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Illumina Intrinsic Value: DCF (Earnings Based)

: $174.84 (As of Today)
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As of today (2022-08-07), Illumina's intrinsic value calculated from the Discounted Earnings model is $174.84.

Note: Discounted Earnings model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Illumina's Predictability Rank is 3-Stars.

Margin of Safety (Earnings Based) using Discounted Earnings model for Illumina is -27.99%.

The historical rank and industry rank for Illumina's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:

ILMN' s Price-to-DCF (Earnings Based) Range Over the Past 10 Years
Min: 0.92   Med: 1.9   Max: 6.38
Current: 1.28

During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Earnings Based) Ratio of Illumina was 6.38. The lowest was 0.92. And the median was 1.90.

ILMN's Price-to-DCF (Earnings Based) is ranked worse than
65.38% of 26 companies
in the Medical Diagnostics & Research industry
Industry Median: 0.92 vs ILMN: 1.28

Illumina Intrinsic Value: DCF (Earnings Based) Historical Data

The historical data trend for Illumina's Intrinsic Value: DCF (Earnings Based) can be seen below:

* 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.

* Premium members only.

Illumina Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
Intrinsic Value: DCF (Earnings Based)
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 66.67 211.33 284.31 208.40 212.71

Illumina Quarterly Data
Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22
Intrinsic Value: DCF (Earnings Based) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 180.28 219.87 256.52 212.71 174.84

Illumina 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 = 9%
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. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then 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 = 20%
Growth Rate in the growth stage = average earnings growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => Average Earnings Growth Rate in the past 10 years was 20% which is NO less than 20% => Growth Rate: 20%

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 = $4.600.
GuruFocus DCF calculator is actually a Discounted Earnings calculator, the Earnings Per Share 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.

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

Intrinsic Value: DCF (Earnings Based)=Earnings per Share (Diluted)*{[(1+g1)/(1+d)+(1+g1)^2/(1+d)^2+...+(1+g1)^10/(1+d)^10]
+(1+g1)^10/(1+d)^10*[(1+g2)/(1+d)+(1+g2)^2/(1+d)^2+...+(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.2)/(1+0.09) = 1.1009174311927
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.09) = 0.95412844036697

Intrinsic Value: DCF (Earnings Based)=Earnings per Share (Diluted)*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=Earnings per Share (Diluted)*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=4.600*38.009
=174.84

Margin of Safety % (DCF Earnings Based)=(Intrinsic Value: DCF (Earnings Based)-Current Price)/Intrinsic Value: DCF (Earnings Based)
=(174.84-223.77)/174.84
=-27.99 %

* 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.


Illumina  (NAS:ILMN) 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.


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.


Illumina Intrinsic Value: DCF (Earnings Based) Related Terms

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


Illumina Business Description

Illumina logo
Industry
Address
5200 Illumina Way, San Diego, CA, USA, 92122
Illumina provides tools and services to analyze genetic material with life science and clinical lab applications. The company generates revenue from sequencing tools and dedicated consumables (76% of 2020 sales). Illumina's high-throughput technology enables whole genome sequencing in humans and other large organisms. Its lower throughput tools enable applications that require smaller data outputs, such as viral and cancer tumor screening. Illumina also sells microarrays (9% of sales) that enable lower-cost, focused genetic screening with primarily consumer and agricultural applications. Services account for 16% of sales and include basic maintenance services, clinical lab applications (such as noninvasive prenatal, oncology, and rare-disease screening), and whole genome sequencing.
Executives
Frank John Edward officer: Chief Public Affairs Officer 5200 ILLUMINA WAY SAN DIEGO CA 92122
Rollins Carissa officer: SVP, Chief Information Officer 5200 ILLUMINA WAY SAN DIEGO CA 92122
Pegels Kevin Carl officer: Chief of Global Operations 5200 ILLUMINA WAY SAN DIEGO CA 92122
Torres Jose officer: VP, Chief Accounting Officer 1300 W. 120TH AVENUE WESTMINSTER CO 80234
Reeves Kathryne Gambrell officer: SVP, Chief Marketing Officer 5200 ILLUMINA WAY SAN DIEGO CA 92122
Aravanis Alexander officer: SVP, Chief Technology Officer 5200 ILLUMINA WAY SAN DIEGO CA 92122
Gottlieb Scott director MOLECULAR INSIGHT PHARMACEUTICALS 160 SECOND STREET CAMBRIDGE MA 02142
Febbo Phillip G. officer: SVP Chief Medical Officer C/O GENOMIC HEALTH, INC. 301 PENOBSCOT DRIVE REDWOOD CITY CA 94063
Tousi Susan H officer: SVP Product Development 5200 ILLUMINA WAY SAN DIEGO CA 92122
Goswami Joydeep officer: SVP Corp Business Development SUMITOMO FUDOSAN MITA TWIN BLDG EAST WING 4-2-8 SHIBAURA MINATO-KU TOKYO M0 1080023
Siegel Susan E director 3000 SAND HILL ROAD BLDG 3 STE 290 MENLO PARK CA 94025
Ragusa Robert P officer: SVP, Global Quality & Ops
Hoyt Aimee L officer: SVP, Chief People Officer 5200 ILLUMINA WAY SAN DIEGO CA 92122
Guthart Gary S director C/O INTUITIVE SURGICAL INC 1266 KIFER RD SUNNYVALE CA 94086
Mcginnis Karen K officer: VP, Chief Accounting Officer INSIGHT ENTERPRISES INC 1305 WEST AUTO DRIVE TEMPE AZ 85284

Illumina Headlines

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