Intrinsic value of Intrexon Corporation - XON

Previous Close

$5.37

  Intrinsic Value

$0.36

stock screener

  Rating & Target

str. sell

-93%

Previous close

$5.37

 
Intrinsic value

$0.36

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of XON 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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  164
  168
  172
  177
  183
  188
  195
  202
  209
  217
  226
  235
  245
  255
  266
  278
  290
  303
  317
  332
  347
  363
  380
  398
  417
  437
  458
  480
  504
  528
Variable operating expenses, $m
  262
  268
  274
  281
  290
  299
  308
  319
  330
  342
  342
  356
  371
  387
  404
  421
  440
  460
  481
  503
  526
  551
  577
  604
  633
  663
  695
  728
  763
  801
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
  262
  268
  274
  281
  290
  299
  308
  319
  330
  342
  342
  356
  371
  387
  404
  421
  440
  460
  481
  503
  526
  551
  577
  604
  633
  663
  695
  728
  763
  801
Operating income, $m
  -98
  -100
  -102
  -104
  -107
  -110
  -113
  -117
  -121
  -125
  -117
  -121
  -126
  -132
  -137
  -143
  -150
  -156
  -164
  -171
  -179
  -187
  -196
  -205
  -215
  -226
  -236
  -248
  -260
  -272
EBITDA, $m
  -63
  -65
  -66
  -68
  -70
  -73
  -75
  -78
  -81
  -84
  -87
  -91
  -94
  -98
  -103
  -107
  -112
  -117
  -122
  -128
  -134
  -140
  -147
  -154
  -161
  -169
  -177
  -185
  -194
  -204
Interest expense (income), $m
  1
  16
  17
  18
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  31
  32
  34
  36
  38
  40
  43
  45
  48
  50
  53
  56
  60
  63
  67
  70
  74
Earnings before tax, $m
  -114
  -116
  -119
  -123
  -126
  -130
  -134
  -139
  -144
  -150
  -142
  -149
  -155
  -162
  -170
  -177
  -186
  -195
  -204
  -214
  -224
  -235
  -247
  -259
  -272
  -285
  -299
  -314
  -330
  -347
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
  -114
  -116
  -119
  -123
  -126
  -130
  -134
  -139
  -144
  -150
  -142
  -149
  -155
  -162
  -170
  -177
  -186
  -195
  -204
  -214
  -224
  -235
  -247
  -259
  -272
  -285
  -299
  -314
  -330
  -347

