What is Avanos Medical, Inc. worth?
With the base-case assumptions below, a discounted cash flow model on Avanos Medical, Inc.'s reported free cash flow gives $11.82 per share.
Inputs from the filings
Three sets of assumptions
| Case | Growth yrs 1-5 | Discount rate | Value per share | Value vs price |
|---|---|---|---|---|
| Bear | -5.5% | 10.0% | $7.23 | - |
| Base | -0.5% | 9.0% | $11.82 | - |
| Bull | 4.5% | 8.0% | $20.75 | - |
Sensitivity: base case value per share
| 1.5% | 2.0% | 2.5% | 3.0% | 3.5% | |
|---|---|---|---|---|---|
| 7.0% | $14.98 | $15.92 | $17.07 | $18.51 | $20.37 |
| 8.0% | $12.63 | $13.25 | $13.97 | $14.84 | $15.90 |
| 9.0% | $10.92 | $11.33 | $11.82 | $12.38 | $13.05 |
| 10.0% | $9.60 | $9.90 | $10.24 | $10.62 | $11.07 |
| 11.0% | $8.56 | $8.78 | $9.02 | $9.30 | $9.61 |
Where the presets come from
Base: years 1 to 5 grow at Avanos Medical, Inc.'s revenue growth rate over the last 5 fiscal years (-0.4% a year), held between -5% and 15%. Years 6 to 10 grow halfway between that and the long-run rate of 2.5%. Future cash is discounted at 9% a year.
Bear: 5 points less growth, 2% long-run growth, 10% discount rate. Bull: 5 points more growth (at most 25%), 3% long-run growth, 8% discount rate.
Value per share = (present value of 10 years of free cash flow + present value of everything after + cash - debt) / diluted shares.
This is a model run on assumptions, not a recommendation or a price target. Small changes in the discount rate or growth move the result a lot, as the table above shows. Change them yourself in the calculator.
Adjust the assumptions
Move the sliders for growth, long-run growth and discount rate, or switch to average free cash flow, and see the value per share change.
Adjust the assumptions