,675
  2,820
  2,971
  3,129
  3,294
  3,468
  3,649
Total liabilities and equity, $m
  791
  866
  945
  1,027
  1,112
  1,201
  1,293
  1,388
  1,487
  1,591
  1,698
  1,809
  1,925
  2,046
  2,171
  2,302
  2,439
  2,581
  2,730
  2,885
  3,047
  3,215
  3,392
  3,576
  3,770
  3,972
  4,183
  4,404
  4,636
  4,878
Debt-to-equity ratio
  0.030
  0.060
  0.080
  0.100
  0.120
  0.130
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.210
  0.220
  0.230
  0.230
  0.240
  0.240
  0.250
  0.250
  0.260
  0.260
  0.270
  0.270
  0.270
  0.280
  0.280
  0.280
  0.280
  0.290
Adjusted equity ratio
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748
  0.748

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  388
  425
  463
  502
  544
  586
  631
  677
  725
  776
  831
  885
  941
  1,000
  1,061
  1,124
  1,191
  1,260
  1,332
  1,407
  1,485
  1,567
  1,653
  1,743
  1,836
  1,934
  2,037
  2,144
  2,257
  2,374
Depreciation, amort., depletion, $m
  24
  26
  28
  30
  32
  34
  36
  39
  41
  44
  41
  44
  47
  50
  53
  56
  60
  63
  67
  70
  74
  79
  83
  87
  92
  97
  102
  108
  113
  119
Funds from operations, $m
  412
  451
  490
  532
  575
  621
  667
  716
  767
  819
  873
  929
  988
  1,050
  1,114
  1,181
  1,250
  1,323
  1,398
  1,477
  1,560
  1,646
  1,736
  1,830
  1,928
  2,031
  2,139
  2,252
  2,370
  2,493
Change in working capital, $m
  11
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
Cash from operations, $m
  401
  438
  478
  519
  562
  606
  653
  701
  751
  803
  855
  912
  970
  1,031
  1,094
  1,160
  1,228
  1,300
  1,375
  1,453
  1,534
  1,619
  1,708
  1,800
  1,897
  1,999
  2,105
  2,216
  2,333
  2,455
Maintenance CAPEX, $m
  -18
  -19
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -36
  -39
  -41
  -44
  -47
  -50
  -53
  -56
  -60
  -63
  -67
  -70
  -74
  -79
  -83
  -87
  -92
  -97
  -102
  -108
  -113
New CAPEX, $m
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
Cash from investing activities, $m
  -35
  -37
  -40
  -43
  -46
  -48
  -51
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -85
  -89
  -94
  -99
  -104
  -109
  -115
  -122
  -128
  -134
  -141
  -148
  -156
  -164
  -172
Free cash flow, $m
  366
  401
  438
  476
  516
  558
  601
  646
  693
  741
  791
  843
  898
  954
  1,014
  1,075
  1,139
  1,206
  1,276
  1,348
  1,424
  1,504
  1,586
  1,673
  1,763
  1,858
  1,957
  2,061
  2,169
  2,283
Issuance/(repayment) of debt, $m
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
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  
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
Total cash flow (excl. dividends), $m
  384
  420
  458
  497
  538
  580
  624
  670
  718
  767
  818
  871
  927
  985
  1,045
  1,108
  1,174
  1,242
  1,313
  1,387
  1,465
  1,546
  1,631
  1,719
  1,812
  1,909
  2,010
  2,116
  2,228
  2,344
Retained Cash Flow (-), $m
  -54
  -56
  -59
  -61
  -64
  -66
  -69
  -71
  -74
  -77
  -80
  -83
  -87
  -90
  -94
  -98
  -102
  -106
  -111
  -116
  -121
  -126
  -132
  -138
  -144
  -151
  -158
  -166
  -173
  -182
Prev. year cash balance distribution, $m
  186
  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
  516
  364
  399
  436
  474
  514
  556
  599
  644
  690
  737
  788
  840
  895
  951
  1,010
  1,072
  1,135
  1,202
  1,272
  1,344
  1,420
  1,499
  1,581
  1,668
  1,758
  1,852
  1,951
  2,054
  2,162
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
  495
  333
  347
  359
  367
  373
  375
  374
  370
  362
  350
  336
  319
  300
  279
  257
  233
  209
  185
  162
  139
  118
  98
  81
  65
  51
  40
  30
  22
  16
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

Masimo Corporation is a medical technology company that develops, manufactures and markets a range of non-invasive patient monitoring technologies. The Company's business is Measure-through Motion and Low Perfusion pulse oximetry monitoring, known as Masimo Signal Extraction Technology (SET) pulse oximetry. Its product offerings include non-invasive monitoring of blood constituents with an optical signature, optical organ oximetry monitoring, electrical, brain function monitoring, acoustic respiration monitoring and exhaled gas monitoring. In addition, the Company has developed the Root patient monitoring and connectivity platform, the Radical-7 bedside and portable patient monitor, and the Radius-7 wearable wireless patient monitor. It offers Patient SafetyNet remote patient surveillance monitoring system, which allows patients to be monitored through a personal computer-based monitor or by care providers through their pagers, voice-over-Internet Protocol (IP) phones or smartphones.

