Intrinsic value of Insulet Corporation - PODD

Previous Close

$97.47

  Intrinsic Value

$72.53

stock screener

  Rating & Target

sell

-26%

Previous close

$97.47

 
Intrinsic value

$72.53

 
Up/down potential

-26%

 
Rating

sell

We calculate the intrinsic value of PODD 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 5.8

 

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, %
  26.30
  24.17
  22.25
  20.53
  18.97
  17.58
  16.32
  15.19
  14.17
  13.25
  12.43
  11.68
  11.02
  10.41
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.11
  6.00
Revenue, $m
  712
  885
  1,081
  1,303
  1,551
  1,823
  2,121
  2,443
  2,789
  3,158
  3,551
  3,966
  4,403
  4,861
  5,341
  5,843
  6,365
  6,910
  7,476
  8,065
  8,677
  9,313
  9,974
  10,661
  11,375
  12,118
  12,891
  13,695
  14,532
  15,405
Variable operating expenses, $m
  457
  561
  680
  815
  964
  1,129
  1,309
  1,504
  1,714
  1,937
  2,149
  2,400
  2,665
  2,942
  3,233
  3,536
  3,853
  4,182
  4,525
  4,881
  5,252
  5,637
  6,037
  6,453
  6,885
  7,334
  7,802
  8,289
  8,796
  9,324
Fixed operating expenses, $m
  177
  181
  185
  189
  193
  197
  201
  206
  210
  215
  220
  225
  230
  235
  240
  245
  250
  256
  262
  267
  273
  279
  285
  292
  298
  305
  311
  318
  325
  332
Total operating expenses, $m
  634
  742
  865
  1,004
  1,157
  1,326
  1,510
  1,710
  1,924
  2,152
  2,369
  2,625
  2,895
  3,177
  3,473
  3,781
  4,103
  4,438
  4,787
  5,148
  5,525
  5,916
  6,322
  6,745
  7,183
  7,639
  8,113
  8,607
  9,121
  9,656
Operating income, $m
  79
  143
  216
  300
  393
  497
  610
  733
  865
  1,006
  1,182
  1,341
  1,508
  1,684
  1,869
  2,061
  2,262
  2,472
  2,690
  2,916
  3,152
  3,397
  3,652
  3,917
  4,192
  4,479
  4,777
  5,088
  5,411
  5,749
EBITDA, $m
  122
  190
  269
  358
  458
  568
  688
  819
  960
  1,110
  1,270
  1,440
  1,618
  1,805
  2,002
  2,207
  2,421
  2,644
  2,876
  3,117
  3,368
  3,629
  3,900
  4,182
  4,475
  4,781
  5,098
  5,429
  5,773
  6,132
Interest expense (income), $m
  4
  32
  40
  51
  64
  78
  94
  112
  131
  152
  175
  199
  224
  251
  280
  310
  341
  373
  407
  443
  480
  518
  558
  599
  642
  687
  733
  782
  832
  884
  939
Earnings before tax, $m
  47
  103
  166
  236
  315
  403
  498
  601
  712
  831
  983
  1,117
  1,257
  1,405
  1,559
  1,720
  1,889
  2,064
  2,247
  2,437
  2,634
  2,839
  3,053
  3,275
  3,505
  3,746
  3,996
  4,256
  4,527
  4,810
Tax expense, $m
  13
  28
  45
  64
  85
  109
  134
  162
  192
  224
  265
  301
  339
  379
  421
  465
  510
  557
  607
  658
  711
  767
  824
  884
  946
  1,011
  1,079
  1,149
  1,222
  1,299
Net income, $m
  34
  75
  121
  173
  230
  294
  364
  439
  520
  607
  718
  815
  918
  1,025
  1,138
  1,256
  1,379
  1,507
  1,640
  1,779
  1,923
  2,073
  2,228
  2,390
  2,559
  2,734
  2,917
  3,107
  3,305
  3,511

