Intrinsic value of Aetna - AET

Previous Close

$157.64

  Intrinsic Value

$116.75

stock screener

  Rating & Target

sell

-26%

  Value-price divergence*

-98%

Previous close

$157.64

 
Intrinsic value

$116.75

 
Up/down potential

-26%

 
Rating

sell

 
Value-price divergence*

-98%

Our model is not good at valuating stocks of financial companies, such as AET.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AET stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 52.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.67
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  0
  64,418
  65,900
  67,593
  69,495
  71,602
  73,913
  76,431
  79,155
  82,091
  85,241
  88,612
  92,208
  96,037
  100,107
  104,425
  109,001
  113,845
  118,968
  124,381
  130,096
  136,126
  142,486
  149,189
  156,252
  163,690
  171,522
  179,766
  188,441
  197,567
  207,166
Variable operating expenses, $m
 
  59,501
  60,845
  62,381
  64,106
  66,018
  68,115
  70,398
  72,870
  75,533
  78,391
  80,385
  83,647
  87,121
  90,813
  94,730
  98,881
  103,276
  107,923
  112,833
  118,017
  123,488
  129,257
  135,338
  141,745
  148,493
  155,598
  163,076
  170,945
  179,224
  187,932
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  58,560
  59,501
  60,845
  62,381
  64,106
  66,018
  68,115
  70,398
  72,870
  75,533
  78,391
  80,385
  83,647
  87,121
  90,813
  94,730
  98,881
  103,276
  107,923
  112,833
  118,017
  123,488
  129,257
  135,338
  141,745
  148,493
  155,598
  163,076
  170,945
  179,224
  187,932
Operating income, $m
  4,595
  4,917
  5,055
  5,212
  5,388
  5,584
  5,799
  6,032
  6,285
  6,558
  6,850
  8,227
  8,561
  8,916
  9,294
  9,695
  10,120
  10,570
  11,045
  11,548
  12,078
  12,638
  13,229
  13,851
  14,507
  15,197
  15,925
  16,690
  17,495
  18,343
  19,234
EBITDA, $m
  5,276
  6,071
  6,210
  6,370
  6,549
  6,748
  6,966
  7,203
  7,460
  7,736
  8,033
  8,351
  8,690
  9,050
  9,434
  9,841
  10,272
  10,729
  11,211
  11,722
  12,260
  12,828
  13,428
  14,059
  14,725
  15,426
  16,164
  16,941
  17,759
  18,619
  19,523
Interest expense (income), $m
  541
  785
  824
  869
  922
  980
  1,045
  1,117
  1,194
  1,278
  1,369
  1,466
  1,570
  1,681
  1,799
  1,924
  2,058
  2,199
  2,348
  2,506
  2,673
  2,849
  3,035
  3,231
  3,438
  3,656
  3,885
  4,127
  4,381
  4,649
  4,930
Earnings before tax, $m
  3,991
  4,132
  4,231
  4,342
  4,467
  4,604
  4,753
  4,916
  5,091
  5,280
  5,482
  6,761
  6,991
  7,236
  7,495
  7,771
  8,062
  8,371
  8,697
  9,042
  9,405
  9,789
  10,193
  10,620
  11,069
  11,541
  12,039
  12,563
  13,114
  13,694
  14,304
Tax expense, $m
  1,735
  1,116
  1,142
  1,172
  1,206
  1,243
  1,283
  1,327
  1,375
  1,425
  1,480
  1,825
  1,888
  1,954
  2,024
  2,098
  2,177
  2,260
  2,348
  2,441
  2,539
  2,643
  2,752
  2,867
  2,989
  3,116
  3,251
  3,392
  3,541
  3,697
  3,862
Net income, $m
  2,271
  3,016
  3,089
  3,170
  3,261
  3,361
  3,470
  3,588
  3,716
  3,854
  4,002
  4,936
  5,103
  5,282
  5,472
  5,673
  5,886
  6,111
  6,349
  6,600
  6,866
  7,146
  7,441
  7,752
  8,080
  8,425
  8,789
  9,171
  9,573
  9,997
  10,442

