Intrinsic value of Allergan - AGN

Previous Close

$185.60

  Intrinsic Value

$32.11

stock screener

  Rating & Target

str. sell

-83%

Previous close

$185.60

 
Intrinsic value

$32.11

 
Up/down potential

-83%

 
Rating

str. sell

We calculate the intrinsic value of AGN 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
(a)
   1
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -100.00
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  0
  17,439
  19,002
  20,629
  22,323
  24,083
  25,913
  27,815
  29,791
  31,844
  33,979
  36,200
  38,510
  40,914
  43,417
  46,025
  48,743
  51,577
  54,535
  57,622
  60,845
  64,213
  67,733
  71,413
  75,262
  79,289
  83,504
  87,917
  92,538
  97,378
  102,448
Variable operating expenses, $m
 
  18,637
  19,370
  20,134
  20,929
  21,755
  22,614
  23,507
  24,434
  25,399
  26,401
  16,992
  18,076
  19,204
  20,379
  21,603
  22,879
  24,210
  25,598
  27,047
  28,560
  30,141
  31,793
  33,520
  35,327
  37,218
  39,196
  41,267
  43,436
  45,708
  48,088
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
  0
  18,637
  19,370
  20,134
  20,929
  21,755
  22,614
  23,507
  24,434
  25,399
  26,401
  16,992
  18,076
  19,204
  20,379
  21,603
  22,879
  24,210
  25,598
  27,047
  28,560
  30,141
  31,793
  33,520
  35,327
  37,218
  39,196
  41,267
  43,436
  45,708
  48,088
Operating income, $m
  0
  -1,198
  -368
  495
  1,393
  2,328
  3,299
  4,308
  5,356
  6,446
  7,579
  19,208
  20,434
  21,709
  23,037
  24,421
  25,864
  27,368
  28,937
  30,575
  32,285
  34,072
  35,940
  37,893
  39,935
  42,072
  44,308
  46,650
  49,102
  51,670
  54,360
EBITDA, $m
  0
  21,118
  23,010
  24,980
  27,031
  29,162
  31,378
  33,681
  36,074
  38,561
  41,146
  43,835
  46,632
  49,543
  52,574
  55,732
  59,023
  62,456
  66,037
  69,775
  73,678
  77,756
  82,018
  86,475
  91,136
  96,012
  101,116
  106,460
  112,055
  117,916
  124,056
Interest expense (income), $m
  0
  1,624
  1,843
  2,078
  2,323
  2,577
  2,842
  3,117
  3,403
  3,700
  4,009
  4,330
  4,664
  5,012
  5,373
  5,750
  6,142
  6,551
  6,977
  7,422
  7,886
  8,371
  8,878
  9,407
  9,960
  10,539
  11,145
  11,779
  12,443
  13,138
  13,866
Earnings before tax, $m
  0
  -2,822
  -2,211
  -1,583
  -929
  -250
  457
  1,190
  1,953
  2,745
  3,569
  14,878
  15,769
  16,697
  17,664
  18,671
  19,721
  20,817
  21,960
  23,153
  24,399
  25,701
  27,062
  28,486
  29,974
  31,532
  33,163
  34,871
  36,659
  38,532
  40,495
Tax expense, $m
  0
  0
  0
  0
  0
  0
  123
  321
  527
  741
  964
  4,017
  4,258
  4,508
  4,769
  5,041
  5,325
  5,621
  5,929
  6,251
  6,588
  6,939
  7,307
  7,691
  8,093
  8,514
  8,954
  9,415
  9,898
  10,404
  10,934
Net income, $m
  0
  -2,822
  -2,211
  -1,583
  -929
  -250
  333
  869
  1,426
  2,004
  2,606
  10,861
  11,512
  12,189
  12,895
  13,630
  14,397
  15,196
  16,031
  16,902
  17,811
  18,762
  19,755
  20,794
  21,881
  23,019
  24,209
  25,456
  26,761
  28,128
  29,561

