Intrinsic value of Vuzix Corporation - VUZI

Previous Close

$3.26

  Intrinsic Value

$0.19

stock screener

  Rating & Target

str. sell

-94%

Previous close

$3.26

 
Intrinsic value

$0.19

 
Up/down potential

-94%

 
Rating

str. sell

We calculate the intrinsic value of VUZI 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 0.1

 

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, %
  36.90
  33.71
  30.84
  28.26
  25.93
  23.84
  21.95
  20.26
  18.73
  17.36
  16.12
  15.01
  14.01
  13.11
  12.30
  11.57
  10.91
  10.32
  9.79
  9.31
  8.88
  8.49
  8.14
  7.83
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
Revenue, $m
  8
  11
  14
  18
  23
  29
  35
  42
  50
  59
  68
  78
  89
  101
  114
  127
  141
  155
  170
  186
  203
  220
  238
  256
  276
  296
  317
  338
  361
  384
Variable operating expenses, $m
  16
  22
  29
  37
  46
  57
  70
  84
  99
  117
  135
  156
  177
  201
  225
  251
  279
  308
  338
  369
  402
  436
  471
  508
  547
  587
  628
  671
  716
  762
Fixed operating expenses, $m
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
  27
  28
  29
  29
  30
  31
  31
  32
  33
Total operating expenses, $m
  33
  40
  47
  56
  65
  76
  90
  104
  120
  138
  157
  178
  200
  224
  249
  275
  304
  333
  364
  395
  429
  463
  499
  537
  576
  617
  659
  702
  748
  795
Operating income, $m
  -26
  -29
  -32
  -37
  -42
  -48
  -54
  -62
  -70
  -79
  -89
  -99
  -110
  -123
  -135
  -149
  -163
  -178
  -193
  -209
  -226
  -244
  -262
  -281
  -300
  -321
  -342
  -364
  -387
  -411
EBITDA, $m
  -24
  -27
  -30
  -34
  -38
  -44
  -49
  -56
  -63
  -71
  -79
  -88
  -98
  -108
  -119
  -131
  -143
  -156
  -169
  -183
  -197
  -213
  -228
  -245
  -261
  -279
  -297
  -316
  -336
  -356
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  3
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  15
  17
  19
  20
  22
  24
  26
  28
  31
  33
  35
  38
  40
Earnings before tax, $m
  -26
  -29
  -33
  -38
  -43
  -50
  -57
  -65
  -74
  -84
  -95
  -106
  -119
  -132
  -146
  -161
  -177
  -193
  -210
  -228
  -247
  -266
  -286
  -307
  -329
  -351
  -375
  -399
  -425
  -451
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
  -26
  -29
  -33
  -38
  -43
  -50
  -57
  -65
  -74
  -84
  -95
  -106
  -119
  -132
  -146
  -161
  -177
  -193
  -210
  -228
  -247
  -266
  -286
  -307
  -329
  -351
  -375
  -399
  -425
  -451

