Intrinsic value of Mallinckrodt - MNK

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$46.92

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$46.92

 
Intrinsic value

$32.13

 
Up/down potential

-32%

 
Rating

sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of MNK 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 4.8

 

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, %
  15.67
  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
  4.87
Revenue, $m
  3,381
  3,459
  3,548
  3,647
  3,758
  3,879
  4,011
  4,154
  4,309
  4,474
  4,651
  4,840
  5,041
  5,254
  5,481
  5,721
  5,975
  6,244
  6,528
  6,828
  7,145
  7,478
  7,830
  8,201
  8,591
  9,002
  9,435
  9,890
  10,369
  10,873
  11,403
Variable operating expenses, $m
 
  1,465
  1,493
  1,525
  1,560
  1,598
  1,640
  1,685
  1,734
  1,786
  1,842
  1,531
  1,595
  1,662
  1,734
  1,810
  1,891
  1,976
  2,066
  2,161
  2,261
  2,366
  2,478
  2,595
  2,718
  2,849
  2,985
  3,129
  3,281
  3,440
  3,608
Fixed operating expenses, $m
 
  1,391
  1,426
  1,461
  1,498
  1,535
  1,574
  1,613
  1,653
  1,695
  1,737
  1,781
  1,825
  1,871
  1,917
  1,965
  2,014
  2,065
  2,116
  2,169
  2,224
  2,279
  2,336
  2,395
  2,454
  2,516
  2,579
  2,643
  2,709
  2,777
  2,846
Total operating expenses, $m
  2,764
  2,856
  2,919
  2,986
  3,058
  3,133
  3,214
  3,298
  3,387
  3,481
  3,579
  3,312
  3,420
  3,533
  3,651
  3,775
  3,905
  4,041
  4,182
  4,330
  4,485
  4,645
  4,814
  4,990
  5,172
  5,365
  5,564
  5,772
  5,990
  6,217
  6,454
Operating income, $m
  617
  603
  629
  661
  701
  746
  798
  856
  921
  993
  1,072
  1,528
  1,621
  1,721
  1,829
  1,945
  2,070
  2,204
  2,346
  2,498
  2,660
  2,833
  3,016
  3,211
  3,418
  3,638
  3,871
  4,118
  4,379
  4,656
  4,948
EBITDA, $m
  1,452
  1,601
  1,643
  1,694
  1,753
  1,820
  1,896
  1,980
  2,073
  2,175
  2,286
  2,406
  2,535
  2,674
  2,823
  2,983
  3,154
  3,336
  3,530
  3,737
  3,956
  4,189
  4,437
  4,699
  4,977
  5,271
  5,582
  5,912
  6,260
  6,628
  7,017
Interest expense (income), $m
  332
  307
  319
  333
  349
  366
  385
  406
  428
  452
  478
  506
  535
  567
  600
  635
  673
  713
  755
  799
  846
  896
  948
  1,003
  1,061
  1,122
  1,186
  1,254
  1,325
  1,400
  1,479
Earnings before tax, $m
  233
  296
  310
  328
  352
  380
  413
  451
  493
  541
  594
  1,022
  1,086
  1,154
  1,229
  1,310
  1,397
  1,491
  1,591
  1,699
  1,814
  1,937
  2,069
  2,209
  2,358
  2,516
  2,685
  2,864
  3,054
  3,256
  3,470
Tax expense, $m
  -256
  80
  84
  89
  95
  103
  112
  122
  133
  146
  160
  276
  293
  312
  332
  354
  377
  403
  430
  459
  490
  523
  559
  596
  637
  679
  725
  773
  825
  879
  937
Net income, $m
  644
  216
  226
  240
  257
  277
  302
  329
  360
  395
  433
  746
  792
  843
  897
  956
  1,020
  1,088
  1,162
  1,240
  1,324
  1,414
  1,510
  1,612
  1,721
  1,837
  1,960
  2,091
  2,230
  2,377
  2,533