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
  0
  129,181
  140,756
  152,810
  165,352
  178,393
  191,948
  206,034
  220,671
  235,884
  251,700
  268,146
  285,256
  303,064
  321,606
  340,924
  361,059
  382,055
  403,962
  426,827
  450,706
  475,652
  501,725
  528,985
  557,497
  587,329
  618,550
  651,236
  685,464
  721,316
  758,877
Adjusted assets (=assets-cash), $m
  0
  129,181
  140,756
  152,810
  165,352
  178,393
  191,948
  206,034
  220,671
  235,884
  251,700
  268,146
  285,256
  303,064
  321,606
  340,924
  361,059
  382,055
  403,962
  426,827
  450,706
  475,652
  501,725
  528,985
  557,497
  587,329
  618,550
  651,236
  685,464
  721,316
  758,877
Revenue / Adjusted assets
  0.000
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
Average production assets, $m
  0
  118,641
  129,271
  140,342
  151,860
  163,837
  176,286
  189,222
  202,666
  216,637
  231,162
  246,267
  261,981
  278,335
  295,365
  313,106
  331,598
  350,881
  371,000
  392,000
  413,930
  436,841
  460,786
  485,822
  512,008
  539,405
  568,080
  598,099
  629,534
  662,460
  696,956
Working capital, $m
  0
  -5,075
  -5,530
  -6,003
  -6,496
  -7,008
  -7,541
  -8,094
  -8,669
  -9,267
  -9,888
  -10,534
  -11,206
  -11,906
  -12,634
  -13,393
  -14,184
  -15,009
  -15,870
  -16,768
  -17,706
  -18,686
  -19,710
  -20,781
  -21,901
  -23,073
  -24,300
  -25,584
  -26,928
  -28,337
  -29,812
Total debt, $m
  0
  34,127
  38,479
  43,011
  47,727
  52,630
  57,727
  63,023
  68,527
  74,247
  80,193
  86,377
  92,811
  99,506
  106,478
  113,742
  121,312
  129,207
  137,444
  146,042
  155,020
  164,400
  174,203
  184,453
  195,173
  206,390
  218,129
  230,419
  243,289
  256,769
  270,892
Total liabilities, $m
  0
  48,572
  52,924
  57,457
  62,172
  67,076
  72,172
  77,469
  82,972
  88,693
  94,639
  100,823
  107,256
  113,952
  120,924
  128,187
  135,758
  143,653
  151,890
  160,487
  169,465
  178,845
  188,648
  198,898
  209,619
  220,836
  232,575
  244,865
  257,735
  271,215
  285,338
Total equity, $m
  0
  80,609
  87,832
  95,353
  103,180
  111,317
  119,775
  128,565
  137,699
  147,192
  157,061
  167,323
  178,000
  189,112
  200,682
  212,736
  225,301
  238,403
  252,072
  266,340
  281,240
  296,807
  313,076
  330,087
  347,878
  366,493
  385,975
  406,371
  427,730
  450,101
  473,539
Total liabilities and equity, $m
  0
  129,181
  140,756
  152,810
  165,352
  178,393
  191,947
  206,034
  220,671
  235,885
  251,700
  268,146
  285,256
  303,064
  321,606
  340,923
  361,059
  382,056
  403,962
  426,827
  450,705
  475,652
  501,724
  528,985
  557,497
  587,329
  618,550
  651,236
  685,465
  721,316
  758,877
Debt-to-equity ratio
  0.000
  0.420
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.500
  0.510
  0.520
  0.520
  0.530
  0.530
  0.530
  0.540
  0.540
  0.550
  0.550
  0.550
  0.550
  0.560
  0.560
  0.560
  0.560
  0.570
  0.570
  0.570
  0.570
  0.570
Adjusted equity ratio
  0.000
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624
  0.624

