Intrinsic value of Novanta Inc. - NOVT

Previous Close

$92.13

  Intrinsic Value

$29.91

stock screener

  Rating & Target

str. sell

-68%

Previous close

$92.13

 
Intrinsic value

$29.91

 
Up/down potential

-68%

 
Rating

str. sell

We calculate the intrinsic value of NOVT 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 3.2

 

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, %
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
Revenue, $m
  653
  693
  735
  779
  824
  872
  921
  973
  1,027
  1,084
  1,143
  1,205
  1,269
  1,337
  1,408
  1,482
  1,560
  1,641
  1,726
  1,816
  1,909
  2,007
  2,110
  2,218
  2,332
  2,450
  2,575
  2,706
  2,843
  2,987
Variable operating expenses, $m
  558
  590
  623
  658
  695
  733
  772
  814
  857
  902
  913
  963
  1,014
  1,069
  1,125
  1,184
  1,246
  1,311
  1,380
  1,451
  1,526
  1,604
  1,687
  1,773
  1,863
  1,958
  2,058
  2,162
  2,272
  2,387
Fixed operating expenses, $m
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  28
  29
  29
  30
  31
Total operating expenses, $m
  574
  607
  640
  675
  713
  751
  791
  833
  876
  922
  933
  984
  1,035
  1,091
  1,147
  1,207
  1,269
  1,335
  1,404
  1,476
  1,551
  1,630
  1,713
  1,800
  1,891
  1,986
  2,087
  2,191
  2,302
  2,418
Operating income, $m
  79
  86
  94
  103
  112
  121
  130
  140
  151
  162
  209
  221
  234
  247
  261
  275
  290
  306
  322
  340
  358
  377
  397
  418
  441
  464
  488
  514
  541
  569
EBITDA, $m
  137
  146
  156
  166
  176
  187
  198
  210
  222
  235
  249
  263
  278
  293
  309
  326
  344
  363
  382
  403
  424
  447
  471
  495
  521
  549
  578
  608
  639
  673
Interest expense (income), $m
  3
  11
  12
  14
  15
  16
  18
  19
  21
  22
  24
  26
  28
  29
  31
  34
  36
  38
  40
  43
  46
  48
  51
  54
  57
  61
  64
  68
  72
  76
  80
Earnings before tax, $m
  67
  74
  81
  88
  95
  103
  111
  120
  128
  138
  183
  194
  204
  215
  227
  239
  252
  265
  280
  294
  310
  326
  343
  361
  380
  400
  420
  442
  465
  489
Tax expense, $m
  18
  20
  22
  24
  26
  28
  30
  32
  35
  37
  50
  52
  55
  58
  61
  65
  68
  72
  75
  79
  84
  88
  93
  97
  103
  108
  113
  119
  126
  132
Net income, $m
  49
  54
  59
  64
  70
  75
  81
  87
  94
  100
  134
  141
  149
  157
  166
  175
  184
  194
  204
  215
  226
  238
  250
  264
  277
  292
  307
  323
  339
  357

