Discounted Cash Flow Calculation for DB:LIA using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:LIA DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
LivaNova's share price is below the future cash flow value, and at a moderate discount (> 20%).
LivaNova's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
LivaNova's earnings available for a low price, and how does
this compare to other companies in the same industry?
LivaNova's earnings are expected to grow significantly at over 20% yearly.
LivaNova's revenue is expected to grow by 5.1% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
LivaNova's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Damien McDonald is the Chief Executive Officer and an Executive Director of LivaNova PLC. since January 1, 2017. Mr. McDonald served as Chief Operating Officer of LivaNova from October 3, 2016 through December 31, 2016. Prior to joining us, Mr. McDonald held several senior roles in the global life sciences sector. Most recently, Mr. McDonald was Group Executive and Corporate Vice President at Danaher Corporation (“Danaher”). From 2013 until 2016, he served as Group President, Professional Consumables at Danaher. During his tenure at Danaher, he was responsible for, among other things, 13 operating plants in Europe and the Americas and over 3,200 employees globally. From 2011 to 2013, Mr. McDonald served as Group President of Kerr Corporation, a subsidiary of Danaher, where he was responsible for a dental consumables business with operations in the United States, Mexico, Switzerland, Italy and the Czech Republic. In 2010, Mr. McDonald undertook special projects for Danaher. From 2007 to 2010, Mr. McDonald was President, Zimmer Spine at Zimmer Holdings, where he was responsible for divisions in the United States and France. From 1999 to 2007, Mr. McDonald occupied various roles with Johnson and Johnson. He has been a Non-Executive Director of Avita Medical Limited since January 13, 2016. Mr. McDonald holds bachelor’s degrees in pharmacy and economics from the University of Queensland in Australia, a master’s degree in international economics from the University of Wales, and an MBA from the Institute for Management Development in Lausanne.
Damien's compensation has been consistent with company performance over the past year.
Damien's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the LivaNova management team is less than 2 years, this suggests a new team.
CEO & Director
Chief Financial Officer
Chief Accounting Officer
General Counsel & Senior VP
Vice President of Investor Relations
Director of Corporate Communications
Senior Vice President of Corporate Development
Chief Human Resources Officer
General Manager of Neuromodulation
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the LivaNova board of directors is about average.
LivaNova PLC, a medical device company, designs, develops, manufactures, and sells therapeutic solutions worldwide. It operates in two segments, Cardiovascular (CV”) and Neuromodulation (NM). The CV segment develops, produces, and sells cardiopulmonary products, including heart-lung machines, oxygenators, perfusion tubing sets, cannulae, and accessories, as well as related equipment and disposables for autotransfusion and autologous blood washing for neonatal, pediatric, and adult patients. It also provides surgical tissue and mechanical valve replacements, and repair products for damaged or diseased heart valves, such as self-anchoring tissue heart, tissue heart, and mechanical heart valves, as well as heart valve repair products; and temporary extracorporeal cardiopulmonary life support solutions for critically ill patients. The NM segment designs, develops, and markets VNS Therapy System, an implantable device that delivers vagus nerve stimulation (VNS) therapy for the treatment of drug-resistant epilepsy, treatment-resistant depression, and obstructive sleep apnea. It is also involved in the development and clinical testing of the VITARIA System for treating heart failure through VNS. The company serves perfusionists, neurologists, neurosurgeons, and other physicians, as well as hospitals, other medical institutions, and healthcare providers. It sells its products through direct sales representatives and independent distributors. The company was founded in 1987 and is headquartered in London, the United Kingdom.
Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.