Intrinsic value of Anthem - ANTM

Previous Close

$190.17

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$190.17

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying
Our model is not good at valuating stocks of financial companies, such as ANTM.

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

We calculate the intrinsic value of ANTM 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 50.3

 

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, %
  7.24
  7.50
  7.25
  7.02
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.78
  5.71
  5.64
  5.57
  5.51
  5.46
  5.42
  5.38
  5.34
  5.30
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
Revenue, $m
  0
  91,351
  97,974
  104,857
  112,011
  119,449
  127,184
  135,233
  143,612
  152,338
  161,431
  170,909
  180,796
  191,112
  201,882
  213,131
  224,884
  237,170
  250,018
  263,457
  277,519
  292,239
  307,650
  323,790
  340,697
  358,411
  376,975
  396,433
  416,831
  438,218
  460,645
Variable operating expenses, $m
 
  85,099
  91,141
  97,421
  103,948
  110,733
  117,791
  125,134
  132,778
  140,740
  149,035
  155,927
  164,946
  174,358
  184,184
  194,447
  205,170
  216,379
  228,100
  240,361
  253,191
  266,620
  280,680
  295,405
  310,830
  326,991
  343,927
  361,679
  380,289
  399,801
  420,262
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
  79,700
  85,099
  91,141
  97,421
  103,948
  110,733
  117,791
  125,134
  132,778
  140,740
  149,035
  155,927
  164,946
  174,358
  184,184
  194,447
  205,170
  216,379
  228,100
  240,361
  253,191
  266,620
  280,680
  295,405
  310,830
  326,991
  343,927
  361,679
  380,289
  399,801
  420,262
Operating income, $m
  5,278
  6,252
  6,833
  7,436
  8,063
  8,715
  9,394
  10,099
  10,834
  11,599
  12,396
  14,983
  15,850
  16,754
  17,698
  18,684
  19,715
  20,792
  21,918
  23,096
  24,329
  25,619
  26,970
  28,385
  29,867
  31,420
  33,048
  34,753
  36,542
  38,417
  40,383
EBITDA, $m
  6,190
  8,355
  8,960
  9,590
  10,244
  10,924
  11,632
  12,368
  13,134
  13,932
  14,764
  15,631
  16,535
  17,479
  18,464
  19,492
  20,567
  21,691
  22,866
  24,095
  25,381
  26,727
  28,137
  29,613
  31,159
  32,779
  34,477
  36,257
  38,122
  40,078
  42,129
Interest expense (income), $m
  595
  598
  710
  829
  952
  1,079
  1,212
  1,350
  1,494
  1,644
  1,800
  1,962
  2,132
  2,308
  2,493
  2,685
  2,886
  3,096
  3,315
  3,545
  3,785
  4,036
  4,299
  4,575
  4,863
  5,165
  5,481
  5,813
  6,161
  6,525
  6,907
Earnings before tax, $m
  4,555
  5,655
  6,123
  6,608
  7,112
  7,636
  8,181
  8,749
  9,339
  9,955
  10,596
  13,021
  13,718
  14,446
  15,206
  15,999
  16,829
  17,696
  18,603
  19,551
  20,544
  21,583
  22,671
  23,811
  25,004
  26,255
  27,566
  28,940
  30,381
  31,891
  33,475
Tax expense, $m
  2,085
  1,527
  1,653
  1,784
  1,920
  2,062
  2,209
  2,362
  2,522
  2,688
  2,861
  3,516
  3,704
  3,900
  4,105
  4,320
  4,544
  4,778
  5,023
  5,279
  5,547
  5,827
  6,121
  6,429
  6,751
  7,089
  7,443
  7,814
  8,203
  8,611
  9,038
Net income, $m
  2,470
  4,128
  4,469
  4,824
  5,192
  5,574
  5,972
  6,387
  6,818
  7,267
  7,735
  9,505
  10,014
  10,545
  11,100
  11,679
  12,285
  12,918
  13,580
  14,272
  14,997
  15,756
  16,550
  17,382
  18,253
  19,166
  20,123
  21,126
  22,178
  23,281
  24,437

