Intrinsic value of Precipio - PRPO

Previous Close

$0.19

  Intrinsic Value

$0.30

stock screener

  Rating & Target

str. buy

+58%

Previous close

$0.19

 
Intrinsic value

$0.30

 
Up/down potential

+58%

 
Rating

str. buy

We calculate the intrinsic value of PRPO 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
  5
  8
  11
  16
  23
  32
  42
  56
  72
  91
  113
  138
  166
  197
  232
  270
  311
  355
  402
  452
  505
  560
  619
  680
  743
  810
  879
  951
  1,026
  1,104
Variable operating expenses, $m
  7
  9
  12
  16
  22
  29
  38
  49
  63
  79
  94
  116
  139
  166
  195
  227
  261
  298
  338
  380
  424
  471
  520
  571
  624
  680
  739
  799
  862
  927
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
  7
  9
  12
  16
  22
  29
  38
  49
  63
  79
  94
  116
  139
  166
  195
  227
  261
  298
  338
  380
  424
  471
  520
  571
  624
  680
  739
  799
  862
  927
Operating income, $m
  -2
  -1
  -1
  0
  1
  3
  4
  6
  9
  12
  18
  22
  27
  32
  37
  43
  50
  57
  64
  72
  81
  90
  99
  109
  119
  130
  141
  152
  164
  177
EBITDA, $m
  1
  2
  3
  5
  7
  9
  12
  16
  21
  26
  32
  40
  48
  57
  67
  78
  89
  102
  115
  130
  145
  161
  178
  195
  214
  233
  253
  273
  295
  317
Interest expense (income), $m
  0
  2
  6
  13
  22
  34
  51
  72
  98
  131
  170
  216
  270
  331
  400
  478
  562
  655
  756
  863
  979
  1,101
  1,230
  1,366
  1,509
  1,659
  1,815
  1,978
  2,148
  2,324
  2,508
Earnings before tax, $m
  -4
  -8
  -14
  -22
  -33
  -48
  -68
  -92
  -122
  -158
  -198
  -248
  -305
  -369
  -440
  -519
  -605
  -699
  -799
  -906
  -1,020
  -1,140
  -1,267
  -1,400
  -1,540
  -1,685
  -1,837
  -1,995
  -2,160
  -2,331
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
  -8
  -14
  -22
  -33
  -48
  -68
  -92
  -122
  -158
  -198
  -248
  -305
  -369
  -440
  -519
  -605
  -699
  -799
  -906
  -1,020
  -1,140
  -1,267
  -1,400
  -1,540
  -1,685
  -1,837
  -1,995
  -2,160
  -2,331

