Intrinsic value of Intersect ENT, Inc. - XENT

Previous Close

$31.42

  Intrinsic Value

$0.93

stock screener

  Rating & Target

str. sell

-97%

Previous close

$31.42

 
Intrinsic value

$0.93

 
Up/down potential

-97%

 
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 1.0

 

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, %
  11.00
  10.40
  9.86
  9.37
  8.94
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
Revenue, $m
  120
  132
  145
  159
  173
  188
  203
  219
  236
  253
  271
  290
  309
  330
  351
  373
  395
  419
  444
  469
  496
  524
  554
  584
  616
  650
  685
  722
  760
  800
Variable operating expenses, $m
  142
  157
  172
  188
  205
  222
  241
  259
  279
  299
  320
  342
  365
  389
  414
  439
  466
  494
  523
  554
  585
  619
  653
  689
  727
  767
  808
  851
  896
  944
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
  142
  157
  172
  188
  205
  222
  241
  259
  279
  299
  320
  342
  365
  389
  414
  439
  466
  494
  523
  554
  585
  619
  653
  689
  727
  767
  808
  851
  896
  944
Operating income, $m
  -22
  -24
  -27
  -29
  -32
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -56
  -59
  -63
  -67
  -71
  -75
  -80
  -84
  -89
  -94
  -99
  -105
  -111
  -117
  -123
  -129
  -136
  -144
EBITDA, $m
  -20
  -22
  -25
  -27
  -29
  -32
  -34
  -37
  -40
  -43
  -46
  -49
  -52
  -56
  -59
  -63
  -67
  -71
  -75
  -80
  -84
  -89
  -94
  -99
  -104
  -110
  -116
  -122
  -129
  -136
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
Earnings before tax, $m
  -22
  -24
  -27
  -30
  -32
  -35
  -38
  -41
  -44
  -47
  -50
  -54
  -57
  -61
  -65
  -69
  -74
  -78
  -83
  -88
  -93
  -98
  -104
  -109
  -115
  -122
  -128
  -135
  -142
  -150
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
  -22
  -24
  -27
  -30
  -32
  -35
  -38
  -41
  -44
  -47
  -50
  -54
  -57
  -61
  -65
  -69
  -74
  -78
  -83
  -88
  -93
  -98
  -104
  -109
  -115
  -122
  -128
  -135
  -142
  -150

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
  67
  73
  81
  88
  96
  104
  113
  122
  131
  141
  151
  161
  172
  183
  195
  207
  219
  233
  246
  261
  275
  291
  307
  324
  342
  361
  380
  400
  422
  444
Adjusted assets (=assets-cash), $m
  67
  73
  81
  88
  96
  104
  113
  122
  131
  141
  151
  161
  172
  183
  195
  207
  219
  233
  246
  261
  275
  291
  307
  324
  342
  361
  380
  400
  422
  444
Revenue / Adjusted assets
  1.791
  1.808
  1.790
  1.807
  1.802
  1.808
  1.796
  1.795
  1.802
  1.794
  1.795
  1.801
  1.797
  1.803
  1.800
  1.802
  1.804
  1.798
  1.805
  1.797
  1.804
  1.801
  1.805
  1.802
  1.801
  1.801
  1.803
  1.805
  1.801
  1.802
Average production assets, $m
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  15
  16
  18
  19
  20
  21
  22
  23
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
Working capital, $m
  16
  17
  19
  21
  23
  25
  27
  29
  31
  33
  36
  38
  41
  43
  46
  49
  52
  55
  58
  62
  65
  69
  73
  77
  81
  85
  90
  95
  100
  105
Total debt, $m
  2
  4
  7
  9
  12
  15
  18
  21
  24
  27
  30
  34
  37
  41
  45
  49
  53
  57
  62
  67
  72
  77
  82
  88
  94
  100
  107
  113
  120
  128
Total liabilities, $m
  22
  24
  27
  29
  32
  35
  38
  41
  44
  47
  50
  54
  57
  61
  65
  69
  73
  77
  82
  87
  92
  97
  102
  108
  114
  120
  127
  133
  140
  148
Total equity, $m
  44
  49
  54
  59
  64
  70
  75
  81
  87
  94
  100
  107
  115
  122
  130
  138
  146
  155
  164
  174
  184
  194
  205
  216
  228
  241
  254
  267
  281
  296
Total liabilities and equity, $m
  66
  73
  81
  88
  96
  105
  113
  122
  131
  141
  150
  161
  172
  183
  195
  207
  219
  232
  246
  261
  276
  291
  307
  324
  342
  361
  381
  400
  421
  444
Debt-to-equity ratio
  0.050
  0.090
  0.130
  0.160
  0.190
  0.210
  0.230
  0.250
  0.270
  0.290
  0.300
  0.310
  0.320
  0.340
  0.350
  0.350
  0.360
  0.370
  0.380
  0.380
  0.390
  0.400
  0.400
  0.410
  0.410
  0.420
  0.420
  0.420
  0.430
  0.430
Adjusted equity ratio
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667
  0.667