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
  559
  571
  586
  603
  621
  641
  663
  686
  712
  739
  768
  800
  833
  868
  905
  945
  987
  1,032
  1,079
  1,128
  1,180
  1,235
  1,294
  1,355
  1,419
  1,487
  1,559
  1,634
  1,713
  1,796
Adjusted assets (=assets-cash), $m
  559
  571
  586
  603
  621
  641
  663
  686
  712
  739
  768
  800
  833
  868
  905
  945
  987
  1,032
  1,079
  1,128
  1,180
  1,235
  1,294
  1,355
  1,419
  1,487
  1,559
  1,634
  1,713
  1,796
Revenue / Adjusted assets
  0.293
  0.294
  0.294
  0.294
  0.295
  0.293
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
Average production assets, $m
  293
  300
  307
  316
  325
  336
  347
  360
  373
  387
  403
  419
  437
  455
  475
  495
  517
  541
  565
  591
  619
  648
  678
  710
  744
  780
  817
  857
  898
  942
Working capital, $m
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
Total debt, $m
  220
  228
  237
  248
  260
  273
  287
  302
  318
  336
  355
  375
  396
  419
  443
  469
  496
  524
  555
  586
  620
  656
  693
  732
  774
  818
  864
  912
  963
  1,017
Total liabilities, $m
  360
  368
  377
  388
  400
  413
  427
  442
  458
  476
  495
  515
  536
  559
  583
  609
  636
  664
  695
  726
  760
  796
  833
  873
  914
  958
  1,004
  1,052
  1,103
  1,157
Total equity, $m
  199
  203
  209
  215
  221
  228
  236
  244
  253
  263
  274
  285
  296
  309
  322
  336
  351
  367
  384
  402
  420
  440
  461
  482
  505
  529
  555
  582
  610
  639
Total liabilities and equity, $m
  559
  571
  586
  603
  621
  641
  663
  686
  711
  739
  769
  800
  832
  868
  905
  945
  987
  1,031
  1,079
  1,128
  1,180
  1,236
  1,294
  1,355
  1,419
  1,487
  1,559
  1,634
  1,713
  1,796
Debt-to-equity ratio
  1.100
  1.120
  1.140
  1.160
  1.180
  1.200
  1.220
  1.240
  1.260
  1.280
  1.300
  1.320
  1.340
  1.360
  1.370
  1.390
  1.410
  1.430
  1.440
  1.460
  1.480
  1.490
  1.500
  1.520
  1.530
  1.540
  1.560
  1.570
  1.580
  1.590
Adjusted equity ratio
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -114
  -116
  -119
  -123
  -126
  -130
  -134
  -139
  -144
  -150
  -142
  -149
  -155
  -162
  -170
  -177
  -186
  -195
  -204
  -214
  -224
  -235
  -247
  -259
  -272
  -285
  -299
  -314
  -330
  -347
Depreciation, amort., depletion, $m
  34
  35
  35
  36
  37
  37
  38
  39
  40
  41
  29
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
Funds from operations, $m
  -80
  -82
  -84
  -87
  -90
  -93
  -96
  -100
  -104
  -108
  -113
  -118
  -123
  -129
  -135
  -141
  -148
  -155
  -163
  -171
  -179
  -188
  -197
  -207
  -217
  -228
  -240
  -252
  -265
  -278
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  -80
  -82
  -84
  -86
  -89
  -93
  -96
  -100
  -104
  -108
  -113
  -118
  -123
  -129
  -135
  -141
  -148
  -155
  -162
  -170
  -179
  -187
  -197
  -206
  -217
  -228
  -239
  -251
  -264
  -277
Maintenance CAPEX, $m
  -21
  -21
  -22
  -22
  -23
  -24
  -25
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
New CAPEX, $m
  -6
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
  -44
Cash from investing activities, $m
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -74
  -77
  -81
  -86
  -90
  -94
  -99
  -104
  -110
Free cash flow, $m
  -106
  -110
  -113
  -118
  -122
  -127
  -132
  -137
  -143
  -150
  -156
  -163
  -171
  -179
  -187
  -196
  -206
  -216
  -226
  -237
  -249
  -261
  -274
  -288
  -302
  -318
  -333
  -350
  -368
  -386
Issuance/(repayment) of debt, $m
  7
  8
  9
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  27
  29
  30
  32
  34
  36
  37
  39
  42
  44
  46
  48
  51
  54
Issuance/(repurchase) of shares, $m
  118
  121
  125
  128
  133
  137
  142
  147
  153
  159
  153
  160
  167
  175
  183
  192
  201
  210
  221
  231
  243
  255
  267
  281
  295
  309
  325
  341
  358
  376
Cash from financing (excl. dividends), $m  
  125
  129
  134
  139
  145
  150
  156
  162
  169
  177
  172
  180
  188
  198
  207
  218
  228
  239
  251
  263
  277
  291
  304
  320
  337
  353
  371
  389
  409
  430
Total cash flow (excl. dividends), $m
  20
  20
  21
  22
  22
  23
  24
  25
  26
  27
  15
  16
  17
  18
  20
  21
  22
  23
  25
  26
  27
  29
  30
  32
  34
  36
  37
  39
  41
  44
Retained Cash Flow (-), $m
  -118
  -121
  -125
  -128
  -133
  -137
  -142
  -147
  -153
  -159
  -153
  -160
  -167
  -175
  -183
  -192
  -201
  -210
  -221
  -231
  -243
  -255
  -267
  -281
  -295
  -309
  -325
  -341
  -358
  -376
Prev. year cash balance distribution, $m
  168
  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
  -101
  -104
  -107
  -110
  -114
  -118
  -122
  -127
  -132
  -138
  -143
  -150
  -156
  -163
  -171
  -179
  -187
  -196
  -206
  -215
  -226
  -237
  -249
  -261
  -274
  -287
  -302
  -317
  -333
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
  67
  -93
  -91
  -88
  -85
  -83
  -80
  -76
  -73
  -69
  -65
  -61
  -57
  -52
  -48
  -43
  -39
  -34
  -30
  -26
  -22
  -19
  -16
  -13
  -10
  -8
  -6
  -5
  -3
  -3
Current shareholders' claim on cash, %
  79.6
  63.4
  50.4
  40.0
  31.7
  25.2
  19.9
  15.8
  12.5
  9.9
  7.9
  6.4
  5.1
  4.1
  3.3
  2.6
  2.1
  1.7
  1.3
  1.1
  0.8
  0.7
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1

