Intrinsic value of Materialise ADR - MTLS

Previous Close

$15.83

  Intrinsic Value

$16.08

stock screener

  Rating & Target

hold

+2%

  Value-price divergence*

+621%

Previous close

$15.83

 
Intrinsic value

$16.08

 
Up/down potential

+2%

 
Rating

hold

 
Value-price divergence*

+621%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MTLS 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 2016), $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 0.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.04
  20.70
  19.13
  17.72
  16.45
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
Revenue, $m
  121
  146
  174
  205
  238
  275
  314
  356
  401
  448
  497
  550
  604
  661
  721
  782
  847
  914
  983
  1,056
  1,131
  1,209
  1,290
  1,375
  1,463
  1,554
  1,649
  1,749
  1,852
  1,960
  2,072
Variable operating expenses, $m
 
  101
  120
  142
  165
  190
  217
  245
  276
  308
  342
  377
  415
  454
  495
  537
  581
  627
  675
  725
  776
  830
  886
  944
  1,004
  1,067
  1,132
  1,201
  1,271
  1,346
  1,423
Fixed operating expenses, $m
 
  39
  40
  41
  42
  43
  44
  45
  46
  47
  49
  50
  51
  52
  54
  55
  56
  58
  59
  61
  62
  64
  65
  67
  69
  70
  72
  74
  76
  78
  80
Total operating expenses, $m
  121
  140
  160
  183
  207
  233
  261
  290
  322
  355
  391
  427
  466
  506
  549
  592
  637
  685
  734
  786
  838
  894
  951
  1,011
  1,073
  1,137
  1,204
  1,275
  1,347
  1,424
  1,503
Operating income, $m
  0
  6
  14
  22
  32
  42
  54
  66
  78
  92
  106
  122
  138
  155
  172
  190
  209
  229
  249
  270
  292
  315
  339
  364
  390
  417
  445
  474
  505
  537
  570
EBITDA, $m
  9
  16
  26
  36
  48
  60
  74
  89
  104
  121
  139
  157
  176
  196
  217
  239
  262
  286
  311
  337
  363
  391
  420
  450
  482
  514
  548
  584
  621
  660
  700
Interest expense (income), $m
  1
  1
  2
  2
  3
  4
  5
  6
  7
  8
  9
  10
  11
  13
  14
  15
  17
  18
  20
  22
  23
  25
  27
  29
  31
  33
  35
  37
  40
  42
  45
Earnings before tax, $m
  -1
  5
  12
  20
  29
  38
  49
  60
  72
  84
  98
  112
  127
  142
  158
  175
  192
  210
  229
  249
  269
  290
  312
  335
  359
  384
  410
  437
  465
  494
  525
Tax expense, $m
  2
  1
  3
  5
  8
  10
  13
  16
  19
  23
  26
  30
  34
  38
  43
  47
  52
  57
  62
  67
  73
  78
  84
  90
  97
  104
  111
  118
  126
  133
  142
Net income, $m
  -3
  4
  9
  15
  21
  28
  36
  44
  52
  62
  71
  82
  93
  104
  116
  128
  140
  154
  167
  182
  196
  212
  228
  245
  262
  280
  299
  319
  339
  361
  383

