Intrinsic value of NeoGenomics, Inc. - NEO

Previous Close

$23.36

  Intrinsic Value

$6.48

stock screener

  Rating & Target

str. sell

-72%

Previous close

$23.36

 
Intrinsic value

$6.48

 
Up/down potential

-72%

 
Rating

str. sell

We calculate the intrinsic value of NEO 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 2.2

 

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, %
  24.50
  22.55
  20.80
  19.22
  17.79
  16.51
  15.36
  14.33
  13.39
  12.55
  11.80
  11.12
  10.51
  9.96
  9.46
  9.01
  8.61
  8.25
  7.93
  7.63
  7.37
  7.13
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
Revenue, $m
  345
  423
  511
  609
  717
  835
  964
  1,102
  1,249
  1,406
  1,572
  1,747
  1,930
  2,123
  2,323
  2,533
  2,751
  2,978
  3,214
  3,459
  3,714
  3,979
  4,255
  4,541
  4,839
  5,148
  5,471
  5,806
  6,156
  6,520
Variable operating expenses, $m
  277
  332
  394
  463
  539
  623
  713
  810
  915
  1,025
  1,108
  1,231
  1,361
  1,496
  1,638
  1,786
  1,939
  2,099
  2,266
  2,439
  2,619
  2,805
  3,000
  3,201
  3,411
  3,629
  3,857
  4,093
  4,340
  4,597
Fixed operating expenses, $m
  39
  40
  41
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  52
  53
  54
  55
  56
  57
  59
  60
  61
  63
  64
  65
  67
  68
  70
  71
  73
Total operating expenses, $m
  316
  372
  435
  504
  581
  666
  757
  855
  961
  1,072
  1,156
  1,280
  1,411
  1,548
  1,691
  1,840
  1,994
  2,155
  2,323
  2,498
  2,679
  2,866
  3,063
  3,265
  3,476
  3,696
  3,925
  4,163
  4,411
  4,670
Operating income, $m
  29
  51
  76
  104
  135
  169
  206
  246
  289
  334
  415
  466
  519
  575
  633
  693
  757
  822
  891
  962
  1,036
  1,113
  1,193
  1,276
  1,362
  1,452
  1,546
  1,643
  1,745
  1,851
EBITDA, $m
  78
  104
  133
  166
  201
  241
  283
  329
  379
  431
  486
  545
  606
  670
  737
  807
  880
  956
  1,035
  1,118
  1,203
  1,292
  1,384
  1,480
  1,580
  1,684
  1,792
  1,905
  2,022
  2,144
Interest expense (income), $m
  5
  6
  9
  12
  15
  19
  23
  28
  32
  38
  43
  49
  56
  62
  69
  76
  84
  92
  100
  109
  118
  127
  137
  147
  157
  168
  180
  191
  204
  216
  230
Earnings before tax, $m
  23
  42
  64
  89
  116
  146
  179
  214
  251
  290
  366
  410
  457
  505
  556
  609
  665
  722
  782
  844
  909
  976
  1,046
  1,118
  1,194
  1,272
  1,354
  1,439
  1,528
  1,621
Tax expense, $m
  6
  11
  17
  24
  31
  39
  48
  58
  68
  78
  99
  111
  123
  136
  150
  165
  179
  195
  211
  228
  245
  263
  282
  302
  322
  344
  366
  389
  413
  438
Net income, $m
  17
  31
  47
  65
  85
  107
  130
  156
  183
  212
  267
  300
  334
  369
  406
  445
  485
  527
  571
  616
  663
  712
  763
  816
  871
  929
  989
  1,051
  1,116
  1,183

