MeritValue

Varex Imaging Corp

VREXdata completeness 100%11 fiscal years on file
The thesis, from the filings

Varex Imaging Corp earns about 2% on invested capital, but has diluted owners by 3% over 5 years — worth asking whether the growth reaches owners. The applicable estimate puts fair value near $4.36 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$818.1M1$859.4M2$893.4M3$811M3$844.6M3
Net income$17.4M4$30.3M5$47.4M6−$48.8M6−$70.3M6
Operating cash flow$92.6M7$16.9M8$108.4M9$47.3M9$41.7M9
Capital expenditure$15.1M10$21.3M11$20.7M12$26.9M12$22.9M12
Free cash flow (derived)$77.5M7−$4.4M8$87.7M9$20.4M9$18.8M9
Total debt$869M13$828.8M14$885.2M15$886.8M16$735M16
Cash & equivalents$144.6M17$89.4M18$152.6M19$168.7M19$145M19
Diluted shares40.3M41.6M50.3M40.8M41.4M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$114.15
your share of equity
Profit it earned you last year
−$16.98
Free cash flow it threw off
$4.54
Debt you’d be carrying
$177.54

10 shares is a claim on $114.15 of net worth that earned you −$16.98 and generated $4.54 of cash last year, against $177.54 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
2% avg · 5y
FY21 4%FY22 5%FY23 5%FY24 0%FY25 -4%

It earned an average 2% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+3% shares · 5y

Share count is up 3% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has fallen 15% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth5.0%
  • fcfBase$20.4M
DCF · Growth Exit 5Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth5.0%
  • fcfBase$20.4M
Earnings Power Value
$4.36
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$17.4M
  • growthAssumed0.0%
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-10-01 · accession 0001681622-23-000074 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-09-30 · accession 0001681622-24-000089 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-09-29 · accession 0001681622-25-000108 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-10-01 · accession 0001681622-23-000074 (NetIncomeLoss)
  5. 10-K · period ending 2022-09-30 · accession 0001681622-24-000089 (NetIncomeLoss)
  6. 10-K · period ending 2023-09-29 · accession 0001681622-25-000108 (NetIncomeLoss)
  7. 10-K · period ending 2021-10-01 · accession 0001681622-23-000074 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-09-30 · accession 0001681622-24-000089 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-09-29 · accession 0001681622-25-000108 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-10-01 · accession 0001681622-23-000074 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-09-30 · accession 0001681622-24-000089 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-09-29 · accession 0001681622-25-000108 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-10-01 · accession 0001681622-22-000091 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-09-30 · accession 0001681622-23-000074 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2023-09-29 · accession 0001681622-24-000089 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2024-09-27 · accession 0001681622-25-000108 (LongTermDebtNoncurrent)
  17. 10-K · period ending 2021-10-01 · accession 0001681622-23-000074 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-09-30 · accession 0001681622-24-000089 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-09-29 · accession 0001681622-25-000108 (CashAndCashEquivalentsAtCarryingValue)