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  69,146
  70,557
  72,179
  74,034
  76,117
  78,425
  80,957
  83,714
  86,698
  89,913
  93,364
  97,056
  100,995
  105,189
  109,646
  114,376
  119,388
  124,694
  130,305
  136,233
  142,493
  149,098
  156,063
  163,405
  171,141
  179,289
  187,867
  196,896
  206,397
  216,393
  226,907
Adjusted assets (=assets-cash), $m
  69,146
  70,557
  72,179
  74,034
  76,117
  78,425
  80,957
  83,714
  86,698
  89,913
  93,364
  97,056
  100,995
  105,189
  109,646
  114,376
  119,388
  124,694
  130,305
  136,233
  142,493
  149,098
  156,063
  163,405
  171,141
  179,289
  187,867
  196,896
  206,397
  216,393
  226,907
Revenue / Adjusted assets
  0.000
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
  0.913
Average production assets, $m
  1,565
  1,610
  1,647
  1,690
  1,737
  1,790
  1,848
  1,911
  1,979
  2,052
  2,131
  2,215
  2,305
  2,401
  2,503
  2,611
  2,725
  2,846
  2,974
  3,110
  3,252
  3,403
  3,562
  3,730
  3,906
  4,092
  4,288
  4,494
  4,711
  4,939
  5,179
Working capital, $m
  0
  1,675
  1,713
  1,757
  1,807
  1,862
  1,922
  1,987
  2,058
  2,134
  2,216
  2,304
  2,397
  2,497
  2,603
  2,715
  2,834
  2,960
  3,093
  3,234
  3,382
  3,539
  3,705
  3,879
  4,063
  4,256
  4,460
  4,674
  4,899
  5,137
  5,386
Total debt, $m
  20,661
  21,678
  22,881
  24,255
  25,799
  27,509
  29,385
  31,428
  33,639
  36,022
  38,579
  41,314
  44,233
  47,341
  50,644
  54,148
  57,863
  61,794
  65,952
  70,345
  74,983
  79,877
  85,039
  90,479
  96,211
  102,249
  108,605
  115,296
  122,336
  129,743
  137,534
Total liabilities, $m
  51,265
  52,282
  53,485
  54,859
  56,403
  58,113
  59,989
  62,032
  64,243
  66,626
  69,183
  71,918
  74,837
  77,945
  81,248
  84,752
  88,467
  92,398
  96,556
  100,949
  105,587
  110,481
  115,643
  121,083
  126,815
  132,853
  139,209
  145,900
  152,940
  160,347
  168,138
Total equity, $m
  17,881
  18,274
  18,694
  19,175
  19,714
  20,312
  20,968
  21,682
  22,455
  23,288
  24,181
  25,137
  26,158
  27,244
  28,398
  29,623
  30,922
  32,296
  33,749
  35,284
  36,906
  38,616
  40,420
  42,322
  44,326
  46,436
  48,658
  50,996
  53,457
  56,046
  58,769
Total liabilities and equity, $m
  69,146
  70,556
  72,179
  74,034
  76,117
  78,425
  80,957
  83,714
  86,698
  89,914
  93,364
  97,055
  100,995
  105,189
  109,646
  114,375
  119,389
  124,694
  130,305
  136,233
  142,493
  149,097
  156,063
  163,405
  171,141
  179,289
  187,867
  196,896
  206,397
  216,393
  226,907
Debt-to-equity ratio
  1.155
  1.190
  1.220
  1.260
  1.310
  1.350
  1.400
  1.450
  1.500
  1.550
  1.600
  1.640
  1.690
  1.740
  1.780
  1.830
  1.870
  1.910
  1.950
  1.990
  2.030
  2.070
  2.100
  2.140
  2.170
  2.200
  2.230
  2.260
  2.290
  2.310
  2.340
Adjusted equity ratio
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,271
  3,016
  3,089
  3,170
  3,261
  3,361
  3,470
  3,588
  3,716
  3,854
  4,002
  4,936
  5,103
  5,282
  5,472
  5,673
  5,886
  6,111
  6,349
  6,600
  6,866
  7,146
  7,441
  7,752
  8,080
  8,425
  8,789
  9,171
  9,573
  9,997
  10,442
Depreciation, amort., depletion, $m
  681
  1,154
  1,156
  1,158
  1,161
  1,164
  1,167
  1,170
  1,174
  1,178
  1,183
  124
  129
  134
  140
  146
  152
  159
  166
  174
  182
  190
  199
  208
  218
  229
  240
  251
  263
  276
  289
Funds from operations, $m
  4,375
  4,170
  4,244
  4,328
  4,421
  4,524
  4,637
  4,759
  4,891
  5,032
  5,184
  5,059
  5,232
  5,416
  5,611
  5,818
  6,038
  6,270
  6,515
  6,774
  7,048
  7,336
  7,640
  7,961
  8,298
  8,654
  9,028
  9,422
  9,836
  10,272
  10,731
Change in working capital, $m
  656
  33
  39
  44
  49
  55
  60
  65
  71
  76
  82
  88
  94
  100
  106
  112
  119
  126
  133
  141
  149
  157
  165
  174
  184
  193
  204
  214
  226
  237
  250