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
  65,083
  69,947
  75,019
  80,289
  85,766
  91,461
  97,385
  103,548
  109,963
  116,645
  123,607
  130,865
  138,435
  146,334
  154,580
  163,194
  172,193
  181,601
  191,438
  201,728
  212,496
  223,766
  235,567
  247,925
  260,871
  274,434
  288,649
  303,547
  319,166
  335,542
  352,714
Adjusted assets (=assets-cash), $m
  65,083
  69,947
  75,019
  80,289
  85,766
  91,461
  97,385
  103,548
  109,963
  116,645
  123,607
  130,865
  138,435
  146,334
  154,580
  163,194
  172,193
  181,601
  191,438
  201,728
  212,496
  223,766
  235,567
  247,925
  260,871
  274,434
  288,649
  303,547
  319,166
  335,542
  352,714
Revenue / Adjusted assets
  0.000
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
  1.306
Average production assets, $m
  9,615
  10,323
  11,071
  11,849
  12,657
  13,498
  14,372
  15,281
  16,228
  17,214
  18,242
  19,313
  20,430
  21,596
  22,813
  24,084
  25,412
  26,800
  28,252
  29,771
  31,360
  33,023
  34,764
  36,588
  38,499
  40,500
  42,598
  44,797
  47,102
  49,519
  52,053
Working capital, $m
  0
  1,462
  1,568
  1,678
  1,792
  1,911
  2,035
  2,164
  2,298
  2,437
  2,583
  2,735
  2,893
  3,058
  3,230
  3,410
  3,598
  3,795
  4,000
  4,215
  4,440
  4,676
  4,922
  5,181
  5,451
  5,735
  6,032
  6,343
  6,669
  7,011
  7,370
Total debt, $m
  15,727
  18,692
  21,805
  25,041
  28,405
  31,901
  35,538
  39,322
  43,262
  47,364
  51,639
  56,095
  60,743
  65,593
  70,656
  75,945
  81,471
  87,247
  93,287
  99,605
  106,216
  113,137
  120,382
  127,970
  135,919
  144,247
  152,974
  162,122
  171,712
  181,767
  192,310
Total liabilities, $m
  39,983
  42,948
  46,061
  49,297
  52,661
  56,157
  59,794
  63,578
  67,518
  71,620
  75,895
  80,351
  84,999
  89,849
  94,912
  100,201
  105,727
  111,503
  117,543
  123,861
  130,472
  137,393
  144,638
  152,226
  160,175
  168,503
  177,230
  186,378
  195,968
  206,023
  216,566
Total equity, $m
  25,100
  27,000
  28,957
  30,991
  33,106
  35,304
  37,591
  39,969
  42,446
  45,025
  47,712
  50,514
  53,436
  56,485
  59,668
  62,993
  66,467
  70,098
  73,895
  77,867
  82,023
  86,374
  90,929
  95,699
  100,696
  105,932
  111,418
  117,169
  123,198
  129,519
  136,148
Total liabilities and equity, $m
  65,083
  69,948
  75,018
  80,288
  85,767
  91,461
  97,385
  103,547
  109,964
  116,645
  123,607
  130,865
  138,435
  146,334
  154,580
  163,194
  172,194
  181,601
  191,438
  201,728
  212,495
  223,767
  235,567
  247,925
  260,871
  274,435
  288,648
  303,547
  319,166
  335,542
  352,714
Debt-to-equity ratio
  0.627
  0.690
  0.750
  0.810
  0.860
  0.900
  0.950
  0.980
  1.020
  1.050
  1.080
  1.110
  1.140
  1.160
  1.180
  1.210
  1.230
  1.240
  1.260
  1.280
  1.290
  1.310
  1.320
  1.340
  1.350
  1.360
  1.370
  1.380
  1.390
  1.400
  1.410
Adjusted equity ratio
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,470
  4,128
  4,469
  4,824
  5,192
  5,574
  5,972
  6,387
  6,818
  7,267
  7,735
  9,505
  10,014
  10,545
  11,100
  11,679
  12,285
  12,918
  13,580
  14,272
  14,997
  15,756
  16,550
  17,382
  18,253
  19,166
  20,123
  21,126
  22,178
  23,281
  24,437
Depreciation, amort., depletion, $m
  912
  2,102
  2,128
  2,154
  2,181
  2,209
  2,238
  2,269
  2,301
  2,334
  2,368
  648
