Intrinsic value of OraSure Technologies - OSUR

Previous Close

$12.58

  Intrinsic Value

$12.97

stock screener

  Rating & Target

hold

+3%

Previous close

$12.58

 
Intrinsic value

$12.97

 
Up/down potential

+3%

 
Rating

hold

We calculate the intrinsic value of OSUR 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 0.8

 

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, %
  8.60
  8.24
  7.92
  7.62
  7.36
  7.13
  6.91
  6.72
  6.55
  6.39
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
Revenue, $m
  181
  196
  212
  228
  245
  262
  280
  299
  319
  339
  361
  383
  406
  430
  455
  481
  508
  536
  566
  597
  630
  664
  699
  736
  775
  816
  859
  904
  950
  1,000
Variable operating expenses, $m
  88
  95
  102
  110
  117
  126
  134
  143
  152
  162
  169
  179
  190
  201
  213
  225
  238
  251
  265
  280
  295
  311
  327
  345
  363
  382
  402
  423
  445
  468
Fixed operating expenses, $m
  48
  49
  50
  51
  52
  54
  55
  56
  57
  58
  60
  61
  62
  64
  65
  67
  68
  70
  71
  73
  74
  76
  78
  79
  81
  83
  85
  86
  88
  90
Total operating expenses, $m
  136
  144
  152
  161
  169
  180
  189
  199
  209
  220
  229
  240
  252
  265
  278
  292
  306
  321
  336
  353
  369
  387
  405
  424
  444
  465
  487
  509
  533
  558
Operating income, $m
  46
  53
  60
  67
  75
  83
  92
  100
  110
  119
  132
  143
  153
  165
  177
  189
  202
  216
  230
  245
  261
  277
  294
  313
  331
  351
  372
  394
  417
  441
EBITDA, $m
  53
  61
  68
  76
  85
  93
  102
  111
  121
  131
  142
  153
  164
  177
  189
  202
  216
  230
  246
  261
  278
  295
  313
  333
  353
  374
  396
  419
  443
  469
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
Earnings before tax, $m
  46
  52
  59
  67
  74
  82
  90
  99
  108
  117
  130
  140
  151
  162
  173
  186
  198
  212
  226
  240
  255
  271
  288
  306
  324
  344
  364
  386
  408
  432
Tax expense, $m
  12
  14
  16
  18
  20
  22
  24
  27
  29
  32
  35
  38
  41
  44
  47
  50
  54
  57
  61
  65
  69
  73
  78
  83
  88
  93
  98
  104
  110
  117
Net income, $m
  33
  38
  43
  49
  54
  60
  66
  72
  79
  86
  95
  102
  110
  118
  127
  136
  145
  154
  165
  175
  186
  198
  210
  223
  237
  251
  266
  282
  298
  315

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
  187
  203
  219
  236
  253
  271
  290
  309
  329
  351
  372
  395
  419
  444
  470
  497
  525
  554
  585
  617
  651
  686
  722
  761
  801
  843
  887
  933
  982
  1,033
Adjusted assets (=assets-cash), $m
  187
  203
  219
  236
  253
  271
  290
  309
  329
  351
  372
  395
  419
  444
  470
  497
  525
  554
  585
  617
  651
  686
  722
  761
  801
  843
  887
  933
  982
  1,033
Revenue / Adjusted assets
  0.968
  0.966
  0.968
  0.966
  0.968
  0.967
  0.966
  0.968
  0.970
  0.966
  0.970
  0.970
  0.969
  0.968
  0.968
  0.968
  0.968
  0.968
  0.968
  0.968
  0.968
  0.968
  0.968
  0.967
  0.968
  0.968
  0.968
  0.969
  0.967
  0.968
Average production assets, $m
  38
  41
  45
  48
  51
  55
  59
  63
  67
  71
  76
  80
  85
  90
  95
  101
  107
  113
  119
  125
  132
  139
  147
  155
  163
  171
  180
  190
  200
  210
Working capital, $m
  37
  40
  43
  46
  49
  53
  57
  60
  64
  69
  73
  77
  82
  87
  92
  97
  103
  108
  114
  121
  127
  134
  141
  149
  157
  165
  173
  183
  192
  202
Total debt, $m
  3
  7
  10
  14
  18
  22
  26
  30
  35
  39
  44
  49
  54
  60
  66
  72
  78
  84
  91
  98
  106
  113
  122
  130
  139
  148
  158
  168
  179
  190
Total liabilities, $m
  41
  45
  48
  52
  56
  60
  64
  68
  73
  77
  82
  87
  93
  98
  104
  110
  116
  122
  129
  136
  144
  152
  160
  168
  177
  186
  196
  206
  217
  228
Total equity, $m
  146
  158
  171
  184
  197
  211
  226
  241
  257
  273
  290
  308
  326
  346
  366
  387
  409
  432
  456
  481
  507
  534
  563
  593
  624
  657
  691
  727
  765
  804
Total liabilities and equity, $m
  187
  203
  219
  236
  253
  271
  290
  309
  330
  350
  372
  395
  419
  444
  470
  497
  525
  554
  585
  617
  651
  686
  723
  761
  801
  843
  887
  933
  982
  1,032
Debt-to-equity ratio
  0.020
  0.040
  0.060
  0.080
  0.090
  0.100
  0.110
  0.130
  0.140
  0.140
  0.150
  0.160
  0.170
  0.170
  0.180
  0.190
  0.190
  0.200
  0.200
  0.200
  0.210
  0.210
  0.220
  0.220
  0.220
  0.230
  0.230
  0.230
  0.230
  0.240
Adjusted equity ratio
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779
  0.779