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  59
  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
  171
  135
  161
  190
  221
  255
  291
  330
  371
  415
  461
  509
  559
  612
  667
  724
  784
  846
  911
  978
  1,047
  1,120
  1,195
  1,273
  1,354
  1,439
  1,527
  1,619
  1,715
  1,815
  1,919
Adjusted assets (=assets-cash), $m
  112
  135
  161
  190
  221
  255
  291
  330
  371
  415
  461
  509
  559
  612
  667
  724
  784
  846
  911
  978
  1,047
  1,120
  1,195
  1,273
  1,354
  1,439
  1,527
  1,619
  1,715
  1,815
  1,919
Revenue / Adjusted assets
  1.080
  1.081
  1.081
  1.079
  1.077
  1.078
  1.079
  1.079
  1.081
  1.080
  1.078
  1.081
  1.081
  1.080
  1.081
  1.080
  1.080
  1.080
  1.079
  1.080
  1.080
  1.079
  1.079
  1.080
  1.081
  1.080
  1.080
  1.080
  1.080
  1.080
  1.080
Average production assets, $m
  54
  65
  78
  91
  106
  123
  140
  159
  179
  200
  222
  245
  269
  295
  321
  349
  378
  408
  439
  471
  504
  539
  576
  613
  652
  693
  736
  780
  826
  874
  924
Working capital, $m
  51
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
Total debt, $m
  36
  47
  66
  87
  110
  134
  161
  189
  220
  252
  285
  320
  357
  396
  436
  478
  522
  567
  615
  664
  715
  768
  823
  880
  939
  1,001
  1,066
  1,133
  1,203
  1,276
  1,353
Total liabilities, $m
  87
  99
  118
  139
  162
  186
  213
  241
  272
  304
  337
  372
  409
  448
  488
  530
  574
  619
  667
  716
  767
  820
  875
  932
  991
  1,053
  1,118
  1,185
  1,255
  1,328
  1,405
Total equity, $m
  83
  36
  43
  51
  59
  68
  78
  88
  99
  111
  123
  136
  150
  164
  179
  194
  210
  227
  244
  262
  281
  300
  320
  341
  363
  386
  409
  434
  460
  486
  514
Total liabilities and equity, $m
  170
  135
  161
  190
  221
  254
  291
  329
  371
  415
  460
  508
  559
  612
  667
  724
  784
  846
  911
  978
  1,048
  1,120
  1,195
  1,273
  1,354
  1,439
  1,527
  1,619
  1,715
  1,814
  1,919
Debt-to-equity ratio
  0.434
  1.300
  1.530
  1.710
  1.850
  1.970
  2.060
  2.140
  2.210
  2.260
  2.310
  2.350
  2.380
  2.410
  2.440
  2.460
  2.480
  2.500
  2.520
  2.530
  2.550
  2.560
  2.570
  2.580
  2.590
  2.600
  2.600
  2.610
  2.620
  2.620
  2.630
Adjusted equity ratio
  0.214
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -3
  4
  9
  15
  21
  28
  36
  44
  52
  62
  71
  82
  93
  104
  116
  128
  140
  154
  167
  182
  196
  212
  228
  245
  262
  280
  299
  319
  339
  361
  383
Depreciation, amort., depletion, $m
  9
  10
  12
  14
  16
  18
  21
  23
  26
  29
  32
  35
  38
  42
  45
  49
  53
  57
  62
  66
  71
  76
  81
  86
  92
  98
  104
  110
  116
  123
  130
Funds from operations, $m
  10
  14
  21
  28
  37
  46
  56
  67
  78
  91
  103
  117
  131
  145
  161
  177
  194
  211
  229
  248
  267
  288
  309
  331
  354
  378
  403
  429
  456
  484
  514
Change in working capital, $m
  1
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  9
  14
  21
  29
  38
  47
  57
  68
  79
  91
  104
  117
  132
  146
  162
  178
  195
  212
  230
  249
  269
  289
  310
  332
  355
  379
  404
  430
  458
  486
  515
Maintenance CAPEX, $m
  0
  -8
  -9
  -11
  -13
  -15
  -17
  -20
  -22
  -25
  -28
  -31
  -35
  -38
  -42
  -45
  -49
  -53
  -57
  -62
  -66
  -71
  -76
  -81
  -86
  -92
  -98
  -104
  -110
  -116
  -123
New CAPEX, $m
  -15
  -11
  -12
  -14
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
Cash from investing activities, $m
  -13
  -19
  -21
  -25
  -28
  -31
  -35
  -39
  -42
  -46
  -50
  -54
  -59
  -63
  -69
  -73
  -78
  -83
  -88
  -94
  -100
  -106
  -112
  -119
  -125
  -133
  -140
  -148
  -156
  -164
  -173
Free cash flow, $m
  -4
  -5
  -1
  4
  10
  16
  22
  29
  37
  45
  54
  63
  73
  83
  94
  105
  117
  129
  142
  155
  169
  183
  198
  214
  230
  247
  264
  283
  302
  321
  342
Issuance/(repayment) of debt, $m
  11
  17
  19
  21
  23
  25
  27
  28
  30
  32
  34
  35
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  76
Issuance/(repurchase) of shares, $m
  0
  3
  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  
  10
  20
  19
  21
  23
  25
  27
  28
  30
  32
  34
  35
  37
  39
  40
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  67
  70
  73
  76
Total cash flow (excl. dividends), $m
  5
  15
  18
  25
  32
  40
  49
  58
  67
  77
  88
  98
  110
  122
  134
  147
  160
  174
  189
  204
  220
  236
  253
  271
  289
  309
  329
  350
  372
  395
  418
Retained Cash Flow (-), $m
  5
  -6
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
Prev. year cash balance distribution, $m
 
