Intrinsic value of Mesa Laboratories - MLAB

Previous Close

$197.62

  Intrinsic Value

$67.03

stock screener

  Rating & Target

str. sell

-66%

Previous close

$197.62

 
Intrinsic value

$67.03

 
Up/down potential

-66%

 
Rating

str. sell

We calculate the intrinsic value of MLAB 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 0.7

 

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, %
  10.90
  10.31
  9.78
  9.30
  8.87
  8.48
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
Revenue, $m
  107
  118
  129
  141
  154
  167
  180
  194
  209
  224
  240
  257
  274
  291
  310
  329
  349
  370
  392
  415
  438
  463
  489
  516
  544
  574
  605
  637
  671
  706
Variable operating expenses, $m
  87
  94
  103
  111
  120
  129
  139
  149
  159
  170
  171
  182
  194
  207
  220
  234
  248
  263
  278
  295
  311
  329
  347
  367
  387
  408
  430
  452
  476
  502
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
  87
  94
  103
  111
  120
  129
  139
  149
  159
  170
  171
  182
  194
  207
  220
  234
  248
  263
  278
  295
  311
  329
  347
  367
  387
  408
  430
  452
  476
  502
Operating income, $m
  20
  23
  27
  30
  34
  37
  41
  45
  50
  54
  70
  74
  79
  84
  90
  95
  101
  107
  114
  120
  127
  134
  142
  150
  158
  166
  175
  185
  194
  205
EBITDA, $m
  37
  41
  45
  49
  54
  58
  63
  68
  73
  78
  84
  89
  95
  102
  108
  115
  122
  129
  137
  144
  153
  161
  170
  180
  190
  200
  211
  222
  234
  246
Interest expense (income), $m
  1
  2
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
Earnings before tax, $m
  18
  20
  23
  26
  30
  33
  36
  40
  44
  48
  62
  67
  71
  75
  80
  85
  90
  96
  101
  107
  113
  119
  126
  133
  140
  147
  155
  163
  172
  181
Tax expense, $m
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  36
  38
  40
  42
  44
  46
  49
Net income, $m
  13
  15
  17
  19
  22
  24
  27
  29
  32
  35
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  87
  92
  97
  102
  108
  113
  119
  126
  132

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
  182
  201
  221
  241
  263
  285
  308
  332
  357
  383
  410
  439
  468
  498
  530
  563
  597
  633
  670
  709
  749
  792
  836
  882
  930
  981
  1,034
  1,089
  1,147
  1,207
Adjusted assets (=assets-cash), $m
  182
  201
  221
  241
  263
  285
  308
  332
  357
  383
  410
  439
  468
  498
  530
  563
  597
  633
  670
  709
  749
  792
  836
  882
  930
  981
  1,034
  1,089
  1,147
  1,207
Revenue / Adjusted assets
  0.588
  0.587
  0.584
  0.585
  0.586
  0.586
  0.584
  0.584
  0.585
  0.585
  0.585
  0.585
  0.585
  0.584
  0.585
  0.584
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
  0.585
Average production assets, $m
  88
  97
  107
  117
  127
  138
  149
  161
  173
  185
  199
  212
  226
  241
  256
  272
  289
  306
  324
  343
  363
  383
  404
  427
  450
  475
  500
  527
  555
  584
Working capital, $m
  12
  13
  15
  16
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  50
  52
  55
  58
  62
  65
  68
  72
  76
  80
Total debt, $m
  54
  61
  69
  77
  85
  94
  103
  113
  123
  133
  144
  155
  166
  178
  191
  204
  217
  231
  246
  262
  278
  294
  312
  330
  349
  369
  390
  412
  434
  458
Total liabilities, $m
  72
  79
  87
  95
  104
  113
  122
  131
  141
  151
  162
  173
  185
  197
  209
  222
  236
  250
  265
  280
  296
  313
  330
  348
  368
  387
  408
  430
  453
  477
Total equity, $m
  110
  122
  134
  146
  159
  172
  186
  201
  216
  232
  248
  265
  283
  301
  321
  341
  361
  383
  405
  429
  453
  479
  506
  534
  563
  593
  625
  659
  694
  730
Total liabilities and equity, $m
  182
  201
  221
  241
  263
  285
  308
  332
  357
  383
  410
  438
  468
  498
  530
  563
  597
  633
  670
  709
  749
  792
  836
  882
  931
  980
  1,033
  1,089
  1,147
  1,207
Debt-to-equity ratio
  0.490
  0.500
  0.510
  0.530
  0.540
  0.550
  0.550
  0.560
  0.570
  0.570
  0.580
  0.580
  0.590
  0.590
  0.600
  0.600
  0.600
  0.600
  0.610
  0.610
  0.610
  0.610
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.630
  0.630
Adjusted equity ratio
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605
  0.605

