Intrinsic value of Bristol-Myers Squibb - BMY

Previous Close

$63.65

  Intrinsic Value

$19.90

stock screener

  Rating & Target

str. sell

-69%

  Value-price divergence*

-67%

Previous close

$63.65

 
Intrinsic value

$19.90

 
Up/down potential

-69%

 
Rating

str. sell

 
Value-price divergence*

-67%

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

We calculate the intrinsic value of BMY 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 104.7

 

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, %
  17.31
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
Revenue, $m
  19,427
  20,515
  21,651
  22,839
  24,081
  25,380
  26,739
  28,161
  29,650
  31,209
  32,842
  34,553
  36,346
  38,224
  40,194
  42,259
  44,424
  46,694
  49,076
  51,574
  54,194
  56,944
  59,828
  62,855
  66,031
  69,364
  72,862
  76,534
  80,387
  84,432
  88,677
Variable operating expenses, $m
 
  18,712
  19,711
  20,754
  21,845
  22,987
  24,181
  25,430
  26,738
  28,108
  29,543
  30,358
  31,934
  33,584
  35,315
  37,129
  39,031
  41,026
  43,119
  45,313
  47,616
  50,031
  52,566
  55,225
  58,016
  60,944
  64,018
  67,243
  70,629
  74,183
  77,913
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
  13,480
  18,712
  19,711
  20,754
  21,845
  22,987
  24,181
  25,430
  26,738
  28,108
  29,543
  30,358
  31,934
  33,584
  35,315
  37,129
  39,031
  41,026
  43,119
  45,313
  47,616
  50,031
  52,566
  55,225
  58,016
  60,944
  64,018
  67,243
  70,629
  74,183
  77,913
Operating income, $m
  5,947
  1,803
  1,941
  2,085
  2,236
  2,393
  2,558
  2,731
  2,912
  3,101
  3,299
  4,194
  4,412
  4,640
  4,879
  5,130
  5,393
  5,668
  5,957
  6,261
  6,579
  6,912
  7,262
  7,630
  8,015
  8,420
  8,845
  9,290
  9,758
  10,249
  10,764
EBITDA, $m
  6,329
  2,705
  2,855
  3,011
  3,175
  3,346
  3,526
  3,713
  3,910
  4,115
  4,330
  4,556
  4,792
  5,040
  5,300
  5,572
  5,858
  6,157
  6,471
  6,800
  7,146
  7,508
  7,889
  8,288
  8,707
  9,146
  9,607
  10,091
  10,600
  11,133
  11,693
Interest expense (income), $m
  191
  200
  233
  267
  302
  339
  378
  419
  461
  506
  552
  601
  652
  705
  761
  820
  882
  946
  1,014
  1,085
  1,159
  1,238
  1,320
  1,406
  1,496
  1,591
  1,690
  1,794
  1,904
  2,019
  2,139
Earnings before tax, $m
  5,915
  1,603
  1,708
  1,818
  1,933
  2,054
  2,180
  2,312
  2,451
  2,595
  2,747
  3,594
  3,760
  3,935
  4,118
  4,310
  4,511
  4,722
  4,943
  5,176
  5,419
  5,675
  5,943
  6,224
  6,520
  6,830
  7,155
  7,496
  7,854
  8,230
  8,625
Tax expense, $m
  1,408
  433
  461
  491
  522
  555
  589
  624
  662
  701
  742
  970
  1,015
  1,062
  1,112
  1,164
  1,218
  1,275
  1,335
  1,397
  1,463
  1,532
  1,605
  1,681
  1,760
  1,844
  1,932
  2,024
  2,121
  2,222
  2,329
Net income, $m
  4,457
  1,170
  1,247
  1,327
  1,411
  1,499
  1,592
  1,688
  1,789
  1,895
  2,005
  2,623
  2,745
  2,872
  3,006
  3,146
  3,293
  3,447
  3,609
  3,778
  3,956
  4,143
  4,338
  4,544
  4,759
  4,986
  5,223
  5,472
  5,734
  6,008
  6,296