  686
  725
  766
  808
  853
  899
  948
  999
  1,052
  1,108
  1,167
  1,228
  1,292
  1,359
  1,429
  1,503
  1,581
  1,662
  1,747
Funds from operations, $m
  2,630
  6,230
  6,597
  6,977
  7,372
  7,783
  8,211
  8,655
  9,118
  9,601
  10,103
  10,153
  10,700
  11,270
  11,866
  12,488
  13,138
  13,817
  14,528
  15,271
  16,049
  16,864
  17,716
  18,610
  19,545
  20,525
  21,553
  22,630
  23,759
  24,942
  26,184
Change in working capital, $m
  -575
  102
  106
  110
  114
  119
  124
  129
  134
  140
  145
  152
  158
  165
  172
  180
  188
  197
  206
  215
  225
  236
  247
  258
  271
  283
  297
  311
  326
  342
  359
Cash from operations, $m
  3,205
  5,995
  6,491
  6,867
  7,258
  7,664
  8,087
  8,527
  8,984
  9,461
  9,958
  10,001
  10,541
  11,105
  11,693
  12,308
  12,950
  13,621
  14,322
  15,056
  15,824
  16,628
  17,470
  18,351
  19,275
  20,242
  21,256
  22,318
  23,432
  24,600
  25,825
Maintenance CAPEX, $m
  0
  -323
  -346
  -372
  -398
  -425
  -453
  -482
  -513
  -545
  -578
  -612
  -648
  -686
  -725
  -766
  -808
  -853
  -899
  -948
  -999
  -1,052
  -1,108
  -1,167
  -1,228
  -1,292
  -1,359
  -1,429
  -1,503
  -1,581
  -1,662
New CAPEX, $m
  -584
  -708
  -748
  -778
  -808
  -840
  -874
  -910
  -947
  -986
  -1,027
  -1,071
  -1,117
  -1,166
  -1,217
  -1,271
  -1,328
  -1,388
  -1,452
  -1,519
  -1,589
  -1,663
  -1,741
  -1,824
  -1,910
  -2,002
  -2,098
  -2,199
  -2,305
  -2,417
  -2,534
Cash from investing activities, $m
  -514
  -1,031
  -1,094
  -1,150
  -1,206
  -1,265
  -1,327
  -1,392
  -1,460
  -1,531
  -1,605
  -1,683
  -1,765
  -1,852
  -1,942
  -2,037
  -2,136
  -2,241
  -2,351
  -2,467
  -2,588
  -2,715
  -2,849
  -2,991
  -3,138
  -3,294
  -3,457
  -3,628
  -3,808
  -3,998
  -4,196
Free cash flow, $m
  2,691
  4,964
  5,396
  5,718
  6,052
  6,399
  6,760
  7,135
  7,525
  7,930
  8,353
  8,318
  8,776
  9,254
  9,752
  10,271
  10,813
  11,380
  11,971
  12,590
  13,236
  13,913
  14,620
  15,361
  16,136
  16,948
  17,799
  18,690
  19,624
  20,603
  21,629
Issuance/(repayment) of debt, $m
  0
  2,965
  3,114
  3,236
  3,363
  3,497
  3,637
  3,784
  3,939
  4,102
  4,275
  4,456
  4,648
  4,850
  5,063
  5,288
  5,526
  5,776
  6,040
  6,318
  6,611
  6,920
  7,245
  7,588
  7,949
  8,328
  8,728
  9,148
  9,590
  10,055
  10,544
Issuance/(repurchase) of shares, $m
  119
  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  
  -49
  2,965
  3,114
  3,236
  3,363
  3,497
  3,637
  3,784
  3,939
  4,102
  4,275
  4,456
  4,648
  4,850
  5,063
  5,288
  5,526
  5,776
  6,040
  6,318
  6,611
  6,920
  7,245
  7,588
  7,949
  8,328
  8,728
  9,148
  9,590
  10,055
  10,544
Total cash flow (excl. dividends), $m
  2,646
  7,929
  8,510
  8,954
  9,415
  9,896
  10,397
  10,919
  11,464
  12,033
  12,627
  12,775
  13,424
  14,104
  14,815
  15,559
  16,339
  17,156
  18,011
  18,908
  19,848
  20,833
  21,866
  22,949
  24,085
  25,277
  26,527
  27,838
  29,214
  30,658
  32,173
Retained Cash Flow (-), $m
  -2,056
  -1,900
  -1,957
  -2,034
  -2,114
  -2,198
  -2,286
  -2,379
  -2,476
  -2,579
  -2,687
  -2,802
  -2,922
  -3,049
  -3,183
  -3,325
  -3,474
  -3,631
  -3,797
  -3,972
  -4,156
  -4,350
  -4,555
  -4,770
  -4,997
  -5,236
  -5,487
  -5,751
  -6,029
  -6,321
  -6,628
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
 