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
  954
  1,184
  1,448
  1,745
  2,076
  2,441
  2,839
  3,270
  3,733
  4,228
  4,754
  5,309
  5,894
  6,508
  7,150
  7,821
  8,521
  9,250
  10,008
  10,796
  11,616
  12,467
  13,352
  14,272
  15,228
  16,222
  17,257
  18,333
  19,454
  20,622
Adjusted assets (=assets-cash), $m
  954
  1,184
  1,448
  1,745
  2,076
  2,441
  2,839
  3,270
  3,733
  4,228
  4,754
  5,309
  5,894
  6,508
  7,150
  7,821
  8,521
  9,250
  10,008
  10,796
  11,616
  12,467
  13,352
  14,272
  15,228
  16,222
  17,257
  18,333
  19,454
  20,622
Revenue / Adjusted assets
  0.746
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
  0.747
Average production assets, $m
  261
  324
  396
  477
  568
  667
  776
  894
  1,021
  1,156
  1,300
  1,452
  1,611
  1,779
  1,955
  2,138
  2,330
  2,529
  2,736
  2,952
  3,176
  3,409
  3,651
  3,902
  4,163
  4,435
  4,718
  5,012
  5,319
  5,638
Working capital, $m
  72
  89
  109
  132
  157
  184
  214
  247
  282
  319
  359
  401
  445
  491
  539
  590
  643
  698
  755
  815
  876
  941
  1,007
  1,077
  1,149
  1,224
  1,302
  1,383
  1,468
  1,556
Total debt, $m
  734
  941
  1,178
  1,446
  1,744
  2,072
  2,430
  2,818
  3,235
  3,681
  4,154
  4,654
  5,180
  5,732
  6,311
  6,914
  7,544
  8,200
  8,883
  9,592
  10,330
  11,096
  11,892
  12,720
  13,580
  14,475
  15,406
  16,375
  17,384
  18,435
Total liabilities, $m
  858
  1,066
  1,303
  1,570
  1,868
  2,197
  2,555
  2,943
  3,360
  3,805
  4,278
  4,778
  5,305
  5,857
  6,435
  7,039
  7,669
  8,325
  9,007
  9,717
  10,454
  11,221
  12,017
  12,845
  13,705
  14,600
  15,531
  16,500
  17,509
  18,560
Total equity, $m
  95
  118
  145
  174
  208
  244
  284
  327
  373
  423
  475
  531
  589
  651
  715
  782
  852
  925
  1,001
  1,080
  1,162
  1,247
  1,335
  1,427
  1,523
  1,622
  1,726
  1,833
  1,945
  2,062
Total liabilities and equity, $m
  953
  1,184
  1,448
  1,744
  2,076
  2,441
  2,839
  3,270
  3,733
  4,228
  4,753
  5,309
  5,894
  6,508
  7,150
  7,821
  8,521
  9,250
  10,008
  10,797
  11,616
  12,468
  13,352
  14,272
  15,228
  16,222
  17,257
  18,333
  19,454
  20,622
Debt-to-equity ratio
  7.690
  7.950
  8.140
  8.290
  8.400
  8.490
  8.560
  8.620
  8.670
  8.710
  8.740
  8.770
  8.790
  8.810
  8.830
  8.840
  8.850
  8.870
  8.880
  8.880
  8.890
  8.900
  8.910
  8.910
  8.920
  8.920
  8.930
  8.930
  8.940
  8.940
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  34
  75
  121
  173
  230
  294
  364
  439
  520
  607
  718
  815
  918
  1,025
  1,138
  1,256
  1,379
  1,507
  1,640
  1,779
  1,923
  2,073
  2,228
  2,390
  2,559
  2,734
  2,917
  3,107
  3,305
  3,511
Depreciation, amort., depletion, $m
  44
  48
  53
  58
  64
  71
  79
  87
  95
  104
  88
  99
  110
  121
  133
  145
  158
  172
  186
  201
  216
  232
  248
  265
  283
  302
  321
  341
  362
  384
Funds from operations, $m
  78
  123
  174
  231
  295
  365
  442
  526
  615
  711
  806
  914
  1,027
  1,146
  1,271
  1,401
  1,537
  1,679
  1,826
  1,979
  2,139
  2,305
  2,477
  2,656
  2,842
  3,036
  3,238
  3,448
  3,667
