Novanta Inc

NOVT

Miscellaneous Electrical Machinery, Equipment & Supplies

Mkt Cap

$5.847B

PE

84.39

Debt

$513.7M

Cash

$93.52M

EV

$6.267B

FCF

$119.9M

Market Cap

$5.847B

P/E Ratio

84.39

Debt

$513.7M

Cash

$93.52M

EV

$6.267B

FCF

$119.9M

Charts data: {"Earnings":[{"time":"2014-12-30","value":-24252000},{"time":"2015-12-30","value":35615000},{"time":"2016-12-30","value":22003000},{"time":"2017-12-30","value":60051000},{"time":"2018-12-30","value":49109000},{"time":"2019-12-30","value":40773000},{"time":"2020-12-30","value":44521000},{"time":"2021-12-30","value":50331000},{"time":"2022-12-30","value":74051000},{"time":"2023-12-30","value":72878000}],"Sales":[{"time":"2014-12-30","value":364706000},{"time":"2015-12-30","value":373598000},{"time":"2016-12-30","value":384758000},{"time":"2017-12-30","value":521290000},{"time":"2018-12-30","value":614337000},{"time":"2019-12-30","value":626099000},{"time":"2020-12-30","value":590623000},{"time":"2021-12-30","value":706793000},{"time":"2022-12-30","value":860903000},{"time":"2023-12-30","value":881662000}],"Net Margins":[{"time":"2014-12-30","value":-0.0664973979040652},{"time":"2015-12-30","value":0.09532973945256666},{"time":"2016-12-30","value":0.05718659521049595},{"time":"2017-12-30","value":0.11519691534462584},{"time":"2018-12-30","value":0.07993820980992516},{"time":"2019-12-30","value":0.06512228896708029},{"time":"2020-12-30","value":0.07537972615357004},{"time":"2021-12-30","value":0.07121038267215436},{"time":"2022-12-30","value":0.0860154976809234},{"time":"2023-12-30","value":0.08265979479664542}],"Assets":[{"time":"2014-12-30","value":398919000},{"time":"2015-12-30","value":416045000},{"time":"2016-12-30","value":425637000},{"time":"2017-12-30","value":726703000},{"time":"2018-12-30","value":719576000},{"time":"2019-12-30","value":869736000},{"time":"2020-12-30","value":865179000},{"time":"2021-12-30","value":1227883000},{"time":"2022-12-30","value":1241212000},{"time":"2023-12-30","value":1226056000}],"Stockholders Equity":[{"time":"2014-12-30","value":211254000},{"time":"2015-12-30","value":244701000},{"time":"2016-12-30","value":258870000},{"time":"2017-12-30","value":311545000},{"time":"2018-12-30","value":368255000},{"time":"2019-12-30","value":417172000},{"time":"2020-12-30","value":476809000},{"time":"2021-12-30","value":521291000},{"time":"2022-12-30","value":577586000},{"time":"2023-12-30","value":673460000}],"ROE":[{"time":"2014-12-30","value":-0.11480019313243772},{"time":"2015-12-30","value":0.14554497120976212},{"time":"2016-12-30","value":0.08499633020434967},{"time":"2017-12-30","value":0.19275225087868525},{"time":"2018-12-30","value":0.13335596258027727},{"time":"2019-12-30","value":0.09773666497272109},{"time":"2020-12-30","value":0.09337281804663922},{"time":"2021-12-30","value":0.09655067898736022},{"time":"2022-12-30","value":0.12820774741770058},{"time":"2023-12-30","value":0.10821429632049416}],"ROA":[{"time":"2014-12-30","value":-0.04212885322584284},{"time":"2015-12-30","value":0.11061784181999543},{"time":"2016-12-30","value":0.07650415729835518},{"time":"2017-12-30","value":0.10476632131696167},{"time":"2018-12-30","value":0.09868728251081192},{"time":"2019-12-30","value":0.0635618164592474},{"time":"2020-12-30","value":0.06459703714491452},{"time":"2021-12-30","value":0.052166208018190656},{"time":"2022-12-30","value":0.08304705400850136},{"time":"2023-12-30","value":0.09012312651298146}]}

Novanta Inc., together with its subsidiaries, designs, manufactures, markets, and sells photonics, vision, and precision motion in the United States and internationally. The company operates through three segments: Photonics, Vision, and Precision Motion. The Photonics segment offers photonics-based solutions, including laser scanning, beam delivery, CO2 laser, solid state laser, ultrafast laser, and optical light engine products serving photonics-based applications for industrial processing, metrology, medical and life science imaging, DNA sequencing, and medical laser procedures. The Vision segment provides a range of medical grade technologies, including medical insufflators, pumps, and related disposables; visualization solutions; wireless technologies, video recorders, and video integration technologies for operating room integrations; optical data collection and machine vision technologies; radio frequency identification technologies; thermal chart recorders; spectrometry technologies; and embedded touch screen solutions. The Precision Motion segment offers optical and inductive encoders, precision motors, servo drives and motion control solutions, integrated stepper motors, intelligent robotic end-of-arm technology solutions, air bearings, and air bearing spindles. The company sells its products through its direct sales force and distributors under the Cambridge Technology, Synrad, Laser Quantum, ARGES, WOM, NDS, Med X Change, Reach Technology, JADAK, ThingMagic, Photo Research, General Scanning, ATI Industrial Automation, Celera Motion, IMS, MicroE, Applimotion, Zettlex, Ingenia, and Westwind brands. The company was formerly known as GSI Group, Inc. and changed its name to Novanta Inc. in May 2016. Novanta Inc. was incorporated in 1968 and is headquartered in Bedford, Massachusetts.

Sector

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10-Q
3/30/18
10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Novanta Inc

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$119.9M	$136.8M	$154.7M	$173.4M	$192.6M	$212M	$231.1M	$249.7M	$267.2M	$283.3M	$297.5M	$2.975B
DCF		$119M	$117M	$114M	$110.1M	$105.4M	$99.93M	$93.87M	$87.36M	$80.53M	$73.53M	$735.3M
Value	$1.736B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 11%

Earnings Stability 52%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	9.5%	5.7%	12%	8%	6.5%	7.5%	7.1%	8.6%	8.3%	7.8%
ROA	11%	7.7%	10%	9.9%	6.4%	6.5%	5.2%	8.3%	9%	7.8%
ROE	15%	8.5%	19%	13%	9.8%	9.3%	9.7%	13%	11%	10%

What is the average Net Margin?

The average Net Margin over the past 5 years is +7.67%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +0.21%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +7.54%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +0.01%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +10.96%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is -0.09%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

The company has high debt with respect to the cashflow it generates.

The Graham’s stability indicate reliability of earnings, and consideration about the future are more dependable.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	3.44	1.98	4.32	2.77	4.20	1.55	5.82	6.12	3.54	4.28
Debt Equity	0.39	0.30	0.75	0.56	0.53	0.42	0.83	0.75	0.53	0.75
MIN
Graham Stability	-	-	100%	100%	93%	89%	100%	100%	100%	89%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 4.28.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 0.40.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.89.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has not been increasing in the past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	13%	7.5%	14%	2.4%	0.02%
Net Income	19%	8.2%	18%	-1.6%	-3%
Stockholders Equity	15%	13%	12%	17%	-0.13%
FCF	14%	5.9%	-8.3%	41%	1.4%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +7.49%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +0.02%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +8.21%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is -3.01%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +12.83%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is -0.13%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is +5.95%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is +1.41%.