  6,029
  6,553
  6,919
  7,301
  7,698
  8,110
  8,540
  8,988
  9,454
  9,940
  9,973
  10,502
  11,055
  11,632
  12,235
  12,865
  13,524
  14,214
  14,936
  15,691
  16,482
  17,311
  18,179
  19,088
  20,041
  21,040
  22,087
  23,185
  24,337
  25,544
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  5,645
  5,708
  5,570
  5,392
  5,175
  4,922
  4,638
  4,327
  3,994
  3,646
  3,140
  2,805
  2,472
  2,148
  1,840
  1,551
  1,286
  1,048
  839
  658
  506
  381
  280
  201
  141
  96
  64
  41
  26
  16
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

Anthem, Inc., through its subsidiaries, operates as a health benefits company in the United States. It operates through three segments: Commercial and Specialty Business, Government Business, and Other. The company offers a spectrum of network-based managed care health benefit plans to large and small employer, individual, Medicaid, and Medicare markets. Its managed care plans include preferred provider organizations; health maintenance organizations; point-of-service plans; traditional indemnity plans and other hybrid plans, such as consumer-driven health plans; and hospital only and limited benefit products. The company also provides a range of managed care services to self-funded customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs, and other administrative services. In addition, it offers an array of specialty and other insurance products and services, such as dental, vision, life and disability insurance benefits, radiology benefit management, and analytics-driven personal health care guidance; and Medicare administrative services. Further, the company provides services to the federal government in connection with the Federal Employee Program; and operates as a licensee of the Blue Cross and Blue Shield Association. As of December 31, 2016, it served 39.9 million medical members through its affiliated health plans. The company was formerly known as WellPoint, Inc. and changed its name to Anthem, Inc. in December 2014. Anthem, Inc. was founded in 1944 and is headquartered in Indianapolis, Indiana.

FINANCIAL RATIOS  of  Anthem (ANTM)

Valuation Ratios
P/E Ratio 20.3
Price to Sales 0.6
Price to Book 2
Price to Tangible Book
Price to Cash Flow 15.6
Price to Free Cash Flow 19.1
Growth Rates
Sales Growth Rate 7.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -8.5%
Cap. Spend. - 3 Yr. Gr. Rate -2%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 57.2%
Total Debt to Equity 62.7%
Interest Coverage 9
Management Effectiveness
Return On Assets 4.4%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 6.2%
Ret/ On T. Cap. - 3 Yr. Avg. 6.4%
Return On Equity 10.3%
Return On Equity - 3 Yr. Avg. 10.5%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 7.1%
EBITDA Margin - 3 Yr. Avg. 7.6%
Operating Margin 6.2%
Oper. Margin - 3 Yr. Avg. 6.5%
Pre-Tax Margin 5.4%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 3.2%
Effective Tax Rate 45.8%
Eff/ Tax Rate - 3 Yr. Avg. 44%
Payout Ratio 27.7%

ANTM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ANTM stock intrinsic value calculation we used $84978 million for the last fiscal year's total revenue generated by Anthem. The default revenue input number comes from 2016 income statement of Anthem. 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 ANTM stock valuation model: a) initial revenue growth rate of 7.5% 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 6.8%, whose default value for ANTM is calculated based on our internal credit rating of Anthem, 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 Anthem.
    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 ANTM stock the variable cost ratio is equal to 93.3%.