FINANCIAL RATIOS  of  Masimo (MASI)

Valuation Ratios
P/E Ratio 20.4
Price to Sales 8.8
Price to Book 11
Price to Tangible Book
Price to Cash Flow 14.7
Price to Free Cash Flow 15.6
Growth Rates
Sales Growth Rate 10.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -56.4%
Cap. Spend. - 3 Yr. Gr. Rate 13%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 106
Management Effectiveness
Return On Assets 42.7%
Ret/ On Assets - 3 Yr. Avg. 23.9%
Return On Total Capital 59%
Ret/ On T. Cap. - 3 Yr. Avg. 32.3%
Return On Equity 72.1%
Return On Equity - 3 Yr. Avg. 41.3%
Asset Turnover 1
Profitability Ratios
Gross Margin 66.8%
Gross Margin - 3 Yr. Avg. 66.2%
EBITDA Margin 63.2%
EBITDA Margin - 3 Yr. Avg. 34.7%
Operating Margin 60.6%
Oper. Margin - 3 Yr. Avg. 32.4%
Pre-Tax Margin 60.1%
Pre-Tax Margin - 3 Yr. Avg. 32%
Net Profit Margin 43.3%
Net Profit Margin - 3 Yr. Avg. 23%
Effective Tax Rate 28%
Eff/ Tax Rate - 3 Yr. Avg. 28.3%
Payout Ratio 0%

MASI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MASI stock intrinsic value calculation we used $798.108 million for the last fiscal year's total revenue generated by Masimo. The default revenue input number comes from 0001 income statement of Masimo. 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 MASI stock valuation model: a) initial revenue growth rate of 10% 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 MASI is calculated based on our internal credit rating of Masimo, 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 Masimo.
    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 MASI stock the variable cost ratio is equal to 39.5%.

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 MASI 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 Masimo.

Corporate tax rate of 27% is the nominal tax rate for Masimo. 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 MASI 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 MASI are equal to 21.8%.

Life of production assets of 9.9 years is the average useful life of capital assets used in Masimo 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 MASI is equal to 14.4%. 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 - $724.024 million for Masimo - 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 52.17 million for Masimo 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 Masimo at the current share price and the inputted number of shares is $6.4 billion.

RELATED COMPANIES Price Int.Val. Rating
CASM CAS Medical Sy 1.98 0.64  str.sell
OMI Owens&Minor 17.16 114.18  str.buy
RMD ResMed 113.83 66.17  sell
BABY Natus Medical 34.45 29.55  hold
BDX Becton Dickins 261.52 1,279.12  str.buy
AHPI Allied Healthc 2.32 1.01  str.sell
OSIS OSI Systems 78.32 29.88  str.sell

COMPANY NEWS

▶ IBD 50 Stocks To Watch: Is It Time To Cash In Masimo?   [Sep-17-18 02:55PM  Investor's Business Daily]
▶ The 15th Rule Breakers 5-Stock Sampler Is Mmm-mmm Good   [Sep-11-18 01:39PM  Motley Fool]
▶ A Niche Medical Company Goes Back to Basics   [Sep-04-18 12:41PM  GuruFocus.com]
▶ Medical Device Stocks on the Move   [Aug-03-18 12:29PM  Investopedia]
▶ H Michael Cohen Joins Masimos Board of Directors   [Aug-02-18 05:00PM  Business Wire]
▶ Masimo: 2Q Earnings Snapshot   [06:39PM  Associated Press]
▶ The 6 Stocks on the MFM Team's Radar This Week   [Jun-19-18 07:20AM  Motley Fool]
▶ Masimo and PositiveID Announce the U.S. Release of TIR-1   [Jun-18-18 08:00AM  Business Wire]
▶ 3 Top Healthcare Stocks to Buy in May   [May-15-18 06:00AM  Motley Fool]
▶ Masimo: 1Q Earnings Snapshot   [May-02-18 06:17PM  Associated Press]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.