Novadaq Technologies, Inc. – Value Analysis (NASDAQ:NVDQ) : January 15, 2016

Capitalcube gives Novadaq Technologies, Inc. a score of 25.

Our analysis is based on comparing Novadaq Technologies, Inc. with the following peers – iCAD, Inc., Intuitive Surgical, Inc., Digirad Corporation, IRIDEX Corporation, CryoLife, Inc., IMRIS Inc., Royal Philips NV Sponsored ADR and General Electric Company (ICAD-US, ISRG-US, DRAD-US, IRIX-US, CRY-US, IMRSQ-US, PHG-US and GE-US).

Investment Outlook

Novadaq Technologies, Inc. has a fundamental score of 25 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • Novadaq Technologies Inc. currently trades at a higher Price/Book ratio (4.54) than its peer median (1.81).
  • NVDQ-US‘s earnings and EBITDA are both negative which suggest that P/E or Price/EBITDA are not meaningful to make this analysis between operating advantage (ROE) and growth expectations (as suggested by P/E or P/EBITDA).
  • NVDQ-US‘s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • NVDQ-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • Company appears to give away relatively high gross margins to relatively high operating costs suggesting a differentiated product portfolio with low pre-tax margins relative to peers.
  • NVDQ-US‘s earnings and EBITDA are both negative which suggest that P/E or Price/EBITDA are not meaningful for an analysis between historical growth (using annualized three-year revenue growth) and investor growth expectations (as suggested by P/E or Price/EBITDA) .
  • The company’s capital investment program and to-date returns suggest that the company is likely making big bets on the future.
  • NVDQ-US‘s operating performance may not allow it to raise additional debt.

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Leverage & Liquidity

NVDQ-US would seem to have a hard time raising additional debt.

  • With debt at a relatively low 0.41% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 0.41%), and relatively tight interest coverage level of -454.94x, NVDQ-US would have a hard time raising much additional debt. Thus, the company is classified as having Limited Flexibility when it comes to raising more debt.
  • Of the 8 chosen peers for the company, only 4 of the stocks have an outstanding debt balance. Companies with no debt include ISRG-US, DRAD-US, IRIX-US and CRY-US.

NVDQ-US has moved to a Constrained from an Quick & Able profile at the recent year-end.

  • NVDQ-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 999x in 2014.
  • The decrease in its interest coverage to -454.94x from 999x (in 2014) was also accompanied by a decrease in its peer median during this period to 3.27x from 45.53x.
  • Interest coverage fell 1,411.68 points relative to peers (and is now lower than its peer median). It is also below the 2.50x coverage benchmark unlike the peer median.
  • NVDQ-US‘s debt-EV is similar to last year’s low of 0%, which compares to the 2011 high of 3.87%.
  • Though its debt-EV has remained relatively stable at 0.41% compared to 2014, its peer median has decreased to 0.41% from 1.29% during this period.
  • Relative to peers, debt-EV rose 1.29 percentage points.

Access the detailed analysis for Novadaq Technologies, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
iCAD, Inc. 3.75 2.05 0.2 425.34
Intuitive Surgical, Inc. 0 5.01 No interest exp 999
Digirad Corporation 0 3.51 66.43 999
IRIDEX Corporation 0 4.4 No interest exp 999
CryoLife, Inc. 0 4.02 0 999
IMRIS Inc. 33.29 1.1 -5.06 -107.04
Royal Philips NV Sponsored ADR 19.93 1.28 3.79 20.53
General Electric Company 63.9 2.6 2.74 4.75
Novadaq Technologies Inc. 0.41 10.04 -454.94 -1460.11
Peer Median 0.41 3.51 3.27 425.34
Best In Class 0.41 10.04 No interest exp 999

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Company Profile

Novadaq Technologies, Inc. develops, manufactures and markets real-time fluorescence imaging products. Its products are designed for use by surgeons in the operating room and other clinical settings where open, minimally invasive or interventional surgical procedures are performed. The company’s products include SPY imaging system, pinpoint endoscopic fluorescence imaging system, firefly system for robotic surgery and CO2 heart laser system. Its SPY Imaging core technology platform provides clinically relevant anatomic and physiologic images during a wide variety of complex surgical procedures without exposing the patient to radiation. Novadaq Technologies was founded by Rick Mangat on April 14, 2000 and is headquartered in Mississauga, Canada.


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