Intrinsic value of Intersect ENT - XENT

Previous Close

$30.72

  Intrinsic Value

$4.69

stock screener

  Rating & Target

str. sell

-85%

Previous close

$30.72

 
Intrinsic value

$4.69

 
Up/down potential

-85%

 
Rating

str. sell

We calculate the intrinsic value of XENT 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 0.9

 

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, %
  9.70
  9.23
  8.81
  8.43
  8.08
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.08
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
  5.25
  5.22
Revenue, $m
  106
  115
  126
  136
  147
  159
  170
  183
  196
  209
  223
  237
  252
  268
  284
  301
  319
  337
  357
  377
  398
  420
  443
  466
  492
  518
  545
  574
  604
  636
Variable operating expenses, $m
  55
  60
  65
  71
  77
  83
  89
  95
  102
  109
  116
  124
  131
  140
  148
  157
  166
  176
  186
  196
  207
  219
  231
  243
  256
  270
  284
  299
  315
  331
Fixed operating expenses, $m
  66
  68
  69
  71
  72
  74
  76
  77
  79
  81
  83
  84
  86
  88
  90
  92
  94
  96
  98
  100
  103
  105
  107
  110
  112
  114
  117
  120
  122
  125
Total operating expenses, $m
  121
  128
  134
  142
  149
  157
  165
  172
  181
  190
  199
  208
  217
  228
  238
  249
  260
  272
  284
  296
  310
  324
  338
  353
  368
  384
  401
  419
  437
  456
Operating income, $m
  -16
  -13
  -9
  -6
  -2
  2
  6
  10
  15
  19
  24
  29
  35
  40
  46
  52
  59
  65
  73
  80
  88
  96
  105
  114
  123
  134
  144
  155
  167
  180
EBITDA, $m
  -15
  -12
  -8
  -4
  -1
  3
  8
  12
  17
  21
  26
  32
  37
  43
  49
  55
  62
  69
  76
  84
  92
  100
  109
  118
  128
  138
  149
  161
  173
  186
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
Earnings before tax, $m
  -16
  -13
  -9
  -6
  -2
  1
  5
  9
  14
  18
  23
  28
  33
  39
  44
  50
  57
  63
  70
  77
  85
  93
  101
  110
  120
  129
  140
  151
  162
  174
Tax expense, $m
  0
  0
  0
  0
  0
  0
  1
  3
  4
  5
  6
  8
  9
  10
  12
  14
  15
  17
  19
  21
  23
  25
  27
  30
  32
  35
  38
  41
  44
  47
Net income, $m
  -16
  -13
  -9
  -6
  -2
  1
  4
  7
  10
  13
  17
  20
  24
  28
  32
  37
  41
  46
  51
  56
  62
  68
  74
  81
  87
  95
  102
  110
  118
  127

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
  56
  61
  67
  72
  78
  84
  90
  97
  104
  111
  118
  126
  134
  142
  151
  160
  169
  179
  189
  200
  211
  223
  235
  247
  261
  275
  289
  305
  320
  337
Adjusted assets (=assets-cash), $m
  56
  61
  67
  72
  78
  84
  90
  97
  104
  111
  118
  126
  134
  142
  151
  160
  169
  179
  189
  200
  211
  223
  235
  247
  261
  275
  289
  305
  320
  337
Revenue / Adjusted assets
  1.893
  1.885
  1.881
  1.889
  1.885
  1.893
  1.889
  1.887
  1.885
  1.883
  1.890
  1.881
  1.881
  1.887
  1.881
  1.881
  1.888
  1.883
  1.889
  1.885
  1.886
  1.883
  1.885
  1.887
  1.885
  1.884
  1.886
  1.882
  1.888
  1.887
Average production assets, $m
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
Working capital, $m
  11
  12
  13
  15
  16
  17
  18
  20
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  38
  40
  43
  45
  47
  50
  53
  55
  58
  61
  65
  68
Total debt, $m
  2
  4
  6
  8
  10
  12
  14
  17
  19
  22
  24
  27
  30
  33
  36
  39
  43
  46
  50
  54
  58
  62
  66
  71
  76
  81
  86
  91
  97
  103
Total liabilities, $m
  20
  22
  24
  26
  28
  30
  33
  35
  37
  40
  43
  45
  48
  51
  54
  58
  61
  64
  68
  72
  76
  80
  85
  89
  94
  99
  104
  110
  115
  121
Total equity, $m
  36
  39
  43
  46
  50
  54
  58
  62
  66
  71
  76
  81
  86
  91
  97
  102
  108
  115
  121
  128
  135
  142
  150
  158
  167
  176
  185
  195
  205
  216
Total liabilities and equity, $m
  56
  61
  67
  72
  78
  84
  91
  97
  103
  111
  119
  126
  134
  142
  151
  160
  169
  179
  189
  200
  211
  222
  235
  247
  261
  275
  289
  305
  320
  337
Debt-to-equity ratio
  0.050
  0.090
  0.130
  0.170
  0.200
  0.220
  0.250
  0.270
  0.290
  0.300
  0.320
  0.330
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.410
  0.420
  0.430
  0.430
  0.440
  0.450
  0.450
  0.460
  0.460
  0.470
  0.470
  0.480
Adjusted equity ratio
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640
  0.640