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -22
  -24
  -27
  -30
  -32
  -35
  -38
  -41
  -44
  -47
  -50
  -54
  -57
  -61
  -65
  -69
  -74
  -78
  -83
  -88
  -93
  -98
  -104
  -109
  -115
  -122
  -128
  -135
  -142
  -150
Depreciation, amort., depletion, $m
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  8
  8
Funds from operations, $m
  -20
  -23
  -25
  -27
  -30
  -33
  -35
  -38
  -41
  -44
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -74
  -78
  -83
  -88
  -93
  -98
  -103
  -109
  -115
  -121
  -128
  -135
  -142
Change in working capital, $m
  2
  2
  2
  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
Cash from operations, $m
  -22
  -24
  -27
  -29
  -32
  -34
  -37
  -40
  -43
  -46
  -50
  -53
  -57
  -61
  -64
  -68
  -73
  -77
  -82
  -86
  -91
  -96
  -102
  -107
  -113
  -120
  -126
  -133
  -140
  -147
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -8
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from investing activities, $m
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -8
  -8
  -8
  -8
  -9
  -9
  -10
Free cash flow, $m
  -24
  -26
  -29
  -31
  -34
  -37
  -40
  -43
  -46
  -50
  -53
  -57
  -61
  -65
  -69
  -73
  -77
  -82
  -87
  -92
  -97
  -103
  -109
  -115
  -121
  -127
  -134
  -142
  -149
  -157
Issuance/(repayment) of debt, $m
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Issuance/(repurchase) of shares, $m
  27
  29
  32
  35
  37
  40
  44
  47
  50
  54
  57
  61
  65
  69
  73
  77
  82
  87
  92
  97
  103
  108
  114
  121
  127
  134
  141
  149
  157
  165
Cash from financing (excl. dividends), $m  
  29
  31
  34
  38
  40
  43
  47
  50
  53
  57
  60
  64
  69
  73
  77
  81
  86
  91
  97
  102
  108
  113
  119
  127
  133
  140
  147
  156
  164
  172
Total cash flow (excl. dividends), $m
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
Retained Cash Flow (-), $m
  -27
  -29
  -32
  -35
  -37
  -40
  -44
  -47
  -50
  -54
  -57
  -61
  -65
  -69
  -73
  -77
  -82
  -87
  -92
  -97
  -103
  -108
  -114
  -121
  -127
  -134
  -141
  -149
  -157
  -165
Prev. year cash balance distribution, $m
  81
  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
  60
  -24
  -26
  -29
  -31
  -34
  -37
  -40
  -43
  -47
  -50
  -53
  -57
  -61
  -65
  -69
  -73
  -78
  -82
  -87
  -92
  -98
  -103
  -109
  -115
  -121
  -128
  -135
  -142
  -150
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
  57
  -22
  -23
  -24
  -24
  -25
  -25
  -25
  -25
  -24
  -24
  -23
  -22
  -20
  -19
  -18
  -16
  -14
  -13
  -11
  -10
  -8
  -7
  -6
  -4
  -4
  -3
  -2
  -2
  -1
Current shareholders' claim on cash, %
  92.4
  85.4
  79.0
  73.1
  67.8
  62.8
  58.3
  54.1
  50.2
  46.6
  43.4
  40.3
  37.5
  34.9
  32.5
  30.3
  28.2
  26.2
  24.4
  22.7
  21.2
  19.7
  18.4
  17.1
  16.0
  14.9
  13.9
  12.9
  12.0
  11.2

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, Inc. (XENT)

Valuation Ratios
P/E Ratio -36
Price to Sales 11.4
Price to Book 7.9
Price to Tangible Book
Price to Cash Flow -45
Price to Free Cash Flow -40.9
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 $108 million for the last fiscal year's total revenue generated by Intersect ENT, Inc.. The default revenue input number comes from 0001 income statement of Intersect ENT, Inc.. 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 11% 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, Inc., 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, Inc..
    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 118.5%.

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 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, Inc..

Corporate tax rate of 27% is the nominal tax rate for Intersect ENT, Inc.. 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 5%.

Life of production assets of 2.8 years is the average useful life of capital assets used in Intersect ENT, Inc. 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 13.1%. 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 - $120.994 million for Intersect ENT, Inc. - 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 30.901 million for Intersect ENT, Inc. 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, Inc. at the current share price and the inputted number of shares is $1.0 billion.

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