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6,350
  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
  33,707
  28,894
  30,495
  32,168
  33,917
  35,746
  37,660
  39,663
  41,760
  43,956
  46,256
  48,666
  51,191
  53,837
  56,611
  59,519
  62,569
  65,767
  69,121
  72,639
  76,330
  80,202
  84,265
  88,528
  93,002
  97,696
  102,623
  107,794
  113,221
  118,918
  124,898
Adjusted assets (=assets-cash), $m
  27,357
  28,894
  30,495
  32,168
  33,917
  35,746
  37,660
  39,663
  41,760
  43,956
  46,256
  48,666
  51,191
  53,837
  56,611
  59,519
  62,569
  65,767
  69,121
  72,639
  76,330
  80,202
  84,265
  88,528
  93,002
  97,696
  102,623
  107,794
  113,221
  118,918
  124,898
Revenue / Adjusted assets
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
  0.710
Average production assets, $m
  6,098
  6,442
  6,799
  7,172
  7,561
  7,969
  8,396
  8,843
  9,310
  9,800
  10,312
  10,850
  11,412
  12,002
  12,621
  13,269
  13,949
  14,662
  15,410
  16,194
  17,017
  17,880
  18,786
  19,736
  20,734
  21,780
  22,879
  24,032
  25,242
  26,512
  27,845
Working capital, $m
  4,863
  -513
  -541
  -571
  -602
  -634
  -668
  -704
  -741
  -780
  -821
  -864
  -909
  -956
  -1,005
  -1,056
  -1,111
  -1,167
  -1,227
  -1,289
  -1,355
  -1,424
  -1,496
  -1,571
  -1,651
  -1,734
  -1,822
  -1,913
  -2,010
  -2,111
  -2,217
Total debt, $m
  6,708
  6,659
  7,627
  8,640
  9,698
  10,805
  11,963
  13,174
  14,443
  15,772
  17,163
  18,621
  20,148
  21,749
  23,428
  25,187
  27,032
  28,967
  30,996
  33,125
  35,358
  37,700
  40,158
  42,738
  45,444
  48,284
  51,265
  54,393
  57,677
  61,123
  64,741
Total liabilities, $m
  17,530
  17,481
  18,449
  19,462
  20,520
  21,627
  22,785
  23,996
  25,265
  26,594
  27,985
  29,443
  30,970
  32,571
  34,250
  36,009
  37,854
  39,789
  41,818
  43,947
  46,180
  48,522
  50,980
  53,560
  56,266
  59,106
  62,087
  65,215
  68,499
  71,945
  75,563
Total equity, $m
  16,177
  11,413
  12,046
  12,706
  13,397
  14,120
  14,876
  15,667
  16,495
  17,363
  18,271
  19,223
  20,220
  21,266
  22,361
  23,510
  24,715
  25,978
  27,303
  28,693
  30,150
  31,680
  33,285
  34,969
  36,736
  38,590
  40,536
  42,579
  44,722
  46,973
  49,335
Total liabilities and equity, $m
  33,707
  28,894
  30,495
  32,168
  33,917
  35,747
  37,661
  39,663
  41,760
  43,957
  46,256
  48,666
  51,190
  53,837
  56,611
  59,519
  62,569
  65,767
  69,121
  72,640
  76,330
  80,202
  84,265
  88,529
  93,002
  97,696
  102,623
  107,794
  113,221
  118,918
  124,898
Debt-to-equity ratio
  0.415
  0.580
  0.630
  0.680
  0.720
  0.770
  0.800
  0.840
  0.880
  0.910
  0.940
  0.970
  1.000
  1.020
  1.050
  1.070
  1.090
  1.120
  1.140
  1.150
  1.170
  1.190
  1.210
  1.220
  1.240
  1.250
  1.260
  1.280
  1.290
  1.300
  1.310
Adjusted equity ratio
  0.359
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395
  0.395