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
  24
  32
  42
  53
  67
  83
  102
  122
  145
  170
  198
  227
  259
  293
  329
  367
  407
  449
  493
  539
  587
  637
  689
  743
  799
  857
  918
  981
  1,046
  1,114
Adjusted assets (=assets-cash), $m
  24
  32
  42
  53
  67
  83
  102
  122
  145
  170
  198
  227
  259
  293
  329
  367
  407
  449
  493
  539
  587
  637
  689
  743
  799
  857
  918
  981
  1,046
  1,114
Revenue / Adjusted assets
  0.333
  0.344
  0.333
  0.340
  0.343
  0.349
  0.343
  0.344
  0.345
  0.347
  0.343
  0.344
  0.344
  0.345
  0.347
  0.346
  0.346
  0.345
  0.345
  0.345
  0.346
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
Average production assets, $m
  6
  8
  10
  13
  16
  20
  25
  30
  35
  41
  48
  55
  63
  71
  80
  89
  99
  109
  120
  131
  143
  155
  168
  181
  195
  209
  224
  239
  255
  271
Working capital, $m
  1
  2
  2
  3
  3
  4
  5
  6
  8
  9
  10
  12
  13
  15
  17
  19
  21
  23
  26
  28
  30
  33
  36
  38
  41
  44
  47
  51
  54
  58
Total debt, $m
  2
  5
  8
  11
  16
  21
  26
  33
  40
  48
  56
  66
  76
  86
  98
  110
  122
  135
  149
  163
  178
  194
  210
  227
  245
  263
  282
  302
  322
  343
Total liabilities, $m
  7
  10
  13
  17
  21
  26
  32
  38
  45
  53
  62
  71
  81
  92
  103
  115
  128
  141
  154
  169
  184
  199
  216
  233
  250
  268
  287
  307
  327
  349
Total equity, $m
  16
  22
  29
  37
  46
  57
  70
  84
  100
  117
  136
  156
  178
  201
  226
  252
  280
  309
  339
  371
  403
  438
  473
  510
  549
  589
  631
  674
  719
  765
Total liabilities and equity, $m
  23
  32
  42
  54
  67
  83
  102
  122
  145
  170
  198
  227
  259
  293
  329
  367
  408
  450
  493
  540
  587
  637
  689
  743
  799
  857
  918
  981
  1,046
  1,114
Debt-to-equity ratio
  0.120
  0.210
  0.270
  0.310
  0.340
  0.360
  0.380
  0.390
  0.400
  0.410
  0.420
  0.420
  0.420
  0.430
  0.430
  0.430
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
Adjusted equity ratio
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687
  0.687