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
  44
  68
  102
  148
  209
  288
  386
  507
  652
  824
  1,023
  1,250
  1,507
  1,793
  2,109
  2,453
  2,825
  3,226
  3,653
  4,108
  4,588
  5,093
  5,624
  6,179
  6,759
  7,364
  7,994
  8,649
  9,330
  10,038
Adjusted assets (=assets-cash), $m
  44
  68
  102
  148
  209
  288
  386
  507
  652
  824
  1,023
  1,250
  1,507
  1,793
  2,109
  2,453
  2,825
  3,226
  3,653
  4,108
  4,588
  5,093
  5,624
  6,179
  6,759
  7,364
  7,994
  8,649
  9,330
  10,038
Revenue / Adjusted assets
  0.114
  0.118
  0.108
  0.108
  0.110
  0.111
  0.109
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
Average production assets, $m
  11
  17
  25
  36
  51
  70
  93
  123
  158
  199
  248
  303
  365
  434
  511
  594
  684
  781
  885
  994
  1,111
  1,233
  1,362
  1,496
  1,636
  1,783
  1,935
  2,094
  2,259
  2,430
Working capital, $m
  -13
  -20
  -30
  -44
  -62
  -85
  -114
  -150
  -193
  -244
  -303
  -370
  -446
  -531
  -625
  -727
  -837
  -956
  -1,082
  -1,217
  -1,359
  -1,509
  -1,666
  -1,830
  -2,002
  -2,181
  -2,368
  -2,562
  -2,764
  -2,974
Total debt, $m
  12
  25
  43
  67
  99
  139
  191
  254
  330
  419
  523
  642
  776
  925
  1,090
  1,270
  1,464
  1,673
  1,896
  2,133
  2,384
  2,648
  2,925
  3,215
  3,517
  3,833
  4,162
  4,504
  4,860
  5,229
Total liabilities, $m
  23
  36
  53
  77
  109
  150
  201
  265
  340
  430
  534
  653
  787
  936
  1,101
  1,280
  1,475
  1,684
  1,907
  2,144
  2,395
  2,659
  2,935
  3,225
  3,528
  3,844
  4,173
  4,515
  4,870
  5,240
Total equity, $m
  21
  33
  49
  71
  100
  137
  184
  242
  312
  394
  489
  598
  720
  857
  1,008
  1,172
  1,351
  1,542
  1,746
  1,963
  2,193
  2,434
  2,688
  2,953
  3,231
  3,520
  3,821
  4,134
  4,460
  4,798
Total liabilities and equity, $m
  44
  69
  102
  148
  209
  287
  385
  507
  652
  824
  1,023
  1,251
  1,507
  1,793
  2,109
  2,452
  2,826
  3,226
  3,653
  4,107
  4,588
  5,093
  5,623
  6,178
  6,759
  7,364
  7,994
  8,649
  9,330
  10,038
Debt-to-equity ratio
  0.590
  0.770
  0.870
  0.940
  0.990
  1.010
  1.030
  1.050
  1.060
  1.060
  1.070
  1.070
  1.080
  1.080
  1.080
  1.080
  1.080
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
  1.090
Adjusted equity ratio
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -4
  -8
  -14
  -22
  -33
  -48
  -68
  -92
  -122
  -158
  -198
  -248
  -305
  -369
  -440
  -519
  -605
  -699
  -799
  -906
  -1,020
  -1,140
  -1,267
  -1,400
  -1,540
  -1,685
  -1,837
  -1,995
  -2,160
  -2,331
Depreciation, amort., depletion, $m
  3
  3
  4
  5
  5
  7
  8
  10
  12
  14
  14
  17
  21
  25
  30
  34
  40
  45
  51
  57
  64
  71
  79
  86
  95
  103
  112
  121
  131
  140
Funds from operations, $m
  0
  -4
  -10
  -17
  -28
  -42
  -60
  -82
  -110
  -144
  -184
  -230
  -284
  -344
  -411
  -485
  -566
  -654
  -748
  -849
  -956
  -1,069
  -1,189
  -1,314
  -1,445
  -1,582
  -1,725
  -1,874
  -2,029
  -2,190
Change in working capital, $m
  -5
  -7
  -10
  -14
  -18
  -23
  -29
  -36
  -43
  -51
  -59
  -67
  -76
  -85
  -93
  -102
  -110
  -119
  -127
  -135
  -142
  -150
  -157
  -164
  -172
  -179
  -187
  -194
  -202
  -210
Cash from operations, $m
  4
  3
  0
  -4
  -10
  -19
  -31
  -47
  -67
  -93
  -125
  -163
  -208
  -259
  -317
  -383
  -455
  -535
  -621
  -714
  -814
  -919
  -1,031
  -1,149
  -1,273
  -1,403
  -1,539
  -1,680
  -1,827
  -1,981
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -2
  -3
  -4
  -5
  -7
  -9
  -12
  -14
  -17
  -21
  -25
  -30
  -34
  -40
  -45
  -51
  -57
  -64
  -71
  -79
  -86
  -95
  -103
  -112
  -121
  -131
New CAPEX, $m
  -4
  -6
  -8
  -11
  -15
  -19
  -24
  -29
  -35
  -42
  -48
  -55
  -62
  -69
  -76
  -83
  -90
  -97
  -104
  -110
  -116
  -122
  -128
  -134
  -140
  -146
  -152
  -159
  -165
  -171
Cash from investing activities, $m
  -4
  -7
  -9
  -12
  -17
  -22
  -28
  -34
  -42
  -51
  -60
  -69
  -79
  -90
  -101
  -113
  -124
  -137
  -149
  -161
  -173
  -186
  -199
  -213
  -226
  -241
  -255
  -271
  -286
  -302
Free cash flow, $m
  0
  -4
  -9
  -16
  -27
  -40
  -58
  -81
  -110
  -144
  -185
  -232
  -287
  -349
  -419
  -496
  -580
  -671
  -770
  -875
  -987
  -1,106
  -1,231
  -1,363
  -1,500
  -1,644
  -1,794
  -1,951
  -2,113
  -2,283
Issuance/(repayment) of debt, $m
  9
  13
  18
  24
  32
  41
  51
  63
  76
  90
  104
  119
  134
  149
  165
  180
  195
  209
  223
  237
  251
  264
  277
  290
  303
  316
  329
  342
  356
  370
Issuance/(repurchase) of shares, $m
  12
  19
  30
  44
  62
  86
  115
  150
  191
  240
  294
  357
  428
  506
  591
  684
  784
  890
  1,003
  1,123
  1,250
  1,382
  1,521
  1,666
  1,817
  1,974
  2,138
  2,309
  2,486
  2,669
Cash from financing (excl. dividends), $m  
  21
  32
  48
  68
  94
  127
  166
  213
  267
  330
  398
  476
  562
  655
  756
  864
  979
  1,099
  1,226
  1,360
  1,501
  1,646
  1,798
  1,956
  2,120
  2,290
  2,467
  2,651
  2,842
  3,039
Total cash flow (excl. dividends), $m
  21
  28
  39
  52
  68
  86
  108
  132
  158
  186
  213
  243
  274
  306
  337
  368
  398
  428
  457
  485
  513
  540
  567
  593
  620
  646
  673
  700
  728
  756
Retained Cash Flow (-), $m
  -12
  -19
  -30
  -44
  -62
  -86
  -115
  -150
  -191
  -240
  -294
  -357
  -428
  -506
  -591
  -684
  -784
  -890
  -1,003
  -1,123
  -1,250
  -1,382
  -1,521
  -1,666
  -1,817
  -1,974
  -2,138
  -2,309
  -2,486
  -2,669
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
  9
  9
  9
  8
  5
  0
  -7
  -18
  -34
  -54
  -81
  -114
  -153
  -200
  -254
  -316
  -386
  -462
  -547
  -638
  -737
  -842
  -954
  -1,073
  -1,197
  -1,328
  -1,465
  -1,609
  -1,758
  -1,913
Discount rate, %
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
  8
  8
  7
  6
  3
  0
  -4
  -9
  -14
  -20
  -25
  -30
  -34
  -37
  -38
  -38
  -37
  -34
  -31
  -27
  -23
  -19
  -15
  -11
  -8
  -6
  -4
  -3
  -2
  -1
Current shareholders' claim on cash, %
  43.8
  19.0
  8.3
  3.6
  1.6
  0.7
  0.3
  0.2
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Precipio, Inc., formerly Transgenomic, Inc., is a biotechnology company. The Company is engaged in advancing personalized medicine for the detection and treatment of cancer, and inherited diseases through its molecular technologies and clinical and research services. The Company operates through its Laboratory Services segment. The Company is engaged in the provision of its Multiplexed ICE COLD-PCR (MX-ICP) product to the clinical market, enabling the use of blood and other bodily fluids for diagnosis, monitoring and treatment of cancer. MX-ICP amplifies the ability to detect genetic mutations by approximately 100 to 400 fold. MX-ICP is validated internally on sequencing platforms, including Sanger, Next Gen Sequencing and Digital polymerase chain reaction (PCR). Its laboratory in Omaha, Nebraska is focused on providing genetic analytical services related to oncology and pharmacogenomics research services supporting Phase II and Phase III clinical trials conducted.

