Intrinsic value of Merit Medical Systems, Inc. - MMSI

Previous Close

$56.70

  Intrinsic Value

$17.03

stock screener

  Rating & Target

str. sell

-70%

Previous close

$56.70

 
Intrinsic value

$17.03

 
Up/down potential

-70%

 
Rating

str. sell

We calculate the intrinsic value of MMSI 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 3.1

 

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, %
  22.20
  20.48
  18.93
  17.54
  16.28
  15.16
  14.14
  13.23
  12.40
  11.66
  11.00
  10.40
  9.86
  9.37
  8.93
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
Revenue, $m
  1,079
  1,300
  1,546
  1,817
  2,113
  2,434
  2,778
  3,145
  3,535
  3,947
  4,382
  4,837
  5,314
  5,812
  6,331
  6,872
  7,435
  8,020
  8,628
  9,260
  9,916
  10,599
  11,308
  12,046
  12,814
  13,612
  14,444
  15,311
  16,214
  17,156
Variable operating expenses, $m
  884
  1,050
  1,235
  1,440
  1,662
  1,903
  2,162
  2,439
  2,732
  3,043
  3,297
  3,640
  3,999
  4,374
  4,765
  5,172
  5,595
  6,035
  6,493
  6,969
  7,463
  7,976
  8,510
  9,065
  9,643
  10,244
  10,870
  11,523
  12,203
  12,912
Fixed operating expenses, $m
  92
  94
  96
  98
  100
  103
  105
  107
  109
  112
  114
  117
  119
  122
  125
  127
  130
  133
  136
  139
  142
  145
  148
  152
  155
  158
  162
  166
  169
  173
Total operating expenses, $m
  976
  1,144
  1,331
  1,538
  1,762
  2,006
  2,267
  2,546
  2,841
  3,155
  3,411
  3,757
  4,118
  4,496
  4,890
  5,299
  5,725
  6,168
  6,629
  7,108
  7,605
  8,121
  8,658
  9,217
  9,798
  10,402
  11,032
  11,689
  12,372
  13,085
Operating income, $m
  103
  156
  215
  280
  351
  428
  511
  599
  693
  793
  970
  1,080
  1,195
  1,316
  1,442
  1,573
  1,709
  1,851
  1,999
  2,152
  2,311
  2,477
  2,649
  2,829
  3,015
  3,210
  3,412
  3,623
  3,843
  4,072
EBITDA, $m
  233
  297
  369
  448
  535
  629
  731
  839
  954
  1,075
  1,203
  1,338
  1,479
  1,626
  1,779
  1,939
  2,106
  2,279
  2,459
  2,646
  2,840
  3,042
  3,253
  3,471
  3,699
  3,936
  4,182
  4,439
  4,707
  4,987
Interest expense (income), $m
  9
  21
  30
  39
  49
  61
  73
  86
  101
  116
  133
  150
  168
  187
  207
  228
  250
  273
  297
  321
  347
  373
  401
  429
  459
  490
  523
  556
  591
  627
  665
Earnings before tax, $m
  82
  126
  176
  230
  290
  355
  424
  498
  577
  660
  820
  912
  1,008
  1,109
  1,213
  1,323
  1,436
  1,555
  1,678
  1,805
  1,938
  2,076
  2,220
  2,369
  2,525
  2,687
  2,856
  3,032
  3,215
  3,407
Tax expense, $m
  22
  34
  47
  62
  78
  96
  115
  135
  156
  178
  221
  246
  272
  299
  328
  357
  388
  420
  453
  487
  523
  561
  599
  640
  682
  726
  771
  819
  868
  920
Net income, $m
  60
  92
  128
  168
  212
  259
  310
  364
  421
  482
  598
  666
  736
  809
  886
  966
  1,049
  1,135
  1,225
  1,318
  1,415
  1,516
  1,621
  1,730
  1,843
  1,962
  2,085
  2,213
  2,347
  2,487