  3,895
Change in working capital, $m
  15
  17
  20
  22
  25
  28
  30
  33
  35
  37
  40
  42
  44
  46
  48
  51
  53
  55
  57
  59
  62
  64
  67
  69
  72
  75
  78
  81
  85
  88
Cash from operations, $m
  63
  106
  154
  208
  270
  338
  412
  493
  580
  674
  766
  872
  983
  1,100
  1,223
  1,351
  1,485
  1,624
  1,769
  1,920
  2,077
  2,240
  2,410
  2,586
  2,770
  2,961
  3,160
  3,367
  3,582
  3,807
Maintenance CAPEX, $m
  -14
  -18
  -22
  -27
  -32
  -39
  -45
  -53
  -61
  -69
  -79
  -88
  -99
  -110
  -121
  -133
  -145
  -158
  -172
  -186
  -201
  -216
  -232
  -248
  -265
  -283
  -302
  -321
  -341
  -362
New CAPEX, $m
  -54
  -63
  -72
  -81
  -91
  -100
  -109
  -118
  -127
  -135
  -144
  -152
  -160
  -168
  -176
  -183
  -191
  -199
  -207
  -216
  -224
  -233
  -242
  -251
  -261
  -272
  -283
  -294
  -306
  -319
Cash from investing activities, $m
  -68
  -81
  -94
  -108
  -123
  -139
  -154
  -171
  -188
  -204
  -223
  -240
  -259
  -278
  -297
  -316
  -336
  -357
  -379
  -402
  -425
  -449
  -474
  -499
  -526
  -555
  -585
  -615
  -647
  -681
Free cash flow, $m
  -6
  25
  60
  100
  147
  199
  258
  322
  393
  469
  544
  632
  725
  823
  926
  1,034
  1,148
  1,266
  1,390
  1,518
  1,652
  1,791
  1,936
  2,087
  2,243
  2,406
  2,575
  2,751
  2,935
  3,125
Issuance/(repayment) of debt, $m
  142
  207
  237
  267
  298
  328
  358
  388
  417
  445
  473
  500
  526
  552
  578
  604
  630
  656
  682
  710
  737
  766
  796
  828
  860
  895
  931
  969
  1,009
  1,051
Issuance/(repurchase) of shares, $m
  23
  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  
  165
  207
  237
  267
  298
  328
  358
  388
  417
  445
  473
  500
  526
  552
  578
  604
  630
  656
  682
  710
  737
  766
  796
  828
  860
  895
  931
  969
  1,009
  1,051
Total cash flow (excl. dividends), $m
  159
  232
  297
  368
  445
  528
  616
  710
  810
  914
  1,017
  1,132
  1,251
  1,375
  1,504
  1,638
  1,778
  1,922
  2,072
  2,228
  2,390
  2,558
  2,733
  2,914
  3,104
  3,301
  3,506
  3,720
  3,943
  4,177
Retained Cash Flow (-), $m
  -57
  -23
  -26
  -30
  -33
  -36
  -40
  -43
  -46
  -49
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -85
  -88
  -92
  -96
  -99
  -103
  -108
  -112
  -117
Prev. year cash balance distribution, $m
  173
  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
  275
  209
  270
  338
  412
  491
  576
  667
  764
  865
  965
  1,076
  1,192
  1,314
  1,440
  1,571
  1,708
  1,849
  1,996
  2,149
  2,308
  2,473
  2,644
  2,822
  3,008
  3,201
  3,403
  3,612
  3,831
  4,060
Discount rate, %
  7.40
  7.77
  8.16
  8.57
  8.99
  9.44
  9.92
  10.41
  10.93
  11.48
  12.05
  12.66
  13.29
  13.95
  14.65
  15.38
  16.15
  16.96
  17.81
  18.70
  19.63
  20.62
  21.65
  22.73
  23.87
  25.06
  26.31
  27.63
  29.01
  30.46
PV of cash for distribution, $m
  256
  180
  214
  243
  268
  286
  297
  302
  300
  292
  276
  257
  235
  211
  185
  159
  134
  110
  89
  70
  53
  40
  29
  21
  14
  10
  6
  4
  2
  1
Current shareholders' claim on cash, %
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5
  94.5