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
  629
  771
  932
  1,111
  1,308
  1,524
  1,758
  2,010
  2,280
  2,566
  2,869
  3,188
  3,523
  3,873
  4,240
  4,622
  5,020
  5,434
  5,865
  6,313
  6,778
  7,262
  7,764
  8,287
  8,830
  9,395
  9,983
  10,595
  11,233
  11,898
Adjusted assets (=assets-cash), $m
  629
  771
  932
  1,111
  1,308
  1,524
  1,758
  2,010
  2,280
  2,566
  2,869
  3,188
  3,523
  3,873
  4,240
  4,622
  5,020
  5,434
  5,865
  6,313
  6,778
  7,262
  7,764
  8,287
  8,830
  9,395
  9,983
  10,595
  11,233
  11,898
Revenue / Adjusted assets
  0.548
  0.549
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
  0.548
Average production assets, $m
  235
  287
  347
  414
  488
  568
  655
  749
  849
  956
  1,069
  1,188
  1,313
  1,443
  1,580
  1,722
  1,871
  2,025
  2,186
  2,352
  2,526
  2,706
  2,893
  3,088
  3,290
  3,501
  3,720
  3,948
  4,186
  4,434
Working capital, $m
  59
  72
  87
  103
  122
  142
  164
  187
  212
  239
  267
  297
  328
  361
  395
  431
  468
  506
  546
  588
  631
  676
  723
  772
  823
  875
  930
  987
  1,046
  1,108
Total debt, $m
  157
  209
  268
  333
  405
  484
  570
  662
  760
  864
  975
  1,091
  1,213
  1,341
  1,475
  1,615
  1,760
  1,911
  2,068
  2,232
  2,402
  2,578
  2,762
  2,952
  3,151
  3,357
  3,572
  3,795
  4,028
  4,271
Total liabilities, $m
  230
  281
  340
  405
  478
  556
  642
  734
  832
  937
  1,047
  1,163
  1,286
  1,414
  1,547
  1,687
  1,832
  1,984
  2,141
  2,304
  2,474
  2,650
  2,834
  3,025
  3,223
  3,429
  3,644
  3,867
  4,100
  4,343
Total equity, $m
  400
  490
  592
  705
  831
  968
  1,117
  1,277
  1,448
  1,629
  1,822
  2,024
  2,237
  2,460
  2,692
  2,935
  3,188
  3,451
  3,724
  4,009
  4,304
  4,611
  4,930
  5,262
  5,607
  5,966
  6,339
  6,728
  7,133
  7,555
Total liabilities and equity, $m
  630
  771
  932
  1,110
  1,309
  1,524
  1,759
  2,011
  2,280
  2,566
  2,869
  3,187
  3,523
  3,874
  4,239
  4,622
  5,020
  5,435
  5,865
  6,313
  6,778
  7,261
  7,764
  8,287
  8,830
  9,395
  9,983
  10,595
  11,233
  11,898
Debt-to-equity ratio
  0.390
  0.430
  0.450
  0.470
  0.490
  0.500
  0.510
  0.520
  0.520
  0.530
  0.540
  0.540
  0.540
  0.550
  0.550
  0.550
  0.550
  0.550
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.570
Adjusted equity ratio
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  17
  31
  47
  65
  85
  107
  130
  156
  183
  212
  267
  300
  334
  369
  406
  445
  485
  527
  571
  616
  663
  712
  763
  816
  871
  929
  989
  1,051
  1,116
  1,183
Depreciation, amort., depletion, $m
  49
  53
  57
  61
  66
  71
  77
  83
  90
  97
  71
  79
  87
  96
  105
  114
  124
  134
  145
  156
  167
  179
  192
  204
  218
  232
  246
  261
  277
  294
Funds from operations, $m
  66
  84
  104
  126
  151
  178
  208
  239
  273
  309
  338
  378
  420
  465
  511
  559
  609
  661
  715
  772
  831
  892
  955
  1,021
  1,089
  1,161
  1,235
  1,312
  1,393
  1,477
Change in working capital, $m
  12
  13
  15
  17
  18
  20
  22
  23
  25
  27
  28
  30
  31
  33
  34
  36
  37
  39
  40
  42
  43
  45
  47
  49
  51
  53
  55
  57
  59
  62
Cash from operations, $m
  54
  70
  89
  110
  133
  158
  186
  216
  248
  283
  310
  349
  389
  432
  477
  523
  572
  623
  675
  730
  787
  846
  908
  972
  1,039
  1,108
  1,180
  1,255
  1,333
  1,415
Maintenance CAPEX, $m
  -12
  -16
  -19
  -23
  -27
  -32
  -38
  -43
  -50
  -56
  -63
  -71
  -79
  -87
  -96
  -105
  -114
  -124
  -134
  -145
  -156
  -167
  -179
  -192
  -204
  -218
  -232
  -246
  -261
  -277
New CAPEX, $m
  -46
  -53
  -60
  -67
  -74
  -81
  -87
  -94
  -100
  -107
  -113
  -119
  -125
  -131
  -137
  -142
  -148
  -154
  -161
  -167
  -173
  -180
  -187
  -195
  -202
  -211
  -219
  -228
  -238
  -248
Cash from investing activities, $m
  -58
  -69
  -79
  -90
  -101
  -113
  -125
  -137
  -150
  -163
  -176
  -190
  -204
  -218
  -233
  -247
  -262
  -278
  -295
  -312
  -329
  -347
  -366
  -387
  -406
  -429
  -451
  -474
  -499
  -525
Free cash flow, $m
  -4
  2
  10
  20
  32
  45
  61
  79
  98
  120
  134
  159
  186
  214
  244
  276
  310
  344
  381
  419
  458
  499
  542
  586
  632
  680
  729
  781
  834
  890
Issuance/(repayment) of debt, $m
  45
  52
  59
  65
  72
  79
  85
  92
  98
  104
  111
  116
  122
  128
  134
  140
  145
  151
  157
  163
  170
  176
  183
  191
  198
  206
  215
  224
  233
  243
Issuance/(repurchase) of shares, $m
  63
  59
  55
  49
  41
  30
  18
  4
  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  
  108
  111
  114
  114
  113
  109
  103
  96
  98
  104
  111
  116
  122
  128
  134
  140
  145
  151
  157
  163
  170
  176
  183
  191
  198
  206
  215
  224
  233
  243
Total cash flow (excl. dividends), $m
  104
  113
  123
  134
  144
  155
  165
  175
  196
  224
  244
  275
  308
  342
  378
  416
  455
  496
  538
  582
  628
  676
  725
  777
  830
  886
  944
  1,004
  1,067
  1,133
Retained Cash Flow (-), $m
  -79
  -90
  -102
  -114
  -125
  -137
  -149
  -160
  -171
  -182
  -192
  -203
  -213
  -223
  -233
  -243
  -253
  -263
  -274
  -284
  -295
  -307
  -319
  -332
  -345
  -359
  -373
  -389
  -405
  -422
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
  24
  23
  22
  20
  19
  17
  16
  15
  25
  42
  52
  73
  95
  120
  146
  173
  202
  232
  264
  298
  332
  368
  406
  445
  485
  527
  570
  615
  662
  711
Discount rate, %
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
  23
  21
  19
  16
  14
  12
  11
  9
  14
  21
  24
  29
  34
  37
  39
  40
  40
  38
  36
  33
  30
  26
  22
  19
  15
  12
  10
  7
  5
  4
Current shareholders' claim on cash, %
  97.2
  95.2
  93.7
  92.6
  91.8
  91.3
  91.1
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0
  91.0

