Utah Medical Products (UTMD) Valuation

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Company Profile (obtained from Google Finance): Utah Medical Products, Inc. (UTMD) is engaged in the production of medical devices that are predominantly disposable and for hospital use. UTMD’s success in providing reliable solutions comes from its ability to integrate a number of engineering and technical disciplines in electronics, software, mechanical packaging, instrumentation, plastics processing and materials. UTMD markets a range of medical devices used in critical care areas, especially the neonatal intensive care unit (NICU), the labor and delivery (L&D) department and the women’s health center in hospitals, as well as products sold to outpatient clinics and physician’s offices.

ModernGraham Comments: None at this time.

Defensive and Enterprising Investor Tests:

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

1. Adequate Size of Enterprise – market capitalization of at least $2 billion – FAIL
2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
6. Moderate PEmg ratio – PEmg is less than 20 – PASS
7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests: Score = 4/5

1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
3. Earnings Stability – positive earnings per share for at least 5 years – PASS
4. Dividend Record – currently pays a dividend – PASS
5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary:

• Last Updated    11/2/2009
• MG Value    $5
• MG Opinion    Overvalued
• Value Based on 3% Growth    $27
• Value Based on 0% Growth    $16
• Market Implied Growth Rate    3.63%
• Net Current Asset Value (NCAV)    $5.98
• PEmg    15.77
• Current Ratio    8.82
• PB Ratio    2.83

Key Data:

Balance Sheet – 9/30/2009

• Current Assets    $26,460,000
• Current Liabilities    $3,000,000
• Total Debt    $1,470,000
• Total Assets    $42,180,000
• Intangible Assets    $7,400,000
• Goodwill    $0
• Total Liabilities    $4,890,000
• Outstanding Shares    3,610,000

Earnings Per Share – Diluted

• 2009 (estimate)    $1.72
• 2008    $1.86
• 2007    $1.98
• 2006    $2.02
• 2005    $1.80
• 2004    $2.19
• 2003    $4.25
• 2002    $1.36
• 2001    $1.14
• 2000    $0.90
• 1999    $0.76

Earnings Per Share – Modern Graham

• 2009 (estimate)    $1.85
• 2008    $1.94
• 2007    $2.13
• 2006    $2.25
• 2005    $2.29
• 2004    $2.35

Valuation History:

• 11/2/09 – Value $5, Actual Price $29.24, Overvalued & Enterprising
• 7/25/09 – Value $6, Actual Price $28.55, Overvalued & Enterprising