Cash from operations, $m
  3,719
  4,137
  4,206
  4,284
  4,372
  4,470
  4,577
  4,693
  4,820
  4,956
  5,102
  4,972
  5,139
  5,316
  5,506
  5,706
  5,919
  6,144
  6,382
  6,633
  6,899
  7,179
  7,475
  7,786
  8,115
  8,460
  8,825
  9,208
  9,611
  10,035
  10,481
Maintenance CAPEX, $m
  0
  -87
  -90
  -92
  -94
  -97
  -100
  -103
  -107
  -111
  -115
  -119
  -124
  -129
  -134
  -140
  -146
  -152
  -159
  -166
  -174
  -182
  -190
  -199
  -208
  -218
  -229
  -240
  -251
  -263
  -276
New CAPEX, $m
  -270
  -45
  -37
  -42
  -48
  -53
  -58
  -63
  -68
  -73
  -79
  -84
  -90
  -96
  -102
  -108
  -114
  -121
  -128
  -135
  -143
  -151
  -159
  -168
  -177
  -186
  -196
  -206
  -217
  -228
  -240
Cash from investing activities, $m
  -381
  -132
  -127
  -134
  -142
  -150
  -158
  -166
  -175
  -184
  -194
  -203
  -214
  -225
  -236
  -248
  -260
  -273
  -287
  -301
  -317
  -333
  -349
  -367
  -385
  -404
  -425
  -446
  -468
  -491
  -516
Free cash flow, $m
  3,338
  4,004
  4,079
  4,150
  4,230
  4,320
  4,419
  4,527
  4,645
  4,772
  4,909
  4,768
  4,925
  5,092
  5,270
  5,458
  5,659
  5,871
  6,095
  6,332
  6,582
  6,847
  7,126
  7,420
  7,730
  8,056
  8,400
  8,762
  9,143
  9,544
  9,965
Issuance/(repayment) of debt, $m
  12,886
  1,017
  1,202
  1,375
  1,543
  1,710
  1,876
  2,043
  2,212
  2,383
  2,557
  2,735
  2,919
  3,108
  3,303
  3,505
  3,714
  3,932
  4,158
  4,393
  4,638
  4,894
  5,161
  5,440
  5,732
  6,037
  6,357
  6,691
  7,040
  7,407
  7,791
Issuance/(repurchase) of shares, $m
  -139
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  12,485
  1,017
  1,202
  1,375
  1,543
  1,710
  1,876
  2,043
  2,212
  2,383
  2,557
  2,735
  2,919
  3,108
  3,303
  3,505
  3,714
  3,932
  4,158
  4,393
  4,638
  4,894
  5,161
  5,440
  5,732
  6,037
  6,357
  6,691
  7,040
  7,407
  7,791
Total cash flow (excl. dividends), $m
  15,823
  5,022
  5,281
  5,524
  5,773
  6,030
  6,295
  6,570
  6,857
  7,155
  7,466
  7,504
  7,844
  8,200
  8,573
  8,963
  9,373
  9,802
  10,252
  10,725
  11,221
  11,741
  12,287
  12,860
  13,462
  14,094
  14,757
  15,453
  16,183
  16,951
  17,756
Retained Cash Flow (-), $m
  -1,767
  -393
  -420
  -480
  -539
  -598
  -656
  -714
  -773
  -833
  -894
  -956
  -1,020
  -1,086
  -1,154
  -1,225
  -1,298
  -1,374
  -1,453
  -1,535
  -1,621
  -1,711
  -1,804
  -1,902
  -2,004
  -2,110
  -2,222
  -2,339
  -2,461
  -2,589
  -2,723
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,628
  4,861
  5,044
  5,234
  5,432
  5,639
  5,856
  6,084
  6,322
  6,572
  6,548
  6,824
  7,113
  7,418
  7,738
  8,074
  8,428
  8,799
  9,189
  9,600
  10,030
  10,483
  10,959
  11,458
  11,983
  12,535
  13,114
  13,723
  14,362
  15,033
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  4,258
  4,081
  3,832
  3,566
  3,286
  2,998
  2,706
  2,415
  2,129
  1,853
  1,524
  1,291
  1,078
  884
  713
  565
  439
  333
  248
  180
  128
  88
  60
  39
  25
  15
  9
  5
  3
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Aetna Inc. is a diversified healthcare benefits company. The Company operates through three segments: Health Care, Group Insurance and Large Case Pensions. It offers a range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, medical management capabilities, Medicaid healthcare management services, Medicare Advantage and Medicare Supplement plans, workers' compensation administrative services and health information technology (HIT) products and services. The Health Care segment consists of medical, pharmacy benefit management services, dental, behavioral health and vision plans offered on both an Insured basis and an employer-funded basis, and emerging businesses products and services. The Group Insurance segment includes group life insurance and group disability products. Its products are offered on an Insured basis.