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  33
  38
  43
  49
  54
  60
  66
  72
  79
  86
  95
  102
  110
  118
  127
  136
  145
  154
  165
  175
  186
  198
  210
  223
  237
  251
  266
  282
  298
  315
Depreciation, amort., depletion, $m
  8
  8
  9
  9
  10
  10
  10
  11
  12
  12
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
Funds from operations, $m
  41
  46
  52
  58
  64
  70
  77
  83
  90
  98
  105
  113
  121
  130
  139
  149
  159
  169
  180
  192
  204
  216
  230
  243
  258
  273
  289
  306
  324
  342
Change in working capital, $m
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
Cash from operations, $m
  38
  43
  49
  54
  60
  66
  73
  79
  86
  94
  100
  108
  116
  125
  134
  143
  153
  163
  174
  185
  197
  209
  222
  236
  250
  265
  281
  297
  314
  333
Maintenance CAPEX, $m
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
New CAPEX, $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
Cash from investing activities, $m
  -8
  -8
  -8
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -15
  -15
  -16
  -17
  -17
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -32
  -35
  -36
Free cash flow, $m
  31
  35
  40
  45
  51
  56
  62
  68
  74
  81
  87
  94
  101
  109
  117
  125
  134
  144
  153
  163
  174
  185
  197
  209
  222
  235
  249
  264
  280
  296
Issuance/(repayment) of debt, $m
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
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  
  3
  3
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
Total cash flow (excl. dividends), $m
  34
  39
  44
  49
  54
  60
  66
  72
  79
  85
  92
  99
  106
  114
  123
  131
  141
  150
  160
  170
  181
  193
  205
  218
  231
  245
  259
  275
  291
  308
Retained Cash Flow (-), $m
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -40
Prev. year cash balance distribution, $m
  124
  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
  146
  27
  31
  36
  41
  46
  51
  57
  63
  69
  74
  81
  88
  95
  103
  110
  119
  127
  136
  145
  155
  166
  176
  188
  199
  212
  225
  239
  253
  268
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
  140
  24
  27
  30
  32
  33
  35
  36
  36
  36
  35
  35
  33
  32
  30
  28
  26
  23
  21
  18
  16
  14
  12
  10
  8
  6
  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

OraSure Technologies, Inc. (OraSure) is involved in the development, manufacture, marketing and sale of oral fluid diagnostic products and specimen collection devices using its technologies, as well as other diagnostic products, including immunoassays and other in vitro diagnostic tests that are used on other specimen types. The Company operates in two segments: OSUR and DNAG. OSUR consists of the development, manufacture and sale of diagnostic products, specimen collection devices, and medical devices. DNAG or molecular collection systems business consists primarily of the development, manufacture and sale of oral fluid collection devices that are used to collect, stabilize, and store samples of genetic material for molecular testing. It also manufactures and sells medical devices used for the removal of benign skin lesions by cryosurgery or freezing. It sells over-the-counter (OTC) cryosurgical products to consumers in North America, Europe, Central and South America, and Australia.

