Intrinsic value of OraSure Technologies, Inc. - OSUR

Previous Close

$10.77

  Intrinsic Value

$8.37

stock screener

  Rating & Target

sell

-22%

Previous close

$10.77

 
Intrinsic value

$8.37

 
Up/down potential

-22%

 
Rating

sell

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 0.7

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  186
  190
  195
  200
  206
  213
  220
  228
  237
  246
  255
  266
  277
  288
  301
  314
  328
  343
  358
  375
  392
  411
  430
  450
  472
  494
  518
  543
  569
  597
Variable operating expenses, $m
  141
  144
  147
  152
  156
  161
  166
  172
  179
  185
  190
  198
  206
  215
  224
  234
  244
  255
  267
  279
  292
  306
  320
  335
  351
  368
  386
  404
  424
  445
Fixed operating expenses, $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 operating expenses, $m
  141
  144
  147
  152
  156
  161
  166
  172
  179
  185
  190
  198
  206
  215
  224
  234
  244
  255
  267
  279
  292
  306
  320
  335
  351
  368
  386
  404
  424
  445
Operating income, $m
  45
  46
  47
  49
  50
  52
  54
  56
  58
  60
  65
  68
  71
  74
  77
  80
  84
  87
  91
  96
  100
  105
  110
  115
  120
  126
  132
  139
  145
  152
EBITDA, $m
  52
  53
  55
  56
  58
  60
  62
  64
  67
  69
  72
  75
  78
  81
  85
  88
  92
  96
  101
  105
  110
  115
  121
  127
  133
  139
  146
  153
  160
  168
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
Earnings before tax, $m
  45
  46
  47
  49
  50
  52
  54
  55
  58
  60
  65
  67
  70
  73
  76
  79
  82
  86
  90
  94
  98
  103
  108
  113
  118
  123
  129
  135
  142
  149
Tax expense, $m
  12
  12
  13
  13
  14
  14
  14
  15
  16
  16
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  27
  28
  29
  30
  32
  33
  35
  37
  38
  40
Net income, $m
  33
  34
  34
  35
  37
  38
  39
  40
  42
  44
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  99
  104
  109

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
  191
  195
  200
  206
  212
  219
  226
  234
  243
  252
  262
  273
  284
  296
  309
  323
  337
  352
  368
  385
  403
  422
  442
  463
  485
  508
  532
  558
  585
  614
Adjusted assets (=assets-cash), $m
  191
  195
  200
  206
  212
  219
  226
  234
  243
  252
  262
  273
  284
  296
  309
  323
  337
  352
  368
  385
  403
  422
  442
  463
  485
  508
  532
  558
  585
  614
Revenue / Adjusted assets
  0.974
  0.974
  0.975
  0.971
  0.972
  0.973
  0.973
  0.974
  0.975
  0.976
  0.973
  0.974
  0.975
  0.973
  0.974
  0.972
  0.973
  0.974
  0.973
  0.974
  0.973
  0.974
  0.973
  0.972
  0.973
  0.972
  0.974
  0.973
  0.973
  0.972
Average production assets, $m
  37
  37
  38
  39
  41
  42
  43
  45
  47
  48
  50
  52
  55
  57
  59
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  118
Working capital, $m
  35
  36
  37
  38
  39
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  60
  63
  65
  68
  72
  75
  78
  82
  86
  90
  94
  99
  104
  109
  114
Total debt, $m
  1
  1
  2
  3
  4
  5
  7
  8
  10
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  44
  47
  51
  55
  59
  64
  68
  73
Total liabilities, $m
  33
  34
  34
  35
  36
  38
  39
  40
  42
  43
  45
  47
  49
  51
  53
  56
  58
  61
  63
  66
  69
  73
  76
  80
  83
  87
  92
  96
  101
  106
Total equity, $m
  158
  162
  166
  170
  176
  181
  187
  194
  201
  209
  217
  226
  236
  245
  256
  267
  279
  292
  305
  319
  334
  349
  366
  383
  401
  421
  441
  462
  485
  508
Total liabilities and equity, $m
  191
  196
  200
  205
  212
  219
  226
  234
  243
  252
  262
  273
  285
  296
  309
  323
  337
  353
  368
  385
  403
  422
  442
  463
  484
  508
  533
  558
  586
  614
Debt-to-equity ratio
  0.000
  0.010
  0.010
  0.020
  0.020
  0.030
  0.040
  0.040
  0.050
  0.050
  0.060
  0.070
  0.070
  0.080
  0.080
  0.090
  0.090
  0.100
  0.100
  0.110
  0.110
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
  0.140
  0.140
  0.140
Adjusted equity ratio
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828
  0.828

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  33
  34
  34
  35
  37
  38
  39
  40
  42
  44
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  99
  104
  109
Depreciation, amort., depletion, $m
  7
  7
  7
  8
  8
  8
  8
  8
  9
  9
  7
  7
  7
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
Funds from operations, $m
  40
  41
  42
  43
  44
  46
  47
  49
  51
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
  118
  124
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
Cash from operations, $m
  39
  40
  41
  42
  43
  44
  46
  47
  49
  51
  52
  54
  56
  58
  61
  63
  66
  69
  72
  75
  79
  82
  86
  90
  94
  99
  103
  108
  113
  119
Maintenance CAPEX, $m
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Cash from investing activities, $m
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -9
  -11
  -11
  -12
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -16
  -18
  -18
  -19
  -20
Free cash flow, $m
  34
  34
  35
  36
  37
  38
  39
  40
  41
  43
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
  65
  68
  72
  75
  78
  82
  86
  90
  94
  99
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
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  
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
Total cash flow (excl. dividends), $m
  34
  35
  36
  37
  38
  39
  40
  41
  43
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  99
  103
Retained Cash Flow (-), $m
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
Prev. year cash balance distribution, $m
  129
  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
  160
  32
  32
  32
  33
  33
  34
  35
  36
  37
  37
  38
  40
  41
  42
  44
  46
  48
  49
  52
  54
  56
  58
  61
  64
  67
  70
  73
  76
  80
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
  153
  29
  28
  27
  25
  24
  23
  22
  20
  19
  18
  16
  15
  14
  12
  11
  10
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  1
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, Inc. (OSUR)

Valuation Ratios
P/E Ratio 30.2
Price to Sales 4.7
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 26.2
Price to Free Cash Flow 31.7
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 $182 million for the last fiscal year's total revenue generated by OraSure Technologies, Inc.. The default revenue input number comes from 0001 income statement of OraSure Technologies, 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 OSUR stock valuation model: a) initial revenue growth rate of 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 4.3%, whose default value for OSUR is calculated based on our internal credit rating of OraSure Technologies, 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 OraSure Technologies, 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 OSUR stock the variable cost ratio is equal to 75.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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, Inc..

Corporate tax rate of 27% is the nominal tax rate for OraSure Technologies, 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 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 19.7%.

Life of production assets of 7.6 years is the average useful life of capital assets used in OraSure Technologies, 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 OSUR is equal to 19.1%. 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 - $283.378 million for OraSure Technologies, 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 61.663 million for OraSure Technologies, 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 OraSure Technologies, Inc. at the current share price and the inputted number of shares is $0.7 billion.

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