IDEXX Laboratories Inc Valuation – Initial Coverage $IDXX

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 – February 2017.  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 IDEXX Laboratories Inc (IDXX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): IDEXX Laboratories, Inc. develops, manufactures and distributes products and provides services for the companion animal veterinary, livestock and poultry, dairy and water testing markets. The Company’s segments include Companion Animal Group (CAG), which develops, designs, manufactures and distributes products and performs services for veterinarians and the bioresearch market; Water, which develops, designs, manufactures and distributes a range of products used in the detection of various microbiological parameters in water; Livestock, Poultry and Dairy (LPD), which develops, designs, manufactures and distributes diagnostic tests and related instrumentation, and performs services that are used to manage the health status of livestock and poultry and to expand bovine reproductive productivity, and Other, which develops, designs, manufactures and distributes point-of-care electrolyte and blood gas analyzers and related consumable products for the human medical diagnostics market.

IDXX Chart

IDXX 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.

[otw_shortcode_button href=”” size=”medium” icon_position=”left” shape=”square”]Learn More About Premium Membership[/otw_shortcode_button]


Downloadable PDF version of this valuation:

ModernGraham Valuation of IDXX – March 2017

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 $13,035,063,265 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.90 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
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 136.48% Pass
6. Moderate PEmg Ratio PEmg < 20 61.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -123.37 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 0.90 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.67 Fail
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 $2.38
MG Growth Estimate 8.73%
MG Value $61.84
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $34.54
MG Value based on 0% Growth $20.25
Market Implied Growth Rate 26.62%
Current Price $147.08
% of Intrinsic Value 237.85%

IDEXX Laboratories, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.51 in 2013 to an estimated $2.38 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 26.62% 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 IDEXX Laboratories, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 61.75, which was above the industry average of 32.29. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-8.73.

IDEXX Laboratories, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$8.73
Graham Number $0.00
PEmg 61.75
Current Ratio 0.90
PB Ratio -123.37
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 12/1/2016
Total Current Assets $845,584,000
Total Current Liabilities $934,568,000
Long-Term Debt $593,110,000
Total Assets $1,530,704,000
Intangible Assets $224,383,000
Total Liabilities $1,639,056,000
Shares Outstanding (Diluted Average) 90,884,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.90
Dec2016 $2.44
Dec2015 $2.05
Dec2014 $1.79
Dec2013 $1.74
Dec2012 $1.59
Dec2011 $1.39
Dec2010 $1.19
Dec2009 $1.01
Dec2008 $0.94
Dec2007 $0.73
Dec2006 $0.71
Dec2005 $0.58
Dec2004 $0.55
Dec2003 $0.40
Dec2002 $0.33
Dec2001 $0.27
Dec2000 $0.26
Dec1999 $0.21
Dec1998 -$0.10
Dec1997 -$0.14

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.38
Dec2016 $2.06
Dec2015 $1.81
Dec2014 $1.64
Dec2013 $1.51
Dec2012 $1.33
Dec2011 $1.15
Dec2010 $0.99
Dec2009 $0.86
Dec2008 $0.76
Dec2007 $0.65
Dec2006 $0.57
Dec2005 $0.48
Dec2004 $0.41
Dec2003 $0.32
Dec2002 $0.25
Dec2001 $0.18

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

Mettler-Toledo International Inc Valuation – Initial Coverage $MTD
Envision Healthcare Corp Valuation – Initial Coverage $EVHC
UnitedHealth Group Inc Valuation – February 2017 $UNH
Davita Inc Valuation – February 2017 $DVA
Steris PLC Valuation – Initial Coverage $STE
Danaher Corporation Valuation – February 2017 $DHR
Cryolife Inc Valuation – Initial Coverage $CRY
CorVel Corp Valuation – Initial Coverage $CRVL
Charles River Laboratories Intl Inc Valuation – Initial Coverage $CRL
Kindred Healthcare Inc Valuation – Initial Coverage $KND


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.