FINANCIAL RATIOS  of  Precipio (PRPO)

Valuation Ratios
P/E Ratio -0
Price to Sales 0
Price to Book -0
Price to Tangible Book
Price to Cash Flow -0
Price to Free Cash Flow -0
Growth Rates
Sales Growth Rate 0%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
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 -266.7%
Ret/ On Assets - 3 Yr. Avg. -167.3%
Return On Total Capital 160%
Ret/ On T. Cap. - 3 Yr. Avg. -194.9%
Return On Equity 84.2%
Return On Equity - 3 Yr. Avg. 342.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. -33.3%
EBITDA Margin -400%
EBITDA Margin - 3 Yr. Avg. -633.3%
Operating Margin -400%
Oper. Margin - 3 Yr. Avg. -650%
Pre-Tax Margin -400%
Pre-Tax Margin - 3 Yr. Avg. -666.7%
Net Profit Margin -400%
Net Profit Margin - 3 Yr. Avg. -1150%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PRPO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PRPO stock intrinsic value calculation we used $3.04 million for the last fiscal year's total revenue generated by Precipio. The default revenue input number comes from 0001 income statement of Precipio. 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 PRPO 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 6.8%, whose default value for PRPO is calculated based on our internal credit rating of Precipio, 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 Precipio.
    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 PRPO stock the variable cost ratio is equal to 166.7%.

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 PRPO 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 51.6% for Precipio.

Corporate tax rate of 27% is the nominal tax rate for Precipio. 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 PRPO 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 PRPO are equal to 220.1%.

Life of production assets of 17.3 years is the average useful life of capital assets used in Precipio 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 PRPO is equal to -269.3%. 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 - $13.025 million for Precipio - 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 19.669 million for Precipio 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 Precipio at the current share price and the inputted number of shares is $0.0 billion.

COMPANY NEWS

▶ Letter to Shareholders to accompany recent proxy filing   [Nov-16-18 09:32AM  GlobeNewswire]
▶ 4 Healthcare Stocks To Watch On Wednesday   [Nov-14-18 09:30AM  ACCESSWIRE]
▶ Precipio, Inc. to Host Earnings Call   [Aug-23-18 07:00AM  ACCESSWIRE]
▶ Who Owns Most Of Precipio Inc (NASDAQ:PRPO)?   [May-24-18 12:43PM  Simply Wall St.]
▶ Precipio Completes a $3M Convertible Debt Facility   [Apr-23-18 07:37AM  GlobeNewswire]
▶ Precipio Inc (NASDAQ:PRPO): Time For A Financial Health Check   [Apr-10-18 12:23PM  Simply Wall St.]
▶ Precipio Restructures Capitalization Table   [Mar-22-18 07:37AM  GlobeNewswire]
▶ Precipio Settles Lawsuit with Crede Capital   [Mar-13-18 08:38AM  GlobeNewswire]
▶ Precipio, Inc. to Host Earnings Call   [Nov-21-17 07:00AM  ACCESSWIRE]

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