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
  765
  812
  862
  913
  966
  1,022
  1,080
  1,141
  1,204
  1,271
  1,340
  1,412
  1,488
  1,567
  1,650
  1,737
  1,828
  1,924
  2,024
  2,128
  2,238
  2,353
  2,474
  2,601
  2,733
  2,873
  3,019
  3,172
  3,333
  3,501
Adjusted assets (=assets-cash), $m
  765
  812
  862
  913
  966
  1,022
  1,080
  1,141
  1,204
  1,271
  1,340
  1,412
  1,488
  1,567
  1,650
  1,737
  1,828
  1,924
  2,024
  2,128
  2,238
  2,353
  2,474
  2,601
  2,733
  2,873
  3,019
  3,172
  3,333
  3,501
Revenue / Adjusted assets
  0.854
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
  0.853
Average production assets, $m
  260
  276
  293
  311
  329
  348
  368
  388
  410
  432
  456
  481
  506
  533
  562
  591
  622
  655
  689
  724
  762
  801
  842
  885
  930
  978
  1,027
  1,080
  1,134
  1,192
Working capital, $m
  106
  113
  120
  127
  134
  142
  150
  159
  167
  177
  186
  196
  207
  218
  229
  242
  254
  267
  281
  296
  311
  327
  344
  362
  380
  399
  420
  441
  463
  487
Total debt, $m
  229
  252
  276
  301
  328
  355
  383
  413
  444
  476
  510
  545
  582
  621
  661
  704
  748
  795
  844
  895
  948
  1,004
  1,063
  1,125
  1,190
  1,258
  1,329
  1,404
  1,482
  1,565
Total liabilities, $m
  373
  396
  420
  445
  472
  499
  527
  557
  588
  620
  654
  689
  726
  765
  805
  848
  892
  939
  988
  1,039
  1,092
  1,148
  1,207
  1,269
  1,334
  1,402
  1,473
  1,548
  1,626
  1,709
Total equity, $m
  392
  416
  441
  467
  495
  523
  553
  584
  617
  651
  686
  723
  762
  802
  845
  890
  936
  985
  1,036
  1,090
  1,146
  1,205
  1,267
  1,331
  1,399
  1,471
  1,546
  1,624
  1,706
  1,793
Total liabilities and equity, $m
  765
  812
  861
  912
  967
  1,022
  1,080
  1,141
  1,205
  1,271
  1,340
  1,412
  1,488
  1,567
  1,650
  1,738
  1,828
  1,924
  2,024
  2,129
  2,238
  2,353
  2,474
  2,600
  2,733
  2,873
  3,019
  3,172
  3,332
  3,502
Debt-to-equity ratio
  0.590
  0.610
  0.630
  0.650
  0.660
  0.680
  0.690
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.810
  0.810
  0.820
  0.830
  0.830
  0.840
  0.850
  0.850
  0.860
  0.860
  0.860
  0.870
  0.870
Adjusted equity ratio
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  49
  54
  59
  64
  70
  75
  81
  87
  94
  100
  134
  141
  149
  157
  166
  175
  184
  194
  204
  215
  226
  238
  250
  264
  277
  292
  307
  323
  339
  357
Depreciation, amort., depletion, $m
  59
  60
  62
  63
  65
  66
  68
  70
  72
  74
  40
  42
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  73
  77
  81
  85
  89
  94
  99
  104
Funds from operations, $m
  108
  114
  121
  127
  134
  142
  149
  157
  165
  174
  174
  183
  193
  204
  215
  226
  238
  251
  264
  278
  292
  308
  324
  341
  358
  377
  396
  417
  438
  461
Change in working capital, $m
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
Cash from operations, $m
  102
  108
  114
  120
  127
  134
  141
  149
  157
  165
  164
  173
  183
  193
  203
  214
  225
  237
  250
  263
  277
  292
  307
  323
  340
  357
  376
  395
  416
  437
Maintenance CAPEX, $m
  -21
  -23
  -24
  -25
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
  -89
  -94
  -99
New CAPEX, $m
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -50
  -52
  -55
  -57
Cash from investing activities, $m
  -36
  -39
  -41
  -42
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -79
  -82
  -86
  -91
  -96
  -100
  -105
  -111
  -116
  -122
  -128
  -135
  -141
  -149
  -156
Free cash flow, $m
  65
  69
  73
  77
  82
  86
  91
  96
  101
  107
  103
  109
  115
  122
  128
  136
  143
  151
  159
  168
  177
  186
  196
  207
  218
  229
  241
  254
  267
  281
Issuance/(repayment) of debt, $m
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
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  
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  68
  71
  75
  78
  82
Total cash flow (excl. dividends), $m
  87
  92
  97
  102
  108
  113
  119
  126
  132
  139
  137
  144
  152
  160
  169
  178
  187
  197
  208
  219
  230
  242
  255
  268
  282
  297
  312
  329
  346
  363
Retained Cash Flow (-), $m
  -24
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
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
  64
  68
  72
  76
  80
  85
  90
  95
  100
  105
  101
  107
  113
  120
  126
  133
  141
  149
  157
  165
  174
  183
  193
  204
  214
  226
  238
  250
  263
  277
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
  61
  62
  62
  63
  62
  62
  61
  59
  57
  55
  48
  46
  43
  40
  37
  34
  31
  27
  24
  21
  18
  15
  13
  10
  8
  7
  5
  4
  3
  2
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