Insulet Corporation is engaged in the development, manufacturing and sale of the OmniPod Insulin Management System (the OmniPod System), an insulin delivery system for people with insulin-dependent diabetes. The Omnipod System features a self-adhesive disposable tubeless Omnipod device, which is worn on the body for approximately three days at a time and its wireless companion, the handheld Personal Diabetes Manager (PDM). The Omnipod System features two discreet devices that eliminate the need for a bulky pump, tubing and separate blood glucose meter, provides for virtually pain-free automated cannula insertion, communicates wirelessly and integrates a blood glucose meter. The Omnipod System is a discreet two part design, the Omnipod device (Pod) and the PDM that eliminates the need for the external tubing required with conventional pumps. The Pod is a self-adhesive device that the patient fills with insulin and wears directly on the body.

FINANCIAL RATIOS  of  Insulet Corporation (PODD)

Valuation Ratios
P/E Ratio -193.1
Price to Sales 15.3
Price to Book 88.9
Price to Tangible Book
Price to Cash Flow 350
Price to Free Cash Flow -933.4
Growth Rates
Sales Growth Rate 39%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 25.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 528.6%
Total Debt to Equity 528.6%
Interest Coverage -6
Management Effectiveness
Return On Assets -6.8%
Ret/ On Assets - 3 Yr. Avg. -15.8%
Return On Total Capital -9.6%
Ret/ On T. Cap. - 3 Yr. Avg. -20.7%
Return On Equity -59.8%
Return On Equity - 3 Yr. Avg. -78.3%
Asset Turnover 1
Profitability Ratios
Gross Margin 57.5%
Gross Margin - 3 Yr. Avg. 54.3%
EBITDA Margin -2.5%
EBITDA Margin - 3 Yr. Avg. -10.5%
Operating Margin -3.5%
Oper. Margin - 3 Yr. Avg. -12%
Pre-Tax Margin -7.4%
Pre-Tax Margin - 3 Yr. Avg. -17.1%
Net Profit Margin -7.9%
Net Profit Margin - 3 Yr. Avg. -19.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -0.5%
Payout Ratio 0%

PODD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PODD stock intrinsic value calculation we used $564 million for the last fiscal year's total revenue generated by Insulet Corporation. The default revenue input number comes from 0001 income statement of Insulet Corporation. 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 PODD stock valuation model: a) initial revenue growth rate of 26.3% 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 7.4%, whose default value for PODD is calculated based on our internal credit rating of Insulet Corporation, 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 Insulet Corporation.
    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 PODD stock the variable cost ratio is equal to 65.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $173 million in the base year in the intrinsic value calculation for PODD 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 Insulet Corporation.

Corporate tax rate of 27% is the nominal tax rate for Insulet Corporation. 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 PODD 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 PODD are equal to 36.6%.

Life of production assets of 14.7 years is the average useful life of capital assets used in Insulet Corporation 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 PODD is equal to 10.1%. 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 - $212.099 million for Insulet Corporation - 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 59.262 million for Insulet Corporation 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 Insulet Corporation at the current share price and the inputted number of shares is $5.8 billion.

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