Intrinsic value of ProPhase Labs - PRPH

Previous Close

$3.03

  Intrinsic Value

$0.74

stock screener

  Rating & Target

str. sell

-75%

Previous close

$3.03

 
Intrinsic value

$0.74

 
Up/down potential

-75%

 
Rating

str. sell

We calculate the intrinsic value of PRPH 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 0.0

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  16
  24
  36
  53
  75
  103
  138
  181
  233
  294
  365
  446
  538
  640
  753
  876
  1,009
  1,152
  1,304
  1,467
  1,638
  1,818
  2,008
  2,206
  2,413
  2,629
  2,854
  3,088
  3,331
  3,584
Variable operating expenses, $m
  16
  24
  36
  53
  75
  103
  138
  181
  233
  294
  365
  446
  538
  640
  753
  876
  1,009
  1,152
  1,304
  1,467
  1,638
  1,818
  2,008
  2,206
  2,413
  2,629
  2,854
  3,088
  3,331
  3,584
Fixed operating expenses, $m
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  7
  8
  8
Total operating expenses, $m
  20
  28
  40
  57
  79
  108
  143
  186
  238
  299
  370
  451
  543
  645
  759
  882
  1,015
  1,158
  1,310
  1,473
  1,644
  1,824
  2,015
  2,213
  2,420
  2,636
  2,861
  3,095
  3,339
  3,592
Operating income, $m
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -7
  -7
  -8
  -8
EBITDA, $m
  -4
  -3
  -3
  -3
  -2
  -1
  0
  1
  3
  5
  7
  10
  13
  16
  20
  24
  28
  33
  38
  43
  49
  55
  61
  67
  74
  81
  89
  97
  105
  113
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  10
  11
  13
  14
  15
  17
  19
  20
  22
  24
  26
Earnings before tax, $m
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -13
  -14
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -28
  -29
  -31
  -33
Tax expense, $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
Net income, $m
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -13
  -14
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -28
  -29
  -31
  -33

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
  21
  32
  49
  70
  99
  137
  183
  241
  310
  391
  486
  594
  716
  851
  1,001
  1,165
  1,341
  1,532
  1,735
  1,950
  2,178
  2,418
  2,670
  2,934
  3,209
  3,496
  3,795
  4,106
  4,430
  4,766
Adjusted assets (=assets-cash), $m
  21
  32
  49
  70
  99
  137
  183
  241
  310
  391
  486
  594
  716
  851
  1,001
  1,165
  1,341
  1,532
  1,735
  1,950
  2,178
  2,418
  2,670
  2,934
  3,209
  3,496
  3,795
  4,106
  4,430
  4,766
Revenue / Adjusted assets
  0.762
  0.750
  0.735
  0.757
  0.758
  0.752
  0.754
  0.751
  0.752
  0.752
  0.751
  0.751
  0.751
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
  0.752
Average production assets, $m
  5
  7
  11
  16
  22
  30
  41
  54
  69
  87
  108
  132
  159
  190
  223
  259
  299
  341
  386
  434
  485
  538
  594
  653
  714
  778
  845
  914
  986
  1,061
Working capital, $m
  8
  12
  18
  26
  37
  51
  69
  90
  116
  147
  183
  223
  269
  320
  376
  438
  504
  576
  652
  733
  819
  909
  1,004
  1,103
  1,207
  1,315
  1,427
  1,544
  1,666
  1,792
Total debt, $m
  1
  2
  3
  5
  7
  10
  14
  18
  24
  31
  38
  47
  57
  68
  80
  93
  108
  123
  139
  157
  175
  195
  215
  237
  259
  282
  306
  332
  358
  385
Total liabilities, $m
  2
  3
  4
  6
  8
  11
  15
  19
  25
  32
  39
  48
  58
  69
  81
  94
  109
  124
  140
  158
  176
  196
  216
  238
  260
  283
  307
  333
  359
  386
Total equity, $m
  19
  30
  45
  65
  91
  125
  168
  221
  285
  359
  446
  546
  658
  782
  920
  1,070
  1,233
  1,407
  1,594
  1,792
  2,002
  2,222
  2,454
  2,696
  2,949
  3,213
  3,488
  3,774
  4,071
  4,380
Total liabilities and equity, $m
  21
  33
  49
  71
  99
  136
  183
  240
  310
  391
  485
  594
  716
  851
  1,001
  1,164
  1,342
  1,531
  1,734
  1,950
  2,178
  2,418
  2,670
  2,934
  3,209
  3,496
  3,795
  4,107
  4,430
  4,766
Debt-to-equity ratio
  0.030
  0.050
  0.060
  0.070
  0.080
  0.080
  0.080
  0.080
  0.080
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
  0.090
Adjusted equity ratio
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919
  0.919

