Foundation Medicine (Foundation Medicine) Intrinsic Value: DCF (Earnings Based) : $-44.66 (As of May. 23, 2024)

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Foundation Medicine Intrinsic Value: DCF (Earnings Based) Chart

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Competitive Comparison of Foundation Medicine's Intrinsic Value: DCF (Earnings Based)

For the Diagnostics & Research subindustry, Foundation Medicine's Price-to-DCF (Earnings Based), along with its competitors' market caps and Price-to-DCF (Earnings Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

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Foundation Medicine's Price-to-DCF (Earnings Based) Distribution in the Medical Diagnostics & Research Industry

For the Medical Diagnostics & Research industry and Healthcare sector, Foundation Medicine's Price-to-DCF (Earnings Based) distribution charts can be found below:

* The bar in red indicates where Foundation Medicine's Price-to-DCF (Earnings Based) falls into.

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Foundation Medicine Intrinsic Value: DCF (Earnings Based) Calculation

This is the intrinsic value calculated from the Discounted Earnings model with default parameters. The calculation method is the same as Discounted Cash Flow model except earnings are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 11%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.47%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
The Growth Rate in the growth stage is initially set as the default 10-Year EPS without NRI Growth Rate. In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year EPS without NRI Growth Rate. If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year EPS without NRI Growth Rate.
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> Foundation Medicine's average EPS without NRI Growth Rate in the past 3 years was 0.00%, which is less than 5%. GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. EPS without NRI: eps without nri = $-3.870.
GuruFocus DCF calculator is actually a Discounted Earnings calculator, EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Foundation Medicine's Intrinsic Value: DCF (Earnings Based) for today is calculated as:

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.11) = 0.94594594594595
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Foundation Medicine  (NAS:FMI) Intrinsic Value: DCF (Earnings Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book Value per Share, Graham Number, Median Ratio etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.

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Be Aware

What you need to know about Discounted Earnings model:

1. The Discounted Earnings model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that are relatively consistent performers.
4. The Discounted Earnings model works poorly for inconsistent performers like cyclicals.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

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Foundation Medicine Intrinsic Value: DCF (Earnings Based) Related Terms

Thank you for viewing the detailed overview of Foundation Medicine's Intrinsic Value: DCF (Earnings Based) provided by GuruFocus.com. Please click on the following links to see related term pages.

Predictability Rank Intrinsic Value: DCF (FCF Based) Intrinsic Value: DCF (Dividends Based) Intrinsic Value: Projected FCF EPS without NRI Free Cash Flow Margin of Safety % (DCF FCF Based) Margin of Safety % (DCF Earnings Based) Margin of Safety % (DCF Dividends Based)

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Foundation Medicine (Foundation Medicine) Business Description

Executives

Alexis Borisy	director	C/O COMBINATORX, INCORPORATED, 245 FIRST STREET, 16TH FLOOR, CAMBRIDGE MA 02142
Vincent A. Miller	officer: Chief Medical Officer	C/O FOUNDATION MEDICINE, INC., ONE KENDALL SQUARE, SUITE B3501, CAMBRIDGE MA 02139
Michael J Pellini	director	222 DUTTON MILL RD, WILLISTOWN PA 19380
Jason Ryan	officer: Chief Financial Officer	C/O FOUNDATION MEDICINE, INC., ONE KENDALL SQUARE, SUITE B3501, CAMBRIDGE MA 02139
Troy Cox	director, officer: President and CEO	C/O FOUNDATION MEDICINE, INC., C/O FOUNDATION MEDICINE, INC., 150 SECON, CAMBRIDGE MA 02141
Robert W. Hesslein	officer: SVP and General Counsel	C/O FOUNDATION MEDICINE, INC., ONE KENDALL SQUARE, SUITE B3501, CAMBRIDGE MA 02139
Thomas Civik	officer: Chief Commercial Officer	C/O FOUNDATION MEDICINE, INC., 150 SECOND STREET, CAMBRIDGE MA 02141
Evan/ Fa Jones	director	C/O OPGEN, INC., 708 QUINCE ORCHARD ROAD, SUITE 205, GAITHERSBURG MD 20878
Michael R Dougherty	director	C/O ADOLOR CORP, 700 PENNSYLVANIA DR, EXTON PA 19341
Roche Finance Ltd	director, 10 percent owner, other: See footnote (1)	C/O HOFFMAN LA ROCHE, 124 GRENSACHERSTRASSE CH 4002, BASEL SWITZERLAND V8
Roche Holding Ltd	director, 10 percent owner, other: See footnote (1)	ROCHE HOLDING, LTD., GRENZACHERSTRASSE 124, BASEL V8 CH-4070
David P Schenkein	director	C/O BLUEBIRD BIO, INC., 840 MEMORIAL DRIVE, CAMBRIDGE MA 02139
Robert I Tepper	10 percent owner	201 BROOKLINE AVE, SUITE 1401, BOSTON MA 02215
Mark J Levin	10 percent owner	29 NEWBURY STREET, 3RD FLOOR, BOSTON MA 02116
Third Rock Ventures Gp, L.p.	10 percent owner	C/O THIRD ROCK VENTURES, 29 NEWBURY STREET, 3RD FLOOR, BOSTON MA 02116