Novanta Inc., formerly GSI Group Inc., designs, develops, manufactures and sells precision photonic and motion control components and subsystems. The Company's segments are Photonics, Vision and Precision Motion. The Photonics segment designs, manufactures and markets photonics-based solutions, including carbon dioxide (CO2) laser sources, laser scanning and laser beam delivery products, to customers around the world. The Vision Technologies segment designs, manufactures and markets a range of medical grade technologies, including visualization solutions, imaging informatics products, optical data collection and machine vision technologies, radio frequency identification (RFID) technologies, and thermal printers, to customers around the world. The Company's Precision Motion segment designs, manufactures and markets optical encoders, precision motors and other motion control technology, air bearing spindles and precision machined components to customers around the world.

FINANCIAL RATIOS  of  Novanta Inc. (NOVT)

Valuation Ratios
P/E Ratio 144.3
Price to Sales 8.2
Price to Book 12.3
Price to Tangible Book
Price to Cash Flow 66.1
Price to Free Cash Flow 88.2
Growth Rates
Sales Growth Rate 2.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 19.1%
Financial Strength
Quick Ratio 10
Current Ratio 0
LT Debt to Equity 30.5%
Total Debt to Equity 33.2%
Interest Coverage 12
Management Effectiveness
Return On Assets 5.7%
Ret/ On Assets - 3 Yr. Avg. 3.4%
Return On Total Capital 6.3%
Ret/ On T. Cap. - 3 Yr. Avg. 3.2%
Return On Equity 8.7%
Return On Equity - 3 Yr. Avg. 4.6%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 42.1%
Gross Margin - 3 Yr. Avg. 41.8%
EBITDA Margin 14.5%
EBITDA Margin - 3 Yr. Avg. 11.9%
Operating Margin 8.6%
Oper. Margin - 3 Yr. Avg. 5.7%
Pre-Tax Margin 8.6%
Pre-Tax Margin - 3 Yr. Avg. 5.3%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 2.9%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 20.2%
Payout Ratio 0%

NOVT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NOVT stock intrinsic value calculation we used $614 million for the last fiscal year's total revenue generated by Novanta Inc.. The default revenue input number comes from 0001 income statement of Novanta 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 NOVT stock valuation model: a) initial revenue growth rate of 6.3% 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 NOVT is calculated based on our internal credit rating of Novanta 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 Novanta 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 NOVT stock the variable cost ratio is equal to 85.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16 million in the base year in the intrinsic value calculation for NOVT 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 Novanta Inc..

Corporate tax rate of 27% is the nominal tax rate for Novanta 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 NOVT 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 NOVT are equal to 39.9%.

Life of production assets of 11.5 years is the average useful life of capital assets used in Novanta 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 NOVT is equal to 16.3%. 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 - $368.255 million for Novanta 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 34.923 million for Novanta 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 Novanta Inc. at the current share price and the inputted number of shares is $3.2 billion.

RELATED COMPANIES Price Int.Val. Rating
COHR Coherent, Inc. 128.69 176.58  buy
IPGP IPG Photonics 146.48 114.19  sell
ZBRA Zebra Technolo 200.11 386.51  str.buy
FTV Fortive Corpor 80.42 87.04  hold
CGNX Cognex Corpora 46.41 19.40  str.sell
IIVI II-VI Incorpor 35.07 7.71  str.sell
HON Honeywell Inte 174.31 132.66  hold

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

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