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -11
  -13
  -14
  -15
  -16
  -18
  -19
  -21
  -22
  -24
  -26
  -28
  -29
  -31
  -33
Depreciation, amort., depletion, $m
  1
  1
  1
  2
  3
  3
  5
  6
  8
  10
  12
  15
  18
  22
  25
  29
  34
  39
  44
  49
  55
  61
  68
  74
  81
  88
  96
  104
  112
  121
Funds from operations, $m
  -4
  -3
  -3
  -3
  -2
  -2
  -1
  0
  2
  3
  5
  7
  9
  12
  15
  18
  21
  25
  29
  33
  37
  42
  47
  52
  57
  63
  68
  74
  81
  87
Change in working capital, $m
  3
  4
  6
  8
  11
  14
  18
  22
  26
  31
  36
  41
  46
  51
  56
  61
  67
  71
  76
  81
  86
  90
  95
  99
  104
  108
  112
  117
  122
  126
Cash from operations, $m
  -7
  -8
  -9
  -11
  -13
  -16
  -18
  -21
  -24
  -27
  -31
  -34
  -36
  -39
  -41
  -43
  -45
  -46
  -47
  -48
  -48
  -48
  -48
  -47
  -46
  -45
  -44
  -43
  -41
  -39
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -2
  -3
  -3
  -5
  -6
  -8
  -10
  -12
  -15
  -18
  -22
  -25
  -29
  -34
  -39
  -44
  -49
  -55
  -61
  -68
  -74
  -81
  -88
  -96
  -104
  -112
New CAPEX, $m
  -2
  -3
  -4
  -5
  -6
  -8
  -10
  -13
  -15
  -18
  -21
  -24
  -27
  -30
  -33
  -36
  -39
  -42
  -45
  -48
  -51
  -53
  -56
  -59
  -61
  -64
  -67
  -69
  -72
  -75
Cash from investing activities, $m
  -2
  -4
  -5
  -6
  -8
  -11
  -13
  -18
  -21
  -26
  -31
  -36
  -42
  -48
  -55
  -61
  -68
  -76
  -84
  -92
  -100
  -108
  -117
  -127
  -135
  -145
  -155
  -165
  -176
  -187
Free cash flow, $m
  -9
  -11
  -14
  -17
  -21
  -26
  -32
  -39
  -46
  -53
  -61
  -70
  -79
  -87
  -96
  -105
  -114
  -123
  -131
  -140
  -148
  -157
  -165
  -173
  -182
  -190
  -199
  -208
  -217
  -226
Issuance/(repayment) of debt, $m
  1
  1
  1
  2
  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
Issuance/(repurchase) of shares, $m
  11
  15
  19
  25
  31
  39
  48
  58
  70
  82
  94
  107
  121
  134
  148
  162
  175
  188
  201
  214
  227
  240
  252
  265
  277
  290
  302
  315
  329
  342
Cash from financing (excl. dividends), $m  
  12
  16
  20
  27
  33
  42
  52
  63
  76
  89
  102
  116
  131
  145
  160
  175
  189
  203
  217
  231
  245
  259
  272
  286
  299
  313
  326
  340
  355
  369
Total cash flow (excl. dividends), $m
  3
  5
  7
  9
  12
  16
  20
  24
  29
  35
  40
  46
  52
  58
  64
  70
  75
  81
  87
  92
  97
  102
  107
  112
  118
  123
  128
  133
  138
  143
Retained Cash Flow (-), $m
  -11
  -15
  -19
  -25
  -31
  -39
  -48
  -58
  -70
  -82
  -94
  -107
  -121
  -134
  -148
  -162
  -175
  -188
  -201
  -214
  -227
  -240
  -252
  -265
  -277
  -290
  -302
  -315
  -329
  -342
Prev. year cash balance distribution, $m
  21
  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
  13
  -10
  -12
  -15
  -19
  -23
  -28
  -34
  -40
  -47
  -54
  -61
  -69
  -76
  -84
  -92
  -100
  -107
  -115
  -122
  -130
  -137
  -145
  -152
  -159
  -167
  -175
  -183
  -191
  -199
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
  12
  -9
  -11
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -26
  -26
  -26
  -26
  -25
  -23
  -22
  -20
  -18
  -16
  -13
  -11
  -9
  -8
  -6
  -5
  -4
  -3
  -2
  -1
Current shareholders' claim on cash, %
  52.8
  30.2
  18.5
  12.0
  8.1
  5.7
  4.1
  3.1
  2.4
  1.8
  1.5
  1.2
  1.0
  0.8
  0.7
  0.6
  0.5
  0.4
  0.4
  0.3
  0.3
  0.3
  0.2
  0.2
  0.2
  0.2
  0.2
  0.2
  0.1
  0.1

