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As of today (2024-05-23), Novanta's intrinsic value calculated from the Discounted Earnings model is $67.85.
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.
Novanta's Predictability Rank is 4-Stars.
Margin of Safety (Earnings Based) using Discounted Earnings model for Novanta is -140.00%.
The historical rank and industry rank for Novanta's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:
During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Earnings Based) Ratio of Novanta was 3.57. The lowest was 2.40. And the median was 2.57.
The historical data trend for Novanta'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.
Novanta Annual Data | |||||||||||||||||||||
Trend | Dec14 | Dec15 | Dec16 | Dec17 | Dec18 | Dec19 | Dec20 | Dec21 | Dec22 | Dec23 | |||||||||||
Intrinsic Value: DCF (Earnings Based) | Get a 7-Day Free Trial | - | - | 49.37 | 55.76 | 69.67 |
Novanta Quarterly Data | ||||||||||||||||||||
Jun19 | Sep19 | Dec19 | Mar20 | Jun20 | Sep20 | Dec20 | Mar21 | Jun21 | Sep21 | Dec21 | Mar22 | Jun22 | Sep22 | Dec22 | Mar23 | Jun23 | Sep23 | Dec23 | Mar24 | |
Intrinsic Value: DCF (Earnings Based) | Get a 7-Day Free Trial | 57.82 | 59.16 | 56.06 | 69.67 | 67.85 |
For the Scientific & Technical Instruments subindustry, Novanta'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.
For the Hardware industry and Technology sector, Novanta's Price-to-DCF (Earnings Based) distribution charts can be found below:
* The bar in red indicates where Novanta's Price-to-DCF (Earnings Based) falls into.
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 4.49%. 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 = 17.90%
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.
=>
Novanta's average EPS without NRI Growth Rate in the past
10 years was 17.90%,
which is between 5% and 20%. => GuruFocus defaults => Growth Rate: 17.90%
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 = $2.500.
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.
Novanta's Intrinsic Value: DCF (Earnings Based) for today is calculated as:
Intrinsic Value: DCF (Earnings Based) | = | EPS without NRI | * | {[(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+0.179)/(1+0.11) = 1.0621621621622
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694
Intrinsic Value: DCF (Earnings Based) | = | EPS without NRI | * | {[x | + | x^2 | + | ... | + | x^10] | + | x^10 | * | [y | + | y^2 | + | ... | + | y^10]} |
= | EPS without NRI | * | [x | * | (1-x^10) | / | (1-x) | + | x^10 | * | y | * | (1-y^10) | / | (1-y)] | |||||
= | 2.500 | * | 27.1415 | |||||||||||||||||
= | 67.85 |
Margin of Safety % (DCF Earnings Based) | = | (Intrinsic Value: DCF (Earnings Based) | - | Current Price) | / | Intrinsic Value: DCF (Earnings Based) |
= | (67.85 | - | 162.84) | / | 67.85 | |
= | -140.00 % |
* 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.
Novanta (NAS:NOVT) 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 powerYou 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.
Thank you for viewing the detailed overview of Novanta's Intrinsic Value: DCF (Earnings Based) provided by GuruFocus.com. Please click on the following links to see related term pages.
Robert Buckley | officer: Chief Financial Officer | C/O GSI GROUP INC., 125 MIDDLESEX TURNPIKE, BEDFORD MA 01730-1409 |
Matthijs Glastra | officer: Group President,Laser Products | C/O GSI GROUP CORPORATION, 125 MIDDLESEX TURNPIKE, BEDFORD MA 01730 |
Brian S Young | officer: Executive VP, Human Resources | C/O 25 CORPORATE DRIVE, BURLINGTON MA 01803 |
Thomas N Secor | director | GSI GROUP INC., 125 MIDDLESEX TURNPIKE, BEDFORD MA 01730 |
Barbara B. Hulit | director | C/O FORTIVE CORPORATION, 6920 SEAWAY BLVD, EVERETT WA 98203 |
Michele Davis Welsh | officer: General Counsel | C/O NOVANTA INC., 125 MIDDLESEX TURNPIKE, BEDFORD MA 01730 |
Solomon Darlene J. S. | director | 6070 PARKLAND BLVD., MAYFIELD HTS. OH 44124 |
Peter L Chang | officer: Vice President-Corp Controller | C/O GSI GROUP INC., 125 MIDDLESEX TURNPIKE, BEDFORD MA 01730 |
Frank Anders Wilson | director | C/O CABOT CORPORATION, TWO SEAPORT LANE, SUITE 1300, BOSTON MA 02210 |
Katherine Ann Owen | director | 2825 AIRVIEW BLVD., KALAMAZOO MI 49002 |
Maxine Lum Mauricio | director | 301 MERRITT SEVEN CORPORATE PARK, 6TH FL, C/O EMCOR GROUP INC., NORWALK CT 06851 |
Stephen W Bershad | director | 66 ARROYO HONDO TRAIL, SANTA FE NM 87508 |
Deborah Disanzo | director | 7601 PENN AVENUE SOUTH, RICHFIELD MN 55423 |
Lonny J Carpenter | director | 2825 AIRVIEW BOULEVARD, KALAMAZOO MI 49002 |
Brian Douglas King | director | C/O NOVANTA INC., 125 MIDDLESEX TURNPIKE, BEDFORD MA 01730 |
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