FINANCIAL RATIOS  of  Aetna (AET)

Valuation Ratios
P/E Ratio 24.4
Price to Sales 0.9
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 14.9
Price to Free Cash Flow 16.1
Growth Rates
Sales Growth Rate 4.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25.6%
Cap. Spend. - 3 Yr. Gr. Rate -10.8%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 106.4%
Total Debt to Equity 115.5%
Interest Coverage 8
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 7.3%
Ret/ On T. Cap. - 3 Yr. Avg. 8.8%
Return On Equity 13.4%
Return On Equity - 3 Yr. Avg. 14.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 8.3%
EBITDA Margin - 3 Yr. Avg. 8.2%
Operating Margin 7.3%
Oper. Margin - 3 Yr. Avg. 7.2%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. 6.5%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 43.5%
Eff/ Tax Rate - 3 Yr. Avg. 42.8%
Payout Ratio 15.5%

AET stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AET stock intrinsic value calculation we used $63155 million for the last fiscal year's total revenue generated by Aetna. The default revenue input number comes from 2016 income statement of Aetna. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AET stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.7%, whose default value for AET is calculated based on our internal credit rating of Aetna, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Aetna.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AET stock the variable cost ratio is equal to 92.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AET stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.8% for Aetna.

Corporate tax rate of 27% is the nominal tax rate for Aetna. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AET stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AET are equal to 2.5%.

Life of production assets of 17.9 years is the average useful life of capital assets used in Aetna operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AET is equal to 2.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $17881 million for Aetna - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 331.967 million for Aetna is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Aetna at the current share price and the inputted number of shares is $52.3 billion.

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COMPANY NEWS

▶ Trump denounces health care bipartisan deal   [10:46AM  Yahoo Finance Video]
▶ Health care trades that still work: 6 picks   [Oct-17-17 05:00PM  CNBC Videos]
▶ Aetna to Announce Third-Quarter 2017 Results   [05:00PM  Business Wire]
▶ A Look at Aetnas Dividend Yield Path   [10:38AM  Market Realist]
▶ [$$] Its Open-Enrollment Time: What Health Plan Should I Pick?   [Oct-13-17 11:21PM  The Wall Street Journal]
▶ Trump to scrap a crucial part of Obamacare   [10:38AM  Yahoo Finance Video]
▶ Trump to unwind Obamacare with new exec. order   [01:18PM  Yahoo Finance Video]
▶ Potential Takeover Candidate Molina Names New CEO   [Oct-11-17 05:12PM  TheStreet.com]
▶ [$$] Boutique Office Buildings Attract Big-Name Tenants   [12:34AM  The Wall Street Journal]
▶ [$$] Boutique Office Buildings Attract Big-Name Tenants   [Oct-08-17 09:38PM  The Wall Street Journal]
▶ Why Companies Cant Just Write Checks to Do Good   [Oct-06-17 09:00AM  Fortune]
▶ Aetna Board of Directors Declares Quarterly Cash Dividend   [Sep-29-17 01:30PM  Business Wire]
▶ GOP health care bill is doomed as possible vote looms   [12:50PM  Yahoo Finance Video]
▶ Trump: The largest tax cut in the history of our country   [Sep-25-17 01:53PM  Yahoo Finance Video]
▶ What it takes to score the best job in America   [Sep-21-17 05:30PM  Yahoo Finance]
▶ Short Sellers Take Aim at Vulnerable Health Carriers   [Sep-20-17 02:14PM  Investopedia]
▶ Healthcare Reform: Who Suffers?   [04:26PM  Barrons.com]
▶ Alexion Pharmaceuticals is moving its headquarters to Boston   [Sep-12-17 04:25PM  Associated Press]
▶ Why Aetna Inc (AET) Could Be A Buy   [08:37AM  Simply Wall St.]
▶ ETFs with exposure to Aetna, Inc. : September 7, 2017   [Sep-07-17 12:10PM  Capital Cube]
▶ Aetna Executive to Present at CEO Investor Forum 2.0   [Sep-06-17 05:00PM  Business Wire]
▶ Texas crippled by catastrophic flood   [12:47PM  Yahoo Finance Video]
▶ Aetna Letters Publicly Revealed Patients' HIV Status   [Aug-25-17 11:51AM  Consumer Reports]
▶ Aetna, Inc. Value Analysis (NYSE:AET) : August 23, 2017   [Aug-23-17 05:10PM  Capital Cube]
▶ Fitbit Buyout Speculation Is Pretty Ridiculous   [Aug-22-17 03:06PM  Motley Fool]
Financial statements of AET
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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