Illumina Inc Valuation – Initial Coverage $ILMN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Illumina Inc (ILMN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Illumina, Inc. (Illumina) offers sequencing and array-based solutions for genetic analysis. The Company’s products and services serve customers in a range of markets, enabling the adoption of genomic solutions in research and clinical settings. The Company’s customers include genomic research centers, academic institutions, government laboratories and hospitals, as well as pharmaceutical, biotechnology, agrigenomics and commercial molecular diagnostic laboratories, and consumer genomics companies. It provides sample-to-answer solutions to its customers in various areas of translational and clinical genomics, such as reproductive and genetic health, and oncology. It provides reproductive-health solutions, including preimplantation genetic screening and diagnosis, noninvasive prenatal testing, and neonatal and genetic health testing. It also provides whole-genome sequencing, genotyping and NIPT services. It has operations in the United States, Europe, Asia-Pacific and other markets.

ILMN Chart

ILMN data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:


Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,814,989,489 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.62 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -589.08% Fail
6. Moderate PEmg Ratio PEmg < 20 50.97 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.44 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.62 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.63 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value


EPSmg $2.51
MG Growth Estimate 15.00%
MG Value $96.61
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $36.39
MG Value based on 0% Growth $21.33
Market Implied Growth Rate 21.23%
Current Price $127.90
% of Intrinsic Value 132.39%

Illumina, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.81 in 2012 to an estimated $2.51 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 21.23% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Illumina, Inc. revealed the company was trading above its Graham Number of $32.3. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 50.97, which was above the industry average of 40.07. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.96.

Illumina, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research


Net Current Asset Value (NCAV) $1.96
Graham Number $32.30
PEmg 50.97
Current Ratio 3.62
PB Ratio 8.44
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0


Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/16/2016
Total Current Assets $2,277,836,000
Total Current Liabilities $628,855,000
Long-Term Debt $1,040,765,000
Total Assets $4,227,827,000
Intangible Assets $1,031,555,000
Total Liabilities $1,987,680,000
Shares Outstanding (Diluted Average) 147,901,000

Earnings Per Share History

Next Fiscal Year Estimate $3.04
Dec2015 $3.10
Dec2014 $2.37
Dec2013 $0.90
Dec2012 $1.13
Dec2011 $0.62
Dec2010 $0.87
Dec2009 $0.53
Dec2008 $0.30
Dec2007 -$2.57
Dec2006 $0.41
Dec2005 -$0.26
Dec2004 -$0.09
Dec2003 -$0.42
Dec2002 -$0.65
Dec2001 -$0.42
Dec2000 -$0.69
Dec1999 -$1.96

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.51
Dec2015 $2.04
Dec2014 $1.40
Dec2013 $0.88
Dec2012 $0.81
Dec2011 $0.41
Dec2010 $0.18
Dec2009 -$0.22
Dec2008 -$0.54
Dec2007 -$0.84
Dec2006 -$0.05
Dec2005 -$0.31
Dec2004 -$0.37
Dec2003 -$0.62
Dec2002 -$0.73
Dec2001 -$0.71
Dec2000 -$0.75

Recommended Reading:

Other ModernGraham posts about the company

None.  This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

Waters Corporation Valuation – November 2016 $WAT
Align Technology Inc Valuation – August 2016 $ALGN
HCA Holdings Inc Valuation – August 2016 $HCA
Express Scripts Holding Co Valuation – August 2016 $ESRX
Universal Health Services Inc Valuation – August 2016 $UHS
Endo International PLC Valuation – August 2016 $ENDP
C R Bard Inc Valuation – August 2016 $BCR
Psychemedics Corp Valuation – August 2016 $PMD
Patterson Companies Inc Valuation – August 2016 $PDCO
Edwards Lifesciences Corp Valuation – August 2016 $EW


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.