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,457
  1,170
  1,247
  1,327
  1,411
  1,499
  1,592
  1,688
  1,789
  1,895
  2,005
  2,623
  2,745
  2,872
  3,006
  3,146
  3,293
  3,447
  3,609
  3,778
  3,956
  4,143
  4,338
  4,544
  4,759
  4,986
  5,223
  5,472
  5,734
  6,008
  6,296
Depreciation, amort., depletion, $m
  382
  902
  914
  927
  940
  953
  967
  982
  998
  1,014
  1,031
  362
  380
  400
  421
  442
  465
  489
  514
  540
  567
  596
  626
  658
  691
  726
  763
  801
  841
  884
  928
Funds from operations, $m
  1,490
  2,072
  2,161
  2,254
  2,351
  2,453
  2,559
  2,670
  2,787
  2,909
  3,037
  2,985
  3,125
  3,273
  3,427
  3,588
  3,758
  3,936
  4,122
  4,318
  4,523
  4,739
  4,965
  5,202
  5,450
  5,712
  5,986
  6,273
  6,575
  6,892
  7,224
Change in working capital, $m
  -1,360
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -62
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -92
  -96
  -101
  -106
Cash from operations, $m
  2,850
  2,099
  2,189
  2,283
  2,382
  2,485
  2,593
  2,706
  2,824
  2,948
  3,077
  3,028
  3,170
  3,319
  3,476
  3,640
  3,812
  3,993
  4,182
  4,380
  4,589
  4,807
  5,037
  5,277
  5,530
  5,795
  6,073
  6,365
  6,671
  6,993
  7,331
Maintenance CAPEX, $m
  0
  -203
  -215
  -227
  -239
  -252
  -266
  -280
  -295
  -310
  -327
  -344
  -362
  -380
  -400
  -421
  -442
  -465
  -489
  -514
  -540
  -567
  -596
  -626
  -658
  -691
  -726
  -763
  -801
  -841
  -884
New CAPEX, $m
  -1,215
  -344
  -357
  -373
  -390
  -408
  -427
  -447
  -468
  -490
  -513
  -537
  -563
  -590
  -618
  -648
  -680
  -713
  -748
  -784
  -823
  -863
  -906
  -950
  -997
  -1,047
  -1,098
  -1,153
  -1,210
  -1,270
  -1,333
Cash from investing activities, $m
  1,480
  -547
  -572
  -600
  -629
  -660
  -693
  -727
  -763
  -800
  -840
  -881
  -925
  -970
  -1,018
  -1,069
  -1,122
  -1,178
  -1,237
  -1,298
  -1,363
  -1,430
  -1,502
  -1,576
  -1,655
  -1,738
  -1,824
  -1,916
  -2,011
  -2,111
  -2,217
Free cash flow, $m
  4,330
  1,552
  1,618
  1,684
  1,753
  1,825
  1,900
  1,979
  2,062
  2,148
  2,238
  2,147
  2,246
  2,349
  2,457
  2,571
  2,690
  2,815
  2,945
  3,082
  3,226
  3,377
  3,535
  3,701
  3,875
  4,057
  4,249
  4,450
  4,660
  4,882
  5,114
Issuance/(repayment) of debt, $m
  110
  943
  968
  1,012
  1,058
  1,107
  1,158
  1,212
  1,269
  1,329
  1,391
  1,458
  1,528
  1,601
  1,678
  1,759
  1,845
  1,935
  2,029
  2,129
  2,233
  2,343
  2,458
  2,579
  2,706
  2,840
  2,981
  3,128
  3,284
  3,446
  3,618
Issuance/(repurchase) of shares, $m
  -50
  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  
  102
  943
  968
  1,012
  1,058
  1,107
  1,158
  1,212
  1,269
  1,329
  1,391
  1,458
  1,528
  1,601
  1,678
  1,759
  1,845
  1,935
  2,029
  2,129
  2,233
  2,343
  2,458
  2,579
  2,706
  2,840
  2,981
  3,128
  3,284
  3,446
  3,618
Total cash flow (excl. dividends), $m
  4,399
  2,495
  2,586
  2,696
  2,811
  2,932
  3,058
  3,191
  3,330
  3,476
  3,630
  3,605
  3,773
  3,950
  4,136
  4,330
  4,535
  4,749
  4,975
  5,211
  5,459
  5,720
  5,993
  6,280
  6,581
  6,897
  7,229
  7,578
  7,944
  8,328
  8,731
Retained Cash Flow (-), $m
  -1,911
  -594
  -632
  -661
  -691
  -723
  -756
  -791
  -828
  -867
  -908
  -952
  -997
  -1,045
  -1,096
  -1,149
  -1,205
  -1,263
  -1,325
  -1,390
  -1,458
  -1,530
  -1,605
  -1,684
  -1,767
  -1,854
  -1,946
  -2,043
  -2,144
  -2,250
  -2,362
Prev. year cash balance distribution, $m
 