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  -2,822
  -2,211
  -1,583
  -929
  -250
  333
  869
  1,426
  2,004
  2,606
  10,861
  11,512
  12,189
  12,895
  13,630
  14,397
  15,196
  16,031
  16,902
  17,811
  18,762
  19,755
  20,794
  21,881
  23,019
  24,209
  25,456
  26,761
  28,128
  29,561
Depreciation, amort., depletion, $m
  0
  22,315
  23,378
  24,485
  25,637
  26,835
  28,080
  29,373
  30,718
  32,115
  33,567
  24,627
  26,198
  27,834
  29,536
  31,311
  33,160
  35,088
  37,100
  39,200
  41,393
  43,684
  46,079
  48,582
  51,201
  53,941
  56,808
  59,810
  62,953
  66,246
  69,696
Funds from operations, $m
  0
  19,494
  21,167
  22,902
  24,708
  26,585
  28,413
  30,242
  32,143
  34,119
  36,173
  35,487
  37,710
  40,023
  42,431
  44,941
  47,556
  50,284
  53,131
  56,102
  59,204
  62,446
  65,834
  69,377
  73,082
  76,959
  81,017
  85,265
  89,714
  94,374
  99,257
Change in working capital, $m
  0
  -436
  -455
  -474
  -493
  -512
  -532
  -553
  -575
  -598
  -621
  -646
  -672
  -700
  -728
  -759
  -791
  -825
  -861
  -898
  -938
  -980
  -1,024
  -1,071
  -1,120
  -1,172
  -1,227
  -1,284
  -1,345
  -1,408
  -1,476
Cash from operations, $m
  0
  19,930
  21,622
  23,376
  25,201
  27,098
  28,945
  30,796
  32,718
  34,717
  36,794
  36,133
  38,382
  40,722
  43,160
  45,700
  48,347
  51,109
  53,991
  57,000
  60,142
  63,426
  66,858
  70,448
  74,202
  78,131
  82,244
  86,550
  91,059
  95,783
  100,732
Maintenance CAPEX, $m
  0
  -10,844
  -11,864
  -12,927
  -14,034
  -15,186
  -16,384
  -17,629
  -18,922
  -20,267
  -21,664
  -23,116
  -24,627
  -26,198
  -27,834
  -29,536
  -31,311
  -33,160
  -35,088
  -37,100
  -39,200
  -41,393
  -43,684
  -46,079
  -48,582
  -51,201
  -53,941
  -56,808
  -59,810
  -62,953
  -66,246
New CAPEX, $m
  0
  -10,199
  -10,630
  -11,071
  -11,519
  -11,977
  -12,449
  -12,936
  -13,443
  -13,972
  -14,525
  -15,105
  -15,714
  -16,355
  -17,030
  -17,741
  -18,492
  -19,284
  -20,119
  -21,000
  -21,930
  -22,911
  -23,945
  -25,036
  -26,186
  -27,397
  -28,674
  -30,019
  -31,435
  -32,926
  -34,496
Cash from investing activities, $m
  0
  -21,043
  -22,494
  -23,998
  -25,553
  -27,163
  -28,833
  -30,565
  -32,365
  -34,239
  -36,189
  -38,221
  -40,341
  -42,553
  -44,864
  -47,277
  -49,803
  -52,444
  -55,207
  -58,100
  -61,130
  -64,304
  -67,629
  -71,115
  -74,768
  -78,598
  -82,615
  -86,827
  -91,245
  -95,879
  -100,742
Free cash flow, $m
  0
  -1,114
  -873
  -622
  -352
  -65
  113
  231
  353
  478
  606
  -2,087
  -1,959
  -1,830
  -1,703
  -1,578
  -1,455
  -1,334
  -1,216
  -1,100
  -988
  -878
  -771
  -667
  -566
  -467
  -371
  -277
  -186
  -97
  -10
Issuance/(repayment) of debt, $m
  0
  4,051
  4,352
  4,532
  4,716
  4,903
  5,097
  5,296
  5,504
  5,720
  5,947
  6,184
  6,433
  6,696
  6,972
  7,263
  7,571
  7,895
  8,237
  8,598
  8,978
  9,380
  9,803
  10,250
  10,721
  11,217
  11,739
  12,290
  12,870
  13,480
  14,123
Issuance/(repurchase) of shares, $m
  0
  9,610
  9,434
  9,105
  8,755
  8,387
  8,125
  7,921
  7,708
  7,489
  7,263
  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  
  0
  13,661
  13,786
  13,637
  13,471
  13,290
  13,222
  13,217
  13,212
  13,209
  13,210
  6,184
  6,433
  6,696
  6,972
  7,263
  7,571
  7,895
  8,237
  8,598
  8,978
  9,380
  9,803
  10,250
  10,721
  11,217
  11,739
  12,290
  12,870
  13,480
  14,123
Total cash flow (excl. dividends), $m
  0
  12,547
  12,913
  13,015
  13,119
  13,225
  13,334
  13,447
  13,565
  13,687
  13,815
  4,096
  4,475
  4,865
  5,269
  5,685
  6,116
  6,561
  7,021
  7,497
  7,991
  8,502
  9,032
  9,583
  10,155
  10,750
  11,368
  12,013
  12,684
  13,383
  14,113
Retained Cash Flow (-), $m
  0
  -9,610
  -9,434
  -9,105
  -8,755
  -8,387
  -8,458
  -8,790
  -9,134
  -9,493
  -9,869
  -10,263
  -10,677
  -11,112
  -11,571
  -12,054
  -12,564
  -13,102
  -13,670
  -14,268
  -14,900
  -15,566
  -16,269
  -17,010
  -17,792
  -18,615
  -19,482
  -20,396
  -21,358
  -22,371
  -23,438
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
 
  287
  314
  342
  371
  402
  433
  466
  501
  536
  573
  612
  652
  693
  736
  782
  828
  877
  928
  982
  1,037
  1,095
  1,156
  1,219
  1,285
  1,355
  1,427
  1,503
  1,583
  1,666
  1,753
Cash available for distribution, $m
 
  2,937
  3,479
  3,911
  4,364
  4,838
  4,876
  4,658
  4,431
  4,194
  3,947
  -6,166
  -6,202
  -6,247
  -6,302
  -6,369
  -6,448
  -6,541
  -6,649
  -6,771
  -6,910
  -7,065
  -7,237
  -7,427
  -7,637
  -7,865
  -8,114
  -8,383
  -8,675
  -8,988
  -9,325
Discount rate, %
 
  5.40
  5.67
  5.95
  6.25
  6.56
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.04
  15.80
  16.59
  17.42
  18.29
  19.20
  20.16
  21.17
  22.23
PV of cash for distribution, $m
 