NeoGenomics, Inc. is an operator of a network of cancer-focused genetic testing laboratories. The Company operates in Laboratory Testing Segment. This segment delivers testing services to hospitals, pathologists, oncologists, other clinicians and researchers. It has laboratory locations in Ft. Myers and Tampa, Florida; Aliso Viejo, Fresno, Irvine, and West Sacramento, California; Houston, Texas and Nashville, and Tennessee. It offers testing services, which include Cytogenetics, Fluorescence In-Situ Hybridization (FISH), Flow cytometry, Immunohistochemistry (IHC), Molecular testing and Pathology consultation. Its Pharma Services and Clinical Trials group provides testing services in support of its pharmaceutical clients' oncology programs from discovery to commercialization. It helps its customers develop a biomarker hypothesis by recommending an optimal platform for molecular screening and backing its discovery tools with the informatics to capture meaningful data.

FINANCIAL RATIOS  of  NeoGenomics, Inc. (NEO)

Valuation Ratios
P/E Ratio -305.9
Price to Sales 7.5
Price to Book 9.8
Price to Tangible Book
Price to Cash Flow 87.4
Price to Free Cash Flow 141.2
Growth Rates
Sales Growth Rate 144%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 300%
Cap. Spend. - 3 Yr. Gr. Rate 32%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 51.9%
Total Debt to Equity 56.7%
Interest Coverage 0
Management Effectiveness
Return On Assets -0.5%
Ret/ On Assets - 3 Yr. Avg. 0.6%
Return On Total Capital -2%
Ret/ On T. Cap. - 3 Yr. Avg. -0.5%
Return On Equity -2.8%
Return On Equity - 3 Yr. Avg. -0.8%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 45.1%
Gross Margin - 3 Yr. Avg. 45.4%
EBITDA Margin 8.6%
EBITDA Margin - 3 Yr. Avg. 6.9%
Operating Margin 0.8%
Oper. Margin - 3 Yr. Avg. -0.6%
Pre-Tax Margin -2.9%
Pre-Tax Margin - 3 Yr. Avg. -1.9%
Net Profit Margin -2.5%
Net Profit Margin - 3 Yr. Avg. -1.4%
Effective Tax Rate 14.3%
Eff/ Tax Rate - 3 Yr. Avg. 13.1%
Payout Ratio 0%

NEO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NEO stock intrinsic value calculation we used $277 million for the last fiscal year's total revenue generated by NeoGenomics, Inc.. The default revenue input number comes from 0001 income statement of NeoGenomics, 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 NEO stock valuation model: a) initial revenue growth rate of 24.5% 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 4.6%, whose default value for NEO is calculated based on our internal credit rating of NeoGenomics, 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 NeoGenomics, 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 NEO stock the variable cost ratio is equal to 82.7%.

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 NEO 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 5.7% for NeoGenomics, Inc..

Corporate tax rate of 27% is the nominal tax rate for NeoGenomics, 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 NEO 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 NEO are equal to 68%.

Life of production assets of 15.1 years is the average useful life of capital assets used in NeoGenomics, 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 NEO is equal to 17%. 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 - $320.443 million for NeoGenomics, 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 94.520 million for NeoGenomics, 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 NeoGenomics, Inc. at the current share price and the inputted number of shares is $2.2 billion.

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