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
  1,980
  2,385
  2,837
  3,334
  3,878
  4,465
  5,097
  5,771
  6,487
  7,243
  8,040
  8,876
  9,751
  10,664
  11,617
  12,609
  13,642
  14,715
  15,831
  16,990
  18,195
  19,447
  20,749
  22,103
  23,511
  24,977
  26,503
  28,094
  29,751
  31,480
Adjusted assets (=assets-cash), $m
  1,980
  2,385
  2,837
  3,334
  3,878
  4,465
  5,097
  5,771
  6,487
  7,243
  8,040
  8,876
  9,751
  10,664
  11,617
  12,609
  13,642
  14,715
  15,831
  16,990
  18,195
  19,447
  20,749
  22,103
  23,511
  24,977
  26,503
  28,094
  29,751
  31,480
Revenue / Adjusted assets
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
  0.545
Average production assets, $m
  725
  874
  1,039
  1,221
  1,420
  1,635
  1,867
  2,113
  2,376
  2,653
  2,944
  3,251
  3,571
  3,906
  4,255
  4,618
  4,996
  5,389
  5,798
  6,222
  6,664
  7,122
  7,599
  8,095
  8,611
  9,148
  9,707
  10,289
  10,896
  11,529
Working capital, $m
  256
  308
  366
  431
  501
  577
  658
  745
  838
  936
  1,038
  1,146
  1,259
  1,377
  1,501
  1,629
  1,762
  1,901
  2,045
  2,195
  2,350
  2,512
  2,680
  2,855
  3,037
  3,226
  3,423
  3,629
  3,843
  4,066
Total debt, $m
  547
  719
  911
  1,122
  1,352
  1,601
  1,869
  2,155
  2,458
  2,779
  3,117
  3,471
  3,842
  4,230
  4,634
  5,054
  5,492
  5,947
  6,420
  6,912
  7,423
  7,954
  8,505
  9,079
  9,677
  10,298
  10,945
  11,620
  12,322
  13,055
Total liabilities, $m
  839
  1,011
  1,203
  1,414
  1,644
  1,893
  2,161
  2,447
  2,750
  3,071
  3,409
  3,763
  4,134
  4,522
  4,926
  5,346
  5,784
  6,239
  6,712
  7,204
  7,715
  8,246
  8,798
  9,372
  9,969
  10,590
  11,237
  11,912
  12,615
  13,347
Total equity, $m
  1,140
  1,374
  1,634
  1,921
  2,233
  2,572
  2,936
  3,324
  3,736
  4,172
  4,631
  5,112
  5,616
  6,143
  6,691
  7,263
  7,858
  8,476
  9,119
  9,786
  10,480
  11,202
  11,951
  12,731
  13,542
  14,387
  15,266
  16,182
  17,137
  18,132
Total liabilities and equity, $m
  1,979
  2,385
  2,837
  3,335
  3,877
  4,465
  5,097
  5,771
  6,486
  7,243
  8,040
  8,875
  9,750
  10,665
  11,617
  12,609
  13,642
  14,715
  15,831
  16,990
  18,195
  19,448
  20,749
  22,103
  23,511
  24,977
  26,503
  28,094
  29,752
  31,479
Debt-to-equity ratio
  0.480
  0.520
  0.560
  0.580
  0.610
  0.620
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
  0.700
  0.700
  0.700
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.720
  0.720
  0.720
  0.720
  0.720
Adjusted equity ratio
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576
  0.576