  2,787
  3,116
  3,288
  3,424
  3,521
  3,269
  2,856
  2,466
  2,102
  1,765
  -2,439
  -2,149
  -1,875
  -1,621
  -1,388
  -1,175
  -984
  -814
  -664
  -535
  -425
  -332
  -255
  -192
  -142
  -103
  -73
  -51
  -34
  -23
Current shareholders' claim on cash, %
  100
  86.6
  76.0
  67.6
  61.0
  55.6
  51.1
  47.4
  44.3
  41.6
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3
  39.3

Allergan plc, a specialty pharmaceutical company, develops, manufactures, markets, and distributes medical aesthetics, biosimilar, and over-the-counter pharmaceutical products worldwide. It operates through US Specialized Therapeutics, US General Medicine, and International segments. The company offers a portfolio of products that provide treatment for the central nervous system, gastroenterology, women’s health and urology, ophthalmology, neurosciences, medical aesthetics, dermatology, plastic surgery, liver disease, inflammation, metabolic syndromes, and fibrosis, as well as Alzheimer’s disease. It is also involved in developing ocular implants that reduce intraocular pressure associated with glaucoma; medical devices for the correction of prominent ears; and intranasal neurostimulation devices, as well as other dry eye products. In addition, the company distributes generic and branded pharmaceutical products primarily to independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics, and physician offices. Further, it develops a portfolio of breast implants and tissue expanders. The company has licensing agreement with Assembly Biosciences, Inc.; Mimetogen Pharmaceuticals, Inc.; Almirall, S.A; Naurex, Inc.; and Merck & Co. The company was formerly known as Actavis plc and changed its name to Allergan plc in June 2015. Allergan plc was founded in 1983 and is headquartered in Dublin, Ireland.

FINANCIAL RATIOS  of  Allergan (AGN)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

AGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGN stock intrinsic value calculation we used $15941 million for the last fiscal year's total revenue generated by Allergan. The default revenue input number comes from income statement of Allergan. 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 AGN stock valuation model: a) initial revenue growth rate of 9.4% 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 5.4%, whose default value for AGN is calculated based on our internal credit rating of Allergan, 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 Allergan.
    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 AGN stock the variable cost ratio is equal to 112.5%.

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 AGN 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 5.4% for Allergan.

Corporate tax rate of 27% is the nominal tax rate for Allergan. 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 AGN stock is equal to 1.8%.

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 AGN are equal to 680.3%.

Life of production assets of 10 years is the average useful life of capital assets used in Allergan 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 AGN is equal to -29.1%. 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 - $73821 million for Allergan - 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 334 million for Allergan 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 Allergan at the current share price and the inputted number of shares is $62.0 billion.

COMPANY NEWS

▶ If I Had to Buy 1 Stock in August, It Would Be This One   [Aug-17-18 07:31AM  Motley Fool]
▶ 10 Roughed-Up Stocks to Buy for a Recovery Rally   [Aug-16-18 08:48AM  Kiplinger]
▶ 3 Stocks for Warren Buffett Fans   [Aug-15-18 10:36AM  Motley Fool]
▶ Editas Prepares for the Commercialization of EDIT-101   [Aug-09-18 04:17PM  Motley Fool]
▶ Allergan: 2Q Earnings Snapshot   [06:49AM  Associated Press]
▶ Allergan's Q2 Earnings Preview   [Jul-25-18 02:30PM  Benzinga]
▶ Aurinia Pharmaceuticals Has Lots of Upside Potential   [Jul-13-18 10:36AM  InvestorPlace]
▶ Examining Allergan: Cramer Goes 'Off the Charts'   [Jul-11-18 06:59AM  TheStreet.com]
▶ Don't get too excited about Botox maker Allergan   [Jul-10-18 07:38PM  CNBC Videos]
▶ This Blockbuster Drug Could Help Allergan Boost Its 2018 Numbers   [Jul-09-18 04:25PM  Investor's Business Daily]
▶ 5 Pharmaceutical and Biotech Stocks to Consider for July   [Jul-06-18 10:56AM  InvestorPlace]
▶ Allergan plcs (NYSE:AGN) Shift From Loss To Profit   [Jun-25-18 02:54PM  Simply Wall St.]
▶ Allergan Promotes Male Botox Users With Big Campaign   [Jun-21-18 05:15PM  Bloomberg Video]
▶ Boston Scientific, Masco, MasterCard, Allergan & Paypal   [Jun-20-18 01:36PM  CNBC Videos]
▶ Is Goldman Sachs Going to Be the Next Allergan?   [Jun-14-18 05:05PM  TheStreet.com]
▶ Allergan oral migraine drug succeeds in study   [Jun-11-18 09:14AM  Reuters]
Financial statements of AGN
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.