FINANCIAL RATIOS  of  OraSure Technologies (OSUR)

Valuation Ratios
P/E Ratio 35.2
Price to Sales 5.5
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 30.6
Price to Free Cash Flow 37.1
Growth Rates
Sales Growth Rate 6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 10.1%
Ret/ On Assets - 3 Yr. Avg. 3.9%
Return On Total Capital 11.6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.5%
Return On Equity 11.6%
Return On Equity - 3 Yr. Avg. 4.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 68.8%
Gross Margin - 3 Yr. Avg. 66.2%
EBITDA Margin 20.3%
EBITDA Margin - 3 Yr. Avg. 11.6%
Operating Margin 15.6%
Oper. Margin - 3 Yr. Avg. 5.9%
Pre-Tax Margin 15.6%
Pre-Tax Margin - 3 Yr. Avg. 6.5%
Net Profit Margin 15.6%
Net Profit Margin - 3 Yr. Avg. 5.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -4.6%
Payout Ratio 0%

OSUR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OSUR stock intrinsic value calculation we used $167.064 million for the last fiscal year's total revenue generated by OraSure Technologies. The default revenue input number comes from 0001 income statement of OraSure Technologies. 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 OSUR stock valuation model: a) initial revenue growth rate of 8.6% 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 OSUR is calculated based on our internal credit rating of OraSure Technologies, 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 OraSure Technologies.
    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 OSUR stock the variable cost ratio is equal to 48.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $47 million in the base year in the intrinsic value calculation for OSUR 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 OraSure Technologies.

Corporate tax rate of 27% is the nominal tax rate for OraSure Technologies. 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 OSUR 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 OSUR are equal to 21%.

Life of production assets of 7.7 years is the average useful life of capital assets used in OraSure Technologies 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 OSUR is equal to 20.2%. 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 - $258.081 million for OraSure Technologies - 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 61.174 million for OraSure Technologies 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 OraSure Technologies at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ OraSure: 3Q Earnings Snapshot   [05:21PM  Associated Press]
▶ OraSure Technologies Earnings Conference Call Invitation   [Oct-08-18 06:00AM  GlobeNewswire]
▶ Is OraSure Technologies, Inc. a Buy?   [Aug-28-18 06:01AM  Motley Fool]
▶ OraSure: 2Q Earnings Snapshot   [07:39PM  Associated Press]
▶ OraSure Technologies Earnings Conference Call Invitation   [Jul-19-18 06:00AM  GlobeNewswire]
▶ 7 Small-Cap Stocks to Consider for the Second Half of 2018   [Jul-09-18 11:01AM  InvestorPlace]
▶ 4 Top Ranked Momentum Stocks to Buy for June 20th   [Jun-20-18 01:45PM  InvestorPlace]
▶ OraSure Technologies Appoints New Chief Financial Officer   [May-04-18 06:00AM  GlobeNewswire]
▶ OraSure: 1Q Earnings Snapshot   [May-02-18 05:31PM  Associated Press]
▶ OraSure Technologies Earnings Conference Call Invitation   [Apr-11-18 06:00AM  GlobeNewswire]
▶ OraSure posts 4Q profit   [Feb-07-18 07:57PM  Associated Press]
▶ University City Science Center CEO stepping down   [Jan-06-18 04:10PM  American City Business Journals]
▶ Why OraSure Technologies, Inc. Rallied 10.8% in December   [Jan-05-18 04:39PM  Motley Fool]
▶ OraSure Technologies Announces Management Succession Plan   [Jan-04-18 06:00AM  GlobeNewswire]
▶ OraSure Technologies Announces 2018 Annual Meeting Date   [Dec-08-17 06:00AM  GlobeNewswire]
▶ Why OraSure Technologies, Inc. Zoomed Higher Today   [Nov-21-17 04:23PM  Motley Fool]
▶ Is This Why OraSure Technologies, Inc. Is Tanking Today?   [Nov-02-17 02:13PM  Motley Fool]
▶ OraSure meets 3Q profit forecasts   [05:20PM  Associated Press]
▶ OraSure Technologies Earnings Conference Call Invitation   [Oct-11-17 06:00AM  GlobeNewswire]
▶ Stocks With Rising Relative Price Strength: MiMedx   [03:00AM  Investor's Business Daily]
▶ Why OraSure Technologies, Inc. Jumped Higher Today   [Aug-03-17 01:44PM  Motley Fool]
▶ OraSure posts 2Q profit   [Aug-02-17 10:51PM  Associated Press]

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