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  60
  92
  128
  168
  212
  259
  310
  364
  421
  482
  598
  666
  736
  809
  886
  966
  1,049
  1,135
  1,225
  1,318
  1,415
  1,516
  1,621
  1,730
  1,843
  1,962
  2,085
  2,213
  2,347
  2,487
Depreciation, amort., depletion, $m
  129
  141
  154
  169
  185
  202
  220
  240
  260
  282
  234
  258
  283
  310
  338
  367
  397
  428
  460
  494
  529
  565
  603
  642
  683
  726
  770
  817
  865
  915
Funds from operations, $m
  189
  233
  283
  337
  396
  461
  530
  603
  682
  764
  832
  924
  1,019
  1,119
  1,223
  1,332
  1,445
  1,563
  1,685
  1,812
  1,944
  2,081
  2,224
  2,372
  2,527
  2,688
  2,855
  3,030
  3,212
  3,402
Change in working capital, $m
  46
  52
  58
  64
  70
  76
  82
  87
  92
  98
  103
  108
  113
  118
  123
  128
  133
  139
  144
  150
  156
  162
  168
  175
  182
  189
  197
  205
  214
  223
Cash from operations, $m
  143
  181
  224
  273
  326
  385
  448
  516
  589
  667
  729
  816
  906
  1,001
  1,100
  1,204
  1,312
  1,424
  1,541
  1,662
  1,788
  1,919
  2,056
  2,197
  2,345
  2,498
  2,658
  2,824
  2,998
  3,179
Maintenance CAPEX, $m
  -47
  -58
  -69
  -82
  -97
  -113
  -130
  -148
  -168
  -189
  -211
  -234
  -258
  -283
  -310
  -338
  -367
  -397
  -428
  -460
  -494
  -529
  -565
  -603
  -642
  -683
  -726
  -770
  -817
  -865
New CAPEX, $m
  -132
  -149
  -165
  -182
  -199
  -215
  -231
  -247
  -262
  -277
  -292
  -306
  -320
  -335
  -349
  -363
  -378
  -393
  -409
  -425
  -441
  -459
  -477
  -496
  -516
  -537
  -559
  -582
  -607
  -633
Cash from investing activities, $m
  -179
  -207
  -234
  -264
  -296
  -328
  -361
  -395
  -430
  -466
  -503
  -540
  -578
  -618
  -659
  -701
  -745
  -790
  -837
  -885
  -935
  -988
  -1,042
  -1,099
  -1,158
  -1,220
  -1,285
  -1,352
  -1,424
  -1,498
Free cash flow, $m
  -36
  -25
  -10
  8
  30
  57
  87
  121
  159
  201
  227
  276
  328
  383
  441
  503
  567
  634
  704
  777
  853
  932
  1,014
  1,098
  1,187
  1,278
  1,373
  1,472
  1,574
  1,681
Issuance/(repayment) of debt, $m
  152
  172
  191
  211
  230
  249
  268
  286
  304
  321
  338
  354
  371
  387
  404
  421
  438
  455
  473
  492
  511
  531
  552
  574
  597
  622
  647
  674
  703
  733
Issuance/(repurchase) of shares, $m
  148
  141
  132
  118
  101
  80
  54
  25
  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  
  300
  313
  323
  329
  331
  329
  322
  311
  304
  321
  338
  354
  371
  387
  404
  421
  438
  455
  473
  492
  511
  531
  552
  574
  597
  622
  647
  674
  703
  733
Total cash flow (excl. dividends), $m
  264
  288
  313
  337
  362
  386
  409
  432
  463
  522
  565
  630
  699
  771
  845
  924
  1,005
  1,089
  1,177
  1,269
  1,364
  1,463
  1,565
  1,672
  1,784
  1,899
  2,020
  2,146
  2,277
  2,414
Retained Cash Flow (-), $m
  -208
  -234
  -260
  -287
  -313
  -339
  -364
  -388
  -412
  -436
  -459
  -481
  -504
  -526
  -549
  -572
  -595
  -618
  -643
  -668
  -694
  -721
  -750
  -780
  -811
  -844
  -879
  -916
  -955
  -996
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
  56
  55
  53
  51
  49
  47
  45
  43
  50
  86
  106
  149
  195
  244
  297
  352
  410
  471
  535
  601
  670
  741
  816
  893
  972
  1,055
  1,141
  1,230
  1,322
  1,418
Discount rate, %
  5.50
  5.78
  6.06
  6.37
  6.69
  7.02
  7.37
  7.74
  8.13
  8.53
  8.96
  9.41
  9.88
  10.37
  10.89
  11.43
  12.01
  12.61
  13.24
  13.90
  14.59
  15.32
  16.09
  16.89
  17.74
  18.62
  19.56
  20.53
  21.56
  22.64
PV of cash for distribution, $m
  53
  49
  44
  40
  35
  31
  27
  24
  25
  38
  41
  51
  57
  61
  63
  62
  60
  56
  50
  45
  38
  32
  26
  21
  16
  12
  9
  7
  5
  3
Current shareholders' claim on cash, %
  95.5
  92.0
  89.5
  87.6
  86.2
  85.3
  84.8
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5
  84.5