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -26
  -29
  -33
  -38
  -43
  -50
  -57
  -65
  -74
  -84
  -95
  -106
  -119
  -132
  -146
  -161
  -177
  -193
  -210
  -228
  -247
  -266
  -286
  -307
  -329
  -351
  -375
  -399
  -425
  -451
Depreciation, amort., depletion, $m
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  10
  11
  13
  14
  16
  18
  20
  22
  24
  26
  29
  31
  34
  36
  39
  42
  45
  48
  51
  54
Funds from operations, $m
  -24
  -27
  -31
  -35
  -40
  -46
  -52
  -59
  -67
  -76
  -85
  -95
  -106
  -118
  -130
  -143
  -157
  -171
  -186
  -202
  -218
  -235
  -252
  -271
  -290
  -310
  -330
  -351
  -374
  -397
Change in working capital, $m
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
Cash from operations, $m
  -25
  -28
  -31
  -36
  -41
  -46
  -53
  -60
  -68
  -77
  -86
  -97
  -108
  -119
  -132
  -145
  -159
  -173
  -188
  -204
  -220
  -237
  -255
  -274
  -293
  -313
  -333
  -355
  -377
  -400
Maintenance CAPEX, $m
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -10
  -11
  -13
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -29
  -31
  -34
  -36
  -39
  -42
  -45
  -48
  -51
New CAPEX, $m
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
Cash from investing activities, $m
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -10
  -12
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -28
  -30
  -33
  -35
  -38
  -41
  -44
  -47
  -50
  -53
  -57
  -60
  -64
  -68
Free cash flow, $m
  -27
  -31
  -35
  -41
  -47
  -54
  -61
  -70
  -80
  -90
  -101
  -114
  -127
  -140
  -155
  -170
  -186
  -203
  -221
  -239
  -258
  -278
  -299
  -320
  -343
  -366
  -390
  -415
  -441
  -468
Issuance/(repayment) of debt, $m
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  20
  21
Issuance/(repurchase) of shares, $m
  30
  34
  40
  46
  53
  61
  70
  79
  90
  101
  114
  127
  141
  155
  171
  187
  204
  222
  240
  259
  279
  300
  322
  344
  367
  391
  416
  442
  469
  498
Cash from financing (excl. dividends), $m  
  32
  37
  43
  50
  57
  66
  76
  85
  97
  109
  123
  136
  151
  166
  182
  199
  217
  235
  254
  273
  294
  316
  338
  361
  385
  409
  435
  462
  489
  519
Total cash flow (excl. dividends), $m
  5
  6
  7
  9
  11
  12
  14
  16
  17
  19
  21
  22
  24
  26
  27
  29
  30
  32
  33
  35
  36
  38
  39
  41
  42
  44
  46
  47
  49
  51
Retained Cash Flow (-), $m
  -30
  -34
  -40
  -46
  -53
  -61
  -70
  -79
  -90
  -101
  -114
  -127
  -141
  -155
  -171
  -187
  -204
  -222
  -240
  -259
  -279
  -300
  -322
  -344
  -367
  -391
  -416
  -442
  -469
  -498
Prev. year cash balance distribution, $m
  9
  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
  -16
  -28
  -32
  -37
  -42
  -49
  -56
  -64
  -72
  -82
  -93
  -104
  -117
  -130
  -144
  -158
  -174
  -190
  -207
  -225
  -243
  -263
  -283
  -303
  -325
  -347
  -371
  -395
  -420
  -446
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
  -15
  -26
  -28
  -30
  -33
  -35
  -38
  -40
  -42
  -43
  -44
  -45
  -44
  -44
  -42
  -40
  -38
  -35
  -32
  -29
  -25
  -22
  -19
  -15
  -13
  -10
  -8
  -6
  -5
  -3
Current shareholders' claim on cash, %
  62.6
  41.8
  29.2
  21.1
  15.7
  12.0
  9.3
  7.3
  5.8
  4.7
  3.8
  3.1
  2.6
  2.1
  1.8
  1.5
  1.2
  1.0
  0.9
  0.7
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Vuzix Corporation designs, manufactures, markets, and sells wearable display devices in the United States and internationally. The company’s products are worn like eyeglasses that enable the user to view video and digital content, such as movies, computer data, the Internet, or video games through various mobile electronic devices, such as cell phones, laptop computers, tablets, portable media players, and gaming systems. Its products include binocular video eyewear devices that contain two micro displays mounted in a frame attached to eyeglass-style temples or stereo headphones; monocular smart glasses products for the enterprise, industrial, and commercial markets; virtual reality video eyewear products that provide a user with 3D computer simulated environments, as well as video headphones; and augmented reality products, which provide a user a live, direct or indirect, view of a physical, and real-world environment. The company sells its products under the Vuzix brand name. Vuzix Corporation offers its products directly to consumers, as well as through specialty retailers, online retailers, distributors, resellers, and Web stores. The company was formerly known as Icuiti Corporation and changed its name to Vuzix Corporation in 2007. Vuzix Corporation was founded in 1997 and is based in West Henrietta, New York.

FINANCIAL RATIOS  of  Vuzix Corporation (VUZI)

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 -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

VUZI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VUZI stock intrinsic value calculation we used $6 million for the last fiscal year's total revenue generated by Vuzix Corporation. The default revenue input number comes from 0001 income statement of Vuzix 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 VUZI stock valuation model: a) initial revenue growth rate of 36.9% 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 VUZI is calculated based on our internal credit rating of Vuzix 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 Vuzix 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 VUZI stock the variable cost ratio is equal to 200%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $17 million in the base year in the intrinsic value calculation for VUZI 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 12.5% for Vuzix Corporation.

Corporate tax rate of 27% is the nominal tax rate for Vuzix 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 VUZI 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 VUZI are equal to 70.6%.

Life of production assets of 4.7 years is the average useful life of capital assets used in Vuzix 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 VUZI is equal to 15%. 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 - $21.379713 million for Vuzix 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 27.588 million for Vuzix 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 Vuzix Corporation at the current share price and the inputted number of shares is $0.1 billion.

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