ProPhase Labs, Inc. manufactures, markets and distributes a range of homeopathic and healthcare products. The Company is engaged in the research and development of over-the-counter (OTC) drugs and natural base health products, including supplements, personal care and cosmeceutical products. The Company's products include TK Supplements and ORXx Complete. TK Supplements consists of LEGENDZ XL, a male sexual enhancement; TRIPLE EDGE XL, a daily energy and stamina booster, and SUPER PROSTAFLOW plus, a supplement to support prostate and urinary health. The Company's OTC offerings include the ORXx cough/cold drops. Its consumer health customers include national wholesalers and distributors, as well as independent and chain food, drug and mass merchandise stores and pharmacies.

FINANCIAL RATIOS  of  ProPhase Labs (PRPH)

Valuation Ratios
P/E Ratio -17.3
Price to Sales 2.5
Price to Book 8.6
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow -51.8
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 16.7%
Interest Coverage 0
Management Effectiveness
Return On Assets -21.4%
Ret/ On Assets - 3 Yr. Avg. -31.9%
Return On Total Capital -37.5%
Ret/ On T. Cap. - 3 Yr. Avg. -48.1%
Return On Equity -40%
Return On Equity - 3 Yr. Avg. -48.9%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 47.6%
Gross Margin - 3 Yr. Avg. 56.1%
EBITDA Margin -14.3%
EBITDA Margin - 3 Yr. Avg. -23.2%
Operating Margin -14.3%
Oper. Margin - 3 Yr. Avg. -21.6%
Pre-Tax Margin -14.3%
Pre-Tax Margin - 3 Yr. Avg. -23.2%
Net Profit Margin -14.3%
Net Profit Margin - 3 Yr. Avg. -23.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PRPH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PRPH stock intrinsic value calculation we used $9.867 million for the last fiscal year's total revenue generated by ProPhase Labs. The default revenue input number comes from 0001 income statement of ProPhase Labs. 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 PRPH stock valuation model: a) initial revenue growth rate of 60% 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 PRPH is calculated based on our internal credit rating of ProPhase Labs, 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 ProPhase Labs.
    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 PRPH stock the variable cost ratio is equal to 100%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4 million in the base year in the intrinsic value calculation for PRPH 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 7.2% for ProPhase Labs.

Corporate tax rate of 27% is the nominal tax rate for ProPhase Labs. 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 PRPH 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 PRPH are equal to 29.6%.

Life of production assets of 8.8 years is the average useful life of capital assets used in ProPhase Labs 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 PRPH is equal to 50%. 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 - $33.089 million for ProPhase Labs - 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 11.13 million for ProPhase Labs 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 ProPhase Labs at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ ProPhase Labs says it miscalculated local taxes owed by $1M+   [Aug-15-18 01:00PM  American City Business Journals]
▶ PROPHASE LABS, INC. ANNOUNCES SPECIAL CASH DIVIDEND   [May-07-18 07:30PM  GlobeNewswire]
▶ ProPhase completes $4.5M tender offer   [Dec-22-17 08:00AM  American City Business Journals]
▶ Is ProPhase Labs Inc (PRPH) A Buy At Its Current Price?   [Oct-03-17 12:46PM  Simply Wall St.]
▶ ProPhase Provides Shareholder Update   [Apr-05-17 04:10PM  Marketwired]
▶ $50M deal done: Cold-Eeze has a new owner   [Mar-30-17 10:50AM  at bizjournals.com]
▶ $50M deal done: Cold-Eeze has a new owner   [10:50AM  American City Business Journals]
▶ $50M deal: Bucks County firm selling Cold-Eeze brand   [09:12AM  American City Business Journals]
▶ 10-Q for ProPhase Labs, Inc.   [Aug-14  08:10PM  at Company Spotlight]
▶ ProPhase Establishes 3.2 Million Share Equity Line   [Aug-05  12:55PM  Marketwired]
▶ Seasonal Businesses Sweat Year-Round To Shine On Time   [May-28  01:32PM  at Investor's Business Daily]
▶ 10-Q for ProPhase Labs, Inc.   [May-15  08:09PM  at Company Spotlight]

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