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 ANTM 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 Anthem.

Corporate tax rate of 27% is the nominal tax rate for Anthem. 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 ANTM 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 ANTM are equal to 11.3%.

Life of production assets of 29.8 years is the average useful life of capital assets used in Anthem 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 ANTM is equal to 1.6%. 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 - $25100 million for Anthem - 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 264.239 million for Anthem 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 Anthem at the current share price and the inputted number of shares is $50.3 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
UNH UnitedHealth G 185.25 prem.  prem.
UAM Universal Amer 9.96 prem.  prem.
HUM Humana 238.42 prem.  prem.
AET Aetna 152.10 prem.  prem.
CI Cigna 169.61 prem.  prem.
MOH Molina Healthc 71.33 prem.  prem.
CNC Centene 84.15 prem.  prem.
WCG WellCare Healt 183.28 prem.  prem.
CSLT Castlight Heal 4.35 prem.  prem.

COMPANY NEWS

▶ Anthem to pay $115 million in data breach settlement   [09:05AM  American City Business Journals]
▶ It just got uglier for Obamacare   [02:00PM  Business Insider]
▶ [$$] Anthem to Exit ACA Exchanges in Wisconsin, Indiana   [01:27PM  The Wall Street Journal]
▶ Anthem CEO on health-care exchange participation   [Jun-15-17 03:16PM  CNBC Videos]
▶ Centene Runs Against Current on Obamacare   [Jun-14-17 03:45PM  TheStreet.com]
▶ Key insurer Centene plans to expand health exchange presence   [Jun-13-17 04:15PM  Associated Press]
▶ IBD's No. 1-Ranked Insurer Just Gave ObamaCare A Big Hug   [04:14PM  Investor's Business Daily]
▶ Big Blue Cross-Blue Shield insurer aims for ACA return   [Jun-09-17 01:09PM  Associated Press]
▶ Now We Know: ObamaCare's 'Guaranteed Issue' Is Another Big Lie   [Jun-07-17 05:31PM  Investor's Business Daily]
▶ Yahoo Finance Live: Market Movers - Jun 7th, 2017   [07:20AM  Yahoo Finance Video]
▶ Anthem to Pull Out of Ohio ACA Exchange   [02:24PM  The Wall Street Journal]
▶ Anthem pulling out of Ohio health care exchange   [01:30PM  American City Business Journals]
▶ 11 Best Insurance Companies to Invest in 2017   [Jun-05-17 11:53AM  Insider Monkey]
▶ 3 Top Dividend Stocks in Medicare   [09:41AM  Motley Fool]
▶ 3 Top Dividend Stocks in Health Insurance   [Jun-02-17 12:03PM  Motley Fool]
▶ Health Insurance Industry Outlook - June 2017   [Jun-01-17 05:37PM  Zacks]
▶ S&P 500, Nasdaq Jump to New Records as Crude Oil Slides   [May-25-17 04:05PM  TheStreet.com]
▶ [$$] Each Cigna Employee to Get Five Shares   [10:00AM  The Wall Street Journal]
▶ 4 health care trades after CBO release   [May-24-17 05:00PM  CNBC Videos]
▶ Evaluating Amazon's Chances in the Pharma Industry   [May-18-17 05:29PM  Investopedia]
▶ Anthem Announces Appearance at Upcoming Conference   [May-15-17 04:30PM  Business Wire]
▶ Anthem-Cigna Drama Heads to Delaware   [May-13-17 10:00AM  TheStreet.com]
▶ [$$] Anthem Ends Cigna Pursuit, Plans to Seek Damages   [May-12-17 10:48PM  The Wall Street Journal]
▶ [$$] Anthem Ends Cigna Pursuit, Plans to Seek Damages   [05:33PM  The Wall Street Journal]
▶ Anthem calls off $48B troubled Cigna merger   [02:35PM  American City Business Journals]
▶ Game Set Match: Anthem/Cigna Merger Over   [10:17AM  Investopedia]
Stock chart of ANTM Financial statements of ANTM Annual reports of ANTM
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

VALUATION THEORY       ASSET ALLOCATION

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

Copyright © X-FIN.com 2005-2017. All rigths reserved.