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  13
  15
  17
  19
  22
  24
  27
  29
  32
  35
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  87
  92
  97
  102
  108
  113
  119
  126
  132
Depreciation, amort., depletion, $m
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
Funds from operations, $m
  30
  33
  35
  38
  41
  45
  48
  51
  55
  59
  60
  64
  68
  72
  77
  81
  86
  91
  97
  102
  108
  114
  121
  127
  134
  141
  149
  157
  165
  174
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
Cash from operations, $m
  29
  31
  34
  37
  40
  43
  46
  50
  53
  57
  58
  62
  66
  70
  75
  79
  84
  89
  94
  100
  105
  111
  118
  124
  131
  138
  145
  153
  161
  170
Maintenance CAPEX, $m
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
New CAPEX, $m
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
Cash from investing activities, $m
  -15
  -15
  -17
  -18
  -18
  -20
  -21
  -23
  -23
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -60
  -62
  -65
  -68
Free cash flow, $m
  14
  16
  18
  19
  21
  23
  25
  28
  30
  32
  32
  34
  37
  39
  42
  45
  48
  51
  55
  58
  62
  65
  69
  73
  77
  82
  86
  91
  96
  101
Issuance/(repayment) of debt, $m
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  12
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
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  
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  12
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
Total cash flow (excl. dividends), $m
  22
  23
  25
  28
  30
  32
  35
  37
  40
  42
  42
  45
  48
  51
  55
  58
  62
  65
  69
  73
  78
  82
  86
  91
  96
  102
  107
  113
  119
  125
Retained Cash Flow (-), $m
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -37
Prev. year cash balance distribution, $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 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
  11
  12
  14
  15
  17
  19
  21
  22
  25
  27
  26
  28
  31
  33
  36
  38
  41
  44
  47
  50
  53
  56
  60
  63
  67
  71
  75
  79
  84
  88
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
  10
  11
  12
  12
  13
  14
  14
  14
  14
  14
  12
  12
  12
  11
  10
  10
  9
  8
  7
  6
  5
  5
  4
  3
  3
  2
  2
  1
  1
  1
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

Mesa Laboratories, Inc. is focused primarily on quality control products and services. The Company operates through four segments: Instruments, Continuous Monitoring, Biological Indicators and Cold Chain. The Instruments Division designs, manufactures and markets quality control instruments and disposable products. Its Biological Indicators Division provides testing services, along with the manufacturing and marketing of biological indicators and distribution of chemical indicators used to assess the effectiveness of sterilization processes. Its Continuous Monitoring Division designs, develops and markets systems, which are used to monitor various environmental parameters. Its Cold Chain Division provides parameter (primarily temperature) monitoring of products in a cold chain. The Company's brands include DataTrace, DialyGuard, DryCal, Torqo, SureTorque, BGI, Mesa, PCD, Apex, CheckPoint, Mesa and TempTrust.