  5,358
  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
 
  7,259
  1,954
  2,035
  2,120
  2,209
  2,302
  2,400
  2,502
  2,609
  2,721
  2,653
  2,776
  2,905
  3,040
  3,182
  3,330
  3,486
  3,650
  3,821
  4,001
  4,190
  4,388
  4,596
  4,814
  5,043
  5,283
  5,535
  5,800
  6,078
  6,370
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  6,960
  1,789
  1,771
  1,746
  1,712
  1,671
  1,621
  1,564
  1,499
  1,427
  1,260
  1,185
  1,104
  1,021
  934
  846
  759
  672
  588
  508
  433
  364
  301
  245
  196
  154
  119
  90
  66
  48
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

Bristol-Myers Squibb Company is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of biopharmaceutical products. The Company's pharmaceutical products include chemically synthesized drugs, or small molecules, and products produced from biological processes called biologics. Small molecule drugs are administered orally in the form of a pill or tablet. Biologics are administered to patients through injections or by infusion. The Company's products include Empliciti, Opdivo, Sprycel, Yervoy, Eliquis, Orencia, Baraclude, Hepatitis C Franchise, Reyataz Franchise and Sustiva Franchise. It offers products for a range of therapeutic classes, which include virology, including human immunodeficiency virus (HIV) infection; oncology; immunoscience, and cardiovascular. Its products are sold to wholesalers, retail pharmacies, hospitals, government entities and the medical profession across the world.

FINANCIAL RATIOS  of  Bristol-Myers Squibb (BMY)

Valuation Ratios
P/E Ratio 23.8
Price to Sales 5.5
Price to Book 6.5
Price to Tangible Book
Price to Cash Flow 37.2
Price to Free Cash Flow 64.8
Growth Rates
Sales Growth Rate 17.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 48.2%
Cap. Spend. - 3 Yr. Gr. Rate 17.7%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 35.3%
Total Debt to Equity 41.5%
Interest Coverage 32
Management Effectiveness
Return On Assets 14.1%
Ret/ On Assets - 3 Yr. Avg. 8.5%
Return On Total Capital 20.3%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 29.3%
Return On Equity - 3 Yr. Avg. 17.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 74.6%
Gross Margin - 3 Yr. Avg. 75.9%
EBITDA Margin 33.4%
EBITDA Margin - 3 Yr. Avg. 23%
Operating Margin 30.6%
Oper. Margin - 3 Yr. Avg. 18.1%
Pre-Tax Margin 30.4%
Pre-Tax Margin - 3 Yr. Avg. 19.3%
Net Profit Margin 22.9%
Net Profit Margin - 3 Yr. Avg. 15%
Effective Tax Rate 23.8%
Eff/ Tax Rate - 3 Yr. Avg. 20%
Payout Ratio 57.1%

BMY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BMY stock intrinsic value calculation we used $19427 million for the last fiscal year's total revenue generated by Bristol-Myers Squibb. The default revenue input number comes from 2016 income statement of Bristol-Myers Squibb. 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 BMY stock valuation model: a) initial revenue growth rate of 5.6% 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 4.3%, whose default value for BMY is calculated based on our internal credit rating of Bristol-Myers Squibb, 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 Bristol-Myers Squibb.
    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 BMY stock the variable cost ratio is equal to 91.4%.

