Latest news with #IntegralDiagnosticsLimited
Yahoo
26-05-2025
- Business
- Yahoo
Shareholders in Integral Diagnostics (ASX:IDX) are in the red if they invested five years ago
Ideally, your overall portfolio should beat the market average. But even the best stock picker will only win with some selections. At this point some shareholders may be questioning their investment in Integral Diagnostics Limited (ASX:IDX), since the last five years saw the share price fall 34%. The falls have accelerated recently, with the share price down 16% in the last three months. So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress. We've discovered 3 warning signs about Integral Diagnostics. View them for free. While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. Integral Diagnostics became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move. In contrast to the share price, revenue has actually increased by 13% a year in the five year period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity. You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values). It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free report showing analyst forecasts should help you form a view on Integral Diagnostics It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Integral Diagnostics, it has a TSR of -25% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence! Integral Diagnostics shareholders gained a total return of 1.2% during the year. Unfortunately this falls short of the market return. But at least that's still a gain! Over five years the TSR has been a reduction of 5% per year, over five years. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand Integral Diagnostics better, we need to consider many other factors. Take risks, for example - Integral Diagnostics has 3 warning signs (and 2 which are significant) we think you should know about. Integral Diagnostics is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
28-04-2025
- Business
- Yahoo
Integral Diagnostics Limited (ASX:IDX) Shares Could Be 44% Below Their Intrinsic Value Estimate
Integral Diagnostics' estimated fair value is AU$4.08 based on 2 Stage Free Cash Flow to Equity Integral Diagnostics' AU$2.27 share price signals that it might be 44% undervalued Our fair value estimate is 29% higher than Integral Diagnostics' analyst price target of AU$3.15 Today we will run through one way of estimating the intrinsic value of Integral Diagnostics Limited (ASX:IDX) by projecting its future cash flows and then discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. Believe it or not, it's not too difficult to follow, as you'll see from our example! Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. Our free stock report includes 3 warning signs investors should be aware of before investing in Integral Diagnostics. Read for free now. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (A$, Millions) AU$20.0m AU$54.8m AU$59.8m AU$61.0m AU$64.0m AU$66.5m AU$68.9m AU$71.2m AU$73.4m AU$75.6m Growth Rate Estimate Source Analyst x4 Analyst x6 Analyst x6 Analyst x2 Analyst x2 Est @ 3.92% Est @ 3.56% Est @ 3.32% Est @ 3.14% Est @ 3.02% Present Value (A$, Millions) Discounted @ 6.5% AU$18.8 AU$48.3 AU$49.5 AU$47.4 AU$46.7 AU$45.5 AU$44.3 AU$42.9 AU$41.6 AU$40.2 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$425m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.7%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 6.5%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = AU$76m× (1 + 2.7%) ÷ (6.5%– 2.7%) = AU$2.1b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$2.1b÷ ( 1 + 6.5%)10= AU$1.1b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is AU$1.5b. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of AU$2.3, the company appears quite good value at a 44% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Integral Diagnostics as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.5%, which is based on a levered beta of 0.874. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Integral Diagnostics Strength Debt is well covered by cash flow. Weakness Interest payments on debt are not well covered. Dividend is low compared to the top 25% of dividend payers in the Healthcare market. Shareholders have been diluted in the past year. Opportunity Annual earnings are forecast to grow faster than the Australian market. Trading below our estimate of fair value by more than 20%. Significant insider buying over the past 3 months. Threat Dividends are not covered by earnings. Revenue is forecast to grow slower than 20% per year. Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. The DCF model is not a perfect stock valuation tool. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. What is the reason for the share price sitting below the intrinsic value? For Integral Diagnostics, there are three additional elements you should assess: Risks: Be aware that Integral Diagnostics is showing 3 warning signs in our investment analysis , and 2 of those are a bit concerning... Future Earnings: How does IDX'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. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ASX every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
02-03-2025
- Business
- Yahoo
Don't Buy Integral Diagnostics Limited (ASX:IDX) For Its Next Dividend Without Doing These Checks
Integral Diagnostics Limited (ASX:IDX) is about to trade ex-dividend in the next 3 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase Integral Diagnostics' shares on or after the 6th of March will not receive the dividend, which will be paid on the 7th of April. The company's next dividend payment will be AU$0.025 per share, on the back of last year when the company paid a total of AU$0.058 to shareholders. Last year's total dividend payments show that Integral Diagnostics has a trailing yield of 2.7% on the current share price of AU$2.13. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Integral Diagnostics can afford its dividend, and if the dividend could grow. Check out our latest analysis for Integral Diagnostics If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Integral Diagnostics paid out a disturbingly high 247% of its profit as dividends last year, which makes us concerned there's something we don't fully understand in the business. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 40% of the free cash flow it generated, which is a comfortable payout ratio. It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Integral Diagnostics fortunately did generate enough cash to fund its dividend. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits. Click here to see the company's payout ratio, plus analyst estimates of its future dividends. When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Integral Diagnostics's earnings have collapsed faster than Wile E Coyote's schemes to trap the Road Runner; down a tremendous 35% a year over the past five years. The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Integral Diagnostics has delivered 4.2% dividend growth per year on average over the past nine years. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. Integral Diagnostics is already paying out a high percentage of its income, so without earnings growth, we're doubtful of whether this dividend will grow much in the future. Has Integral Diagnostics got what it takes to maintain its dividend payments? It's never great to see earnings per share declining, especially when a company is paying out 247% of its profit as dividends, which we feel is uncomfortably high. Yet cashflow was much stronger, which makes us wonder if there are some large timing issues in Integral Diagnostics's cash flows, or perhaps the company has written down some assets aggressively, reducing its income. It's not that we think Integral Diagnostics is a bad company, but these characteristics don't generally lead to outstanding dividend performance. With that being said, if you're still considering Integral Diagnostics as an investment, you'll find it beneficial to know what risks this stock is facing. For instance, we've identified 4 warning signs for Integral Diagnostics (2 are significant) you should be aware of. A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