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -16
  -13
  -9
  -6
  -2
  1
  4
  7
  10
  13
  17
  20
  24
  28
  32
  37
  41
  46
  51
  56
  62
  68
  74
  81
  87
  95
  102
  110
  118
  127
Depreciation, amort., depletion, $m
  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
  6
  6
Funds from operations, $m
  -15
  -12
  -8
  -5
  -1
  2
  5
  9
  12
  15
  19
  23
  27
  31
  35
  40
  44
  49
  54
  60
  66
  72
  78
  85
  92
  99
  107
  115
  124
  133
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
Cash from operations, $m
  -16
  -13
  -9
  -6
  -2
  1
  4
  7
  11
  14
  17
  21
  25
  29
  33
  38
  42
  47
  52
  58
  63
  69
  76
  82
  89
  97
  104
  112
  121
  130
Maintenance CAPEX, $m
  -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
  -6
New CAPEX, $m
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from investing activities, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
Free cash flow, $m
  -17
  -14
  -11
  -8
  -4
  -1
  2
  5
  8
  11
  15
  18
  22
  26
  30
  34
  39
  43
  48
  54
  59
  65
  71
  77
  84
  91
  98
  106
  114
  123
Issuance/(repayment) of debt, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
Issuance/(repurchase) of shares, $m
  19
  16
  13
  10
  6
  3
  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  
  21
  18
  15
  12
  8
  5
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
Total cash flow (excl. dividends), $m
  3
  4
  4
  4
  4
  4
  5
  7
  11
  14
  17
  21
  25
  29
  33
  37
  42
  47
  52
  57
  63
  69
  75
  82
  89
  96
  103
  111
  120
  129
Retained Cash Flow (-), $m
  -19
  -16
  -13
  -10
  -6
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
Prev. year cash balance distribution, $m
  85
  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
  69
  -12
  -9
  -6
  -2
  1
  1
  3
  6
  9
  13
  16
  20
  24
  28
  32
  36
  41
  45
  51
  56
  61
  67
  73
  80
  87
  94
  102
  110
  118
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
  66
  -11
  -8
  -5
  -1
  0
  0
  2
  4
  5
  6
  7
  8
  8
  8
  8
  8
  7
  7
  6
  6
  5
  4
  4
  3
  3
  2
  2
  1
  1
Current shareholders' claim on cash, %
  92.7
  87.4
  83.7
  81.2
  79.8
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2
  79.2

Intersect ENT, Inc. is a commercial-stage drug-device company. The Company develops drugs for patients with ear, nose and throat (ENT) conditions. The Company has developed a drug releasing bioabsorbable implant technology that enables targeted and sustained release of therapeutic agents. This targeted drug delivery technology is designed to allow ENT physicians to manage patient care. The Company's commercial products are the PROPEL and PROPEL mini drug-releasing implants for patients undergoing sinus surgery to treat chronic sinusitis. The Company is building a portfolio of products based on its drug releasing bio-absorbable implant technology that are designed to provide localized drug delivery to treat patients across the continuum of care in chronic sinusitis. The Company markets PROPEL, which is indicated for use following ethmoid sinus surgery, and PROPEL Mini, which is indicated for use following ethmoid and/or frontal sinus surgery.