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 BMY 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 3.5% for Bristol-Myers Squibb.

Corporate tax rate of 27% is the nominal tax rate for Bristol-Myers Squibb. 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 BMY 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 BMY are equal to 31.4%.

Life of production assets of 34 years is the average useful life of capital assets used in Bristol-Myers Squibb 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 BMY is equal to -2.5%. 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 - $16177 million for Bristol-Myers Squibb - 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 1645.54 million for Bristol-Myers Squibb 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 Bristol-Myers Squibb at the current share price and the inputted number of shares is $104.7 billion.

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COMPANY NEWS

▶ [$$] Bristol-Myers Gets a Boost   [07:53AM  Barrons.com]
▶ Cramer's lightning round: Zagg's got good swag   [Oct-12-17 07:01PM  CNBC Videos]
▶ Better Buy: Celgene Corporation vs. Bristol-Myers Squibb   [Oct-07-17 10:34AM  Motley Fool]
▶ Missing Link: Long Capital One, Bristol-Myers   [Oct-06-17 12:38PM  CNBC Videos]
▶ Must-Know Changes to Bristol-Myers Squibbs Valuation   [Sep-29-17 10:40AM  Market Realist]
▶ Bristol-Myers Squibbs Immunoscience Products   [09:11AM  Market Realist]
▶ UNC lands $1.7M grant from Bristol-Myers Squibb   [08:35AM  American City Business Journals]
▶ Tax reform could spark a wave of biopharma M&A   [Sep-28-17 05:27PM  CNBC Videos]
▶ Bulls dial into this stock   [01:36PM  CNBC Videos]
▶ Bristol-Myers Squibbs Virology Portfolio   [10:41AM  Market Realist]
▶ Bristol-Myers Squibbs Growing Quarterly Revenues   [Sep-27-17 05:37PM  Market Realist]
▶ Gilead Sciences: New Market, Same Problem?   [Sep-26-17 12:51PM  Barrons.com]
▶ 2 Important Dates for Big Pharma   [Sep-20-17 03:50PM  GuruFocus.com]
▶ Buy Bristol-Myers Squibb Co (BMY) Stock With No Fear   [Sep-18-17 10:19AM  InvestorPlace]
▶ Better Buy: Pfizer Inc. vs. Bristol-Myers Squibb   [Sep-17-17 07:03AM  Motley Fool]
▶ Bristol-Myers Squibb Stock Still a Beast?   [07:02AM  TheStreet.com]
▶ Time to Adjust as Bristol-Myers Squibb Continues Its Climb   [Sep-15-17 11:41AM  TheStreet.com]
▶ This Small Cap Biotech Soars On Deals With Bristol-Myers, Roche   [Sep-14-17 04:20PM  Investor's Business Daily]
▶ Bristol-Myers Squibb Announces Dividend   [Sep-13-17 04:30PM  Business Wire]
▶ Company News For Sep 12, 2017   [10:17AM  Zacks]
▶ Exelixis Recovers From Bristol-Inspired Pitfall In Kidney Cancer   [Sep-08-17 03:22PM  Investor's Business Daily]
▶ 3 Stocks Soaring Today   [Sep-07-17 06:10PM  GuruFocus.com]
▶ Bristol-Myers Squibb: And Just Like That   [02:00PM  Barrons.com]
Financial statements of BMY
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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