Merit Medical Systems, Inc. is a manufacturer and marketer of disposable medical devices used in a range of interventional, diagnostic and therapeutic medical procedures. The Company operates in two segments: cardiovascular and endoscopy. The cardiovascular segment consists of cardiology and radiology devices, which assist in diagnosing and treating coronary arterial disease, peripheral vascular disease and other non-vascular diseases, and includes embolotherapeutic, cardiac rhythm management (CRM), electrophysiology (EP), and interventional oncology and spine devices. Its endoscopy segment consists of gastroenterology and pulmonology medical devices, which assist in the palliative treatment of expanding esophageal, tracheobronchial and biliary strictures caused by malignant tumors. Within its segments, the Company offers products focused in four product groups: peripheral intervention, cardiac intervention, interventional oncology and spine, and endoscopy.

FINANCIAL RATIOS  of  Merit Medical Systems, Inc. (MMSI)

Valuation Ratios
P/E Ratio 126.6
Price to Sales 4.2
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 46.9
Price to Free Cash Flow 133.2
Growth Rates
Sales Growth Rate 11.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -34%
Cap. Spend. - 3 Yr. Gr. Rate -10.5%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 63.1%
Total Debt to Equity 65.1%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 3.6%
Return On Total Capital 2.7%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity 4.1%
Return On Equity - 3 Yr. Avg. 5%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 43.9%
Gross Margin - 3 Yr. Avg. 43.8%
EBITDA Margin 12.9%
EBITDA Margin - 3 Yr. Avg. 13.9%
Operating Margin 5.8%
Oper. Margin - 3 Yr. Avg. 6.8%
Pre-Tax Margin 4.1%
Pre-Tax Margin - 3 Yr. Avg. 5.4%
Net Profit Margin 3.3%
Net Profit Margin - 3 Yr. Avg. 4.1%
Effective Tax Rate 20%
Eff/ Tax Rate - 3 Yr. Avg. 23.6%
Payout Ratio 0%

MMSI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MMSI stock intrinsic value calculation we used $883 million for the last fiscal year's total revenue generated by Merit Medical Systems, Inc.. The default revenue input number comes from 0001 income statement of Merit Medical Systems, Inc.. 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 MMSI stock valuation model: a) initial revenue growth rate of 22.2% 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 5.5%, whose default value for MMSI is calculated based on our internal credit rating of Merit Medical Systems, Inc., 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 Merit Medical Systems, Inc..
    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 MMSI stock the variable cost ratio is equal to 83.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $90 million in the base year in the intrinsic value calculation for MMSI 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 Merit Medical Systems, Inc..

Corporate tax rate of 27% is the nominal tax rate for Merit Medical Systems, Inc.. 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 MMSI 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 MMSI are equal to 67.2%.

Life of production assets of 12.6 years is the average useful life of capital assets used in Merit Medical Systems, Inc. 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 MMSI is equal to 23.7%. 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 - $932.775 million for Merit Medical Systems, Inc. - 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 54.853 million for Merit Medical Systems, Inc. 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 Merit Medical Systems, Inc. at the current share price and the inputted number of shares is $3.1 billion.

RELATED COMPANIES Price Int.Val. Rating
ANGO AngioDynamics, 19.58 6.76  str.sell
BSX Boston Scienti 37.62 15.59  str.sell
CNMD CONMED Corpora 81.89 59.66  sell
ICUI ICU Medical, I 228.96 20.14  str.sell
CAH Cardinal Healt 45.23 157.75  str.buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.