  53
  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
 
  62
  11
  18
  24
  31
  39
  47
  56
  65
  75
  85
  96
  108
  119
  132
  144
  158
  172
  186
  201
  217
  233
  250
  268
  286
  305
  325
  346
  368
  390
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
 
  59
  11
  15
  20
  24
  28
  32
  35
  38
  39
  41
  41
  41
  40
  39
  37
  34
  32
  29
  26
  22
  19
  16
  14
  11
  9
  7
  5
  4
  3
Current shareholders' claim on cash, %
  100
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0
  99.0

Materialise NV is a Belgium-based company engaged in the software industry. The Company is a provider of additive manufacturing software and of three dimensional (3D) printing services. Materialise NV incorporates of 3D printing experience into a range of software solution and 3D printing services, through which the Company seeks to form the backbone of the 3D printing industry. Its solutions enable players in a wide variety of industries, including healthcare, automotive, aerospace, art and design, and consumer goods, to build 3D printing applications. The Company operates in the domestic market and worldwide, including Colombia, Brazil, Australia, Malaysia, China, Japan, Austria, Poland, Germany and France, among others.

FINANCIAL RATIOS  of  Materialise ADR (MTLS)

Valuation Ratios
P/E Ratio -249.7
Price to Sales 6.2
Price to Book 9
Price to Tangible Book
Price to Cash Flow 83.2
Price to Free Cash Flow -124.9
Growth Rates
Sales Growth Rate 12%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 36.4%
Cap. Spend. - 3 Yr. Gr. Rate 38%
Financial Strength
Quick Ratio 10
Current Ratio 0.1
LT Debt to Equity 36.1%
Total Debt to Equity 43.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0.5%
Return On Total Capital -2.6%
Ret/ On T. Cap. - 3 Yr. Avg. -0.9%
Return On Equity -3.5%
Return On Equity - 3 Yr. Avg. -1.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 59.5%
Gross Margin - 3 Yr. Avg. 59.1%
EBITDA Margin 7.4%
EBITDA Margin - 3 Yr. Avg. 7.1%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. -1.2%
Pre-Tax Margin -0.8%
Pre-Tax Margin - 3 Yr. Avg. -0.4%
Net Profit Margin -2.5%
Net Profit Margin - 3 Yr. Avg. -1%
Effective Tax Rate -200%
Eff/ Tax Rate - 3 Yr. Avg. -66.7%
Payout Ratio 0%

MTLS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTLS stock intrinsic value calculation we used $121 million for the last fiscal year's total revenue generated by Materialise ADR. The default revenue input number comes from 2016 income statement of Materialise ADR. 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 MTLS stock valuation model: a) initial revenue growth rate of 20.7% 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 MTLS is calculated based on our internal credit rating of Materialise ADR, 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 Materialise ADR.
    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 MTLS stock the variable cost ratio is equal to 69.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $38 million in the base year in the intrinsic value calculation for MTLS 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 3.5% for Materialise ADR.

Corporate tax rate of 27% is the nominal tax rate for Materialise ADR. 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 MTLS 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 MTLS are equal to 44.6%.

Life of production assets of 7.1 years is the average useful life of capital assets used in Materialise ADR 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 MTLS is equal to -1.7%. 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 - $83 million for Materialise ADR - 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 47.835 million for Materialise ADR 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 Materialise ADR at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ Should You Buy Materialise NV (MTLS)?   [Sep-11-17 12:15PM  Simply Wall St.]
▶ Materialise reports 2Q loss   [Aug-08-17 10:00PM  Associated Press]
▶ Investor Network: Materialise NV to Host Earnings Call   [May-09-17 07:15AM  Accesswire]
▶ Materialise reports 1Q loss   [06:40AM  Associated Press]
▶ Materialise NV to Report First Quarter 2017 Earnings   [Apr-26-17 09:00AM  GlobeNewswire]
▶ Materialise posts 4Q profit   [06:46AM  Associated Press]
▶ Materialise posts 3Q loss   [06:41AM  AP]
▶ Materialise reports 2Q loss   [06:37AM  AP]
▶ MATERIALISE NV Financials   [May-05-16 01:04PM  EDGAR Online Financials]
▶ Materialise posts 4Q profit   [07:01AM  AP]
▶ Three of the Biggest 3D Printing Companies   [Feb-04-16 02:01PM  at Investopedia]
Financial statements of MTLS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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