FINANCIAL RATIOS  of  Mesa Laboratories (MLAB)

Valuation Ratios
P/E Ratio 67
Price to Sales 7.8
Price to Book 7.5
Price to Tangible Book
Price to Cash Flow 92.1
Price to Free Cash Flow -184.3
Growth Rates
Sales Growth Rate 10.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate 64.4%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 55.1%
Total Debt to Equity 56.1%
Interest Coverage 15
Management Effectiveness
Return On Assets 7.1%
Ret/ On Assets - 3 Yr. Avg. 8.5%
Return On Total Capital 7.8%
Ret/ On T. Cap. - 3 Yr. Avg. 9.5%
Return On Equity 12%
Return On Equity - 3 Yr. Avg. 13.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 56.4%
Gross Margin - 3 Yr. Avg. 59%
EBITDA Margin 25.5%
EBITDA Margin - 3 Yr. Avg. 28.3%
Operating Margin 18.1%
Oper. Margin - 3 Yr. Avg. 20.2%
Pre-Tax Margin 14.9%
Pre-Tax Margin - 3 Yr. Avg. 18.3%
Net Profit Margin 11.7%
Net Profit Margin - 3 Yr. Avg. 12.9%
Effective Tax Rate 21.4%
Eff/ Tax Rate - 3 Yr. Avg. 28.7%
Payout Ratio 18.2%

MLAB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MLAB stock intrinsic value calculation we used $96.179 million for the last fiscal year's total revenue generated by Mesa Laboratories. The default revenue input number comes from 0001 income statement of Mesa Laboratories. 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 MLAB stock valuation model: a) initial revenue growth rate of 10.9% 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 MLAB is calculated based on our internal credit rating of Mesa Laboratories, 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 Mesa Laboratories.
    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 MLAB stock the variable cost ratio is equal to 82.3%.

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 MLAB 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 Mesa Laboratories.

Corporate tax rate of 27% is the nominal tax rate for Mesa Laboratories. 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 MLAB 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 MLAB are equal to 82.7%.

Life of production assets of 14.1 years is the average useful life of capital assets used in Mesa Laboratories 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 MLAB is equal to 11.3%. 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 - $99.361 million for Mesa Laboratories - 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 3.783 million for Mesa Laboratories 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 Mesa Laboratories at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ Mesa Labs: Fiscal 2Q Earnings Snapshot   [Oct-31-18 08:39AM  Associated Press]
▶ Mesa Labs Declares Quarterly Dividend   [Oct-02-18 01:00PM  GlobeNewswire]
▶ Mesa Labs: Fiscal 1Q Earnings Snapshot   [Jul-31-18 09:27AM  Associated Press]
▶ Mesa Labs Declares Quarterly Dividend   [Jul-09-18 06:00PM  GlobeNewswire]
▶ Mesa Labs: Fiscal 4Q Earnings Snapshot   [Jun-05-18 07:53AM  Associated Press]
▶ Mesa Labs Declares Quarterly Dividend   [Apr-04-18 07:00PM  GlobeNewswire]
▶ Mesa Labs reports 3Q loss   [Feb-05-18 05:22PM  Associated Press]
▶ Mesa Labs Reports Third Quarter Results   [05:00PM  GlobeNewswire]
▶ Mesa Labs Declares Quarterly Dividend   [Jan-02-18 03:34PM  GlobeNewswire]
▶ New Strong Sell Stocks for November 21st   [Nov-21-17 09:31AM  Zacks]
▶ Mesa Labs posts 2Q profit   [Nov-06-17 08:21AM  Associated Press]
▶ Mesa Labs Reports Second Quarter Results   [08:00AM  GlobeNewswire]
▶ Mesa Labs Acquires Sterilization Process Control Business   [Oct-05-17 04:00PM  GlobeNewswire]
▶ Mesa Labs Declares Quarterly Dividend   [Oct-03-17 08:00AM  GlobeNewswire]
▶ Mesa Labs Reports Transition of its Chief Executive Officer   [Sep-01-17 08:00AM  GlobeNewswire]
▶ Mesa Labs posts 1Q profit   [Jul-31-17 11:02PM  Associated Press]
▶ Mesa Labs Declares Quarterly Dividend   [Jul-05-17 01:00PM  GlobeNewswire]

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