Intrexon Corporation (Intrexon) forms collaborations to create biologically-based products and processes using synthetic biology. The Company's domestic operations are in California, Florida, Maryland, and Virginia, and its primary international operations are in Belgium and Hungary. The Company designs, builds and regulates gene programs, which are deoxyribonucleic acid (DNA) sequences that consist of genetic components. The Company's synthetic biology capabilities include the ability to control the amount, location and modification of biological molecules to control the function and output of living cells and optimize for desired results at an industrial scale. The Company's technologies include UltraVector gene design and fabrication platform, and its associated library of modular DNA components; Cell Systems Informatics; RheoSwitch inducible gene switch; AttSite Recombinases; Protein Engineering; Laser-Enabled Analysis and Processing (LEAP), and ActoBiotics platform.

FINANCIAL RATIOS  of  Intrexon Corporation (XON)

Valuation Ratios
P/E Ratio -3.4
Price to Sales 3.3
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow -11.4
Price to Free Cash Flow -6.7
Growth Rates
Sales Growth Rate 9.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 200%
Cap. Spend. - 3 Yr. Gr. Rate 81.1%
Financial Strength
Quick Ratio 237
Current Ratio 0.1
LT Debt to Equity 1.4%
Total Debt to Equity 1.6%
Interest Coverage -172
Management Effectiveness
Return On Assets -19.3%
Ret/ On Assets - 3 Yr. Avg. -15.2%
Return On Total Capital -29.4%
Ret/ On T. Cap. - 3 Yr. Avg. -22%
Return On Equity -29.8%
Return On Equity - 3 Yr. Avg. -22.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 67.5%
Gross Margin - 3 Yr. Avg. 73.2%
EBITDA Margin -77%
EBITDA Margin - 3 Yr. Avg. -69.4%
Operating Margin -65.4%
Oper. Margin - 3 Yr. Avg. -82.2%
Pre-Tax Margin -90.6%
Pre-Tax Margin - 3 Yr. Avg. -82.2%
Net Profit Margin -97.9%
Net Profit Margin - 3 Yr. Avg. -86.7%
Effective Tax Rate 2.3%
Eff/ Tax Rate - 3 Yr. Avg. 0.3%
Payout Ratio 0%

XON stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XON stock intrinsic value calculation we used $161 million for the last fiscal year's total revenue generated by Intrexon Corporation. The default revenue input number comes from 0001 income statement of Intrexon 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 XON stock valuation model: a) initial revenue growth rate of 2% 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 XON is calculated based on our internal credit rating of Intrexon 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 Intrexon 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 XON stock the variable cost ratio is equal to 159.6%.

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 XON 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 7.7% for Intrexon Corporation.

Corporate tax rate of 27% is the nominal tax rate for Intrexon 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 XON 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 XON are equal to 178.3%.

Life of production assets of 13.7 years is the average useful life of capital assets used in Intrexon 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 XON is equal to -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 - $362.855 million for Intrexon 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 160.409 million for Intrexon 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 Intrexon Corporation at the current share price and the inputted number of shares is $0.9 billion.

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