FINANCIAL RATIOS  of  Intersect ENT (XENT)

Valuation Ratios
P/E Ratio -35.2
Price to Sales 11.1
Price to Book 7.7
Price to Tangible Book
Price to Cash Flow -44
Price to Free Cash Flow -40
Growth Rates
Sales Growth Rate 27.4%
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 NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -18.2%
Ret/ On Assets - 3 Yr. Avg. -29%
Return On Total Capital -20.5%
Ret/ On T. Cap. - 3 Yr. Avg. -34%
Return On Equity -20.5%
Return On Equity - 3 Yr. Avg. -34.3%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 83.5%
Gross Margin - 3 Yr. Avg. 78.1%
EBITDA Margin -30.4%
EBITDA Margin - 3 Yr. Avg. -38.6%
Operating Margin -32.9%
Oper. Margin - 3 Yr. Avg. -40.9%
Pre-Tax Margin -31.6%
Pre-Tax Margin - 3 Yr. Avg. -40.4%
Net Profit Margin -31.6%
Net Profit Margin - 3 Yr. Avg. -40.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

XENT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XENT stock intrinsic value calculation we used $96.301 million for the last fiscal year's total revenue generated by Intersect ENT. The default revenue input number comes from 0001 income statement of Intersect ENT. 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 XENT stock valuation model: a) initial revenue growth rate of 9.7% 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 XENT is calculated based on our internal credit rating of Intersect ENT, 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 Intersect ENT.
    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 XENT stock the variable cost ratio is equal to 52.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $65 million in the base year in the intrinsic value calculation for XENT 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 Intersect ENT.

Corporate tax rate of 27% is the nominal tax rate for Intersect ENT. 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 XENT 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 XENT are equal to 4.7%.

Life of production assets of 3.1 years is the average useful life of capital assets used in Intersect ENT 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 XENT is equal to 10.7%. 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 - $117.219 million for Intersect ENT - 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 28.326 million for Intersect ENT 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 Intersect ENT at the current share price and the inputted number of shares is $0.9 billion.

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COMPANY NEWS

▶ Intersect ENT: 3Q Earnings Snapshot   [07:09AM  Associated Press]
▶ Here's Why Intersect ENT Stock Is Sinking Today   [Aug-01-18 12:45PM  Motley Fool]
▶ Intersect ENT: 2Q Earnings Snapshot   [08:31AM  Associated Press]
▶ 3 Top Healthcare Stocks to Buy Right Now   [Jun-01-18 08:44AM  Motley Fool]
▶ Best NasdaqGM Growth Companies   [May-06-18 12:02PM  Simply Wall St.]
▶ Intersect ENT Reports First Quarter 2018 Results   [May-01-18 04:05PM  Business Wire]
▶ Intersect ENT Inc to Host Earnings Call   [12:50PM  ACCESSWIRE]
▶ Intersect ENT Reports Preliminary Q4 and Year 2017 Revenue   [Jan-08-18 08:00AM  Business Wire]
▶ Intersect ENT reports 3Q loss   [Nov-02-17 05:45PM  Associated Press]
▶ Intersect ENT Inc to Host Earnings Call   [11:40AM  ACCESSWIRE]
▶ 5 MedTech Stocks for Stellar Returns in Q3   [Oct-10-17 04:59PM  Zacks]
▶ Intersect ENT reports 2Q loss   [Aug-01-17 06:06PM  Associated Press]
▶ ETFs with exposure to Intersect ENT, Inc. : July 31, 2017   [Jul-31-17 05:22PM  Capital Cube]
▶ Teresa L. Kline Joins Intersect ENTs Board of Directors   [Jul-20-17 04:05PM  Business Wire]
▶ ETFs with exposure to Intersect ENT, Inc. : July 12, 2017   [Jul-12-17 03:05PM  Capital Cube]
▶ ETFs with exposure to Intersect ENT, Inc. : June 27, 2017   [Jun-27-17 04:01PM  Capital Cube]
▶ ETFs with exposure to Intersect ENT, Inc. : June 16, 2017   [Jun-16-17 04:27PM  Capital Cube]
▶ Why Intersect ENT Shares Are Rallying 17% Today   [May-03-17 02:44PM  Motley Fool]
▶ Intersect ENT reports 1Q loss   [May-02-17 06:18PM  Associated Press]
▶ ETFs with exposure to Intersect ENT, Inc. : April 7, 2017   [Apr-07-17 05:49PM  Capital Cube]
▶ Intersect ENT reports 4Q loss   [05:25PM  Associated Press]

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