What is the reason for the share price to differ from the intrinsic value? For GHDX, there are three pertinent factors you should look at:įinancial Health: Does GHDX have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.įuture Earnings: How does GHDX’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Whilst important, DCF calculation shouldn’t be the only metric you look at when researching a company. Keen to know how I arrived at this number? Check out our detailed analysis here. This resulted in a present value of 5-year cash flow of US$206.47M. When estimates weren’t available, I’ve extrapolated the average annual growth rate over the previous five years, capped at a reasonable level.
To start off, I pulled together the analyst consensus estimates of GHDX’s levered free cash flow (FCF) over the next five years and discounted these values at the cost of equity of 11.18%. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have perpetual stable growth rate. We are going to use a two-stage DCF model, which simply means we take in account two stages of company’s growth. If you are reading this after March 2018 then I highly recommend you check out the latest calculation for Genomic Health here. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model.
How far off is Genomic Health Inc ( NASDAQ:GHDX) from its intrinsic value? Using the most recent financial data, I am going to take a look at whether the stock is fairly priced using the discounted cash flows (DCF) model.
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