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  281
  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
  15,499
  15,580
  15,980
  16,430
  16,928
  17,475
  18,070
  18,714
  19,408
  20,153
  20,950
  21,800
  22,705
  23,667
  24,688
  25,770
  26,915
  28,126
  29,406
  30,757
  32,183
  33,686
  35,271
  36,941
  38,700
  40,551
  42,500
  44,551
  46,709
  48,978
  51,365
Adjusted assets (=assets-cash), $m
  15,218
  15,580
  15,980
  16,430
  16,928
  17,475
  18,070
  18,714
  19,408
  20,153
  20,950
  21,800
  22,705
  23,667
  24,688
  25,770
  26,915
  28,126
  29,406
  30,757
  32,183
  33,686
  35,271
  36,941
  38,700
  40,551
  42,500
  44,551
  46,709
  48,978
  51,365
Revenue / Adjusted assets
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
Average production assets, $m
  10,243
  10,477
  10,746
  11,048
  11,383
  11,751
  12,151
  12,584
  13,051
  13,551
  14,087
  14,659
  15,268
  15,915
  16,601
  17,329
  18,099
  18,913
  19,774
  20,682
  21,641
  22,652
  23,718
  24,841
  26,023
  27,268
  28,579
  29,958
  31,409
  32,935
  34,540
Working capital, $m
  272
  252
  259
  266
  274
  283
  293
  303
  315
  327
  340
  353
  368
  384
  400
  418
  436
  456
  477
  498
  522
  546
  572
  599
  627
  657
  689
  722
  757
  794
  832
Total debt, $m
  6,045
  6,022
  6,284
  6,579
  6,905
  7,263
  7,653
  8,075
  8,529
  9,017
  9,539
  10,096
  10,689
  11,319
  11,988
  12,696
  13,447
  14,240
  15,078
  15,963
  16,897
  17,882
  18,920
  20,013
  21,165
  22,378
  23,655
  24,998
  26,411
  27,898
  29,461
Total liabilities, $m
  10,228
  10,205
  10,467
  10,762
  11,088
  11,446
  11,836
  12,258
  12,712
  13,200
  13,722
  14,279
  14,872
  15,502
  16,171
  16,879
  17,630
  18,423
  19,261
  20,146
  21,080
  22,065
  23,103
  24,196
  25,348
  26,561
  27,838
  29,181
  30,594
  32,081
  33,644
Total equity, $m
  5,271
  5,375
  5,513
  5,668
  5,840
  6,029
  6,234
  6,456
  6,696
  6,953
  7,228
  7,521
  7,833
  8,165
  8,517
  8,891
  9,286
  9,704
  10,145
  10,611
  11,103
  11,622
  12,169
  12,745
  13,351
  13,990
  14,663
  15,370
  16,115
  16,897
  17,721
Total liabilities and equity, $m
  15,499
  15,580
  15,980
  16,430
  16,928
  17,475
  18,070
  18,714
  19,408
  20,153
  20,950
  21,800
  22,705
  23,667
  24,688
  25,770
  26,916
  28,127
  29,406
  30,757
  32,183
  33,687
  35,272
  36,941
  38,699
  40,551
  42,501
  44,551
  46,709
  48,978
  51,365
Debt-to-equity ratio
  1.147
  1.120
  1.140
  1.160
  1.180
  1.200
  1.230
  1.250
  1.270
  1.300
  1.320
  1.340
  1.360
  1.390
  1.410
  1.430
  1.450
  1.470
  1.490
  1.500
  1.520
  1.540
  1.550
  1.570
  1.590
  1.600
  1.610
  1.630
  1.640
  1.650
  1.660
Adjusted equity ratio
  0.328
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345
  0.345

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  644
  216
  226
  240
  257
  277
  302
  329
  360
  395
  433
  746
  792
  843
  897
  956
  1,020
  1,088
  1,162
  1,240
  1,324
  1,414
  1,510
  1,612
  1,721
  1,837
  1,960
  2,091
  2,230
  2,377
  2,533
Depreciation, amort., depletion, $m
  835
  998
  1,014
  1,032
  1,052
  1,074
  1,098
  1,124
  1,152
  1,182
  1,214
  878
  914
  953
  994
  1,038
  1,084
  1,133
  1,184
  1,238
  1,296
  1,356
  1,420
  1,487
  1,558
  1,633
  1,711
  1,794
  1,881
  1,972
  2,068
Funds from operations, $m
  1,301
  1,214
  1,240
  1,272
  1,309
  1,352
  1,400
  1,453
  1,512
  1,577
  1,647
  1,624
  1,707
  1,796
  1,891
  1,994
  2,104
  2,221
  2,346
  2,479
  2,620
  2,771
  2,930
  3,100
  3,279
  3,470
  3,671
  3,885
  4,110
  4,349
  4,601
Change in working capital, $m
  116
  6
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
Cash from operations, $m
  1,185
  992
  1,234
  1,265
  1,301
  1,343
  1,390
  1,443
  1,501
  1,565
  1,635
  1,610
  1,692
  1,780
  1,875
  1,976
  2,085
  2,201
  2,325
  2,457
  2,597
  2,746
  2,905
  3,073
  3,251
  3,440
  3,640
  3,851
  4,075
  4,312
  4,563
Maintenance CAPEX, $m
  0
  -613
  -627
  -643
  -662
  -682
  -704
  -728
  -754
  -781
  -811
  -844
  -878
  -914
  -953
  -994
  -1,038
  -1,084
  -1,133
  -1,184
  -1,238
  -1,296
  -1,356
  -1,420
  -1,487
  -1,558
  -1,633
  -1,711
  -1,794
  -1,881
  -1,972
New CAPEX, $m
  -183
  -234
  -269
  -302
  -335
  -368
  -400
  -433
  -467
  -501
  -536
  -572
  -609
  -647
  -687
  -728
  -770
  -814
  -861
  -909
  -959
  -1,011
  -1,066
  -1,123
  -1,183
  -1,245
  -1,311
  -1,379
  -1,451
  -1,526
  -1,605
Cash from investing activities, $m
  -108
  -847
  -896
  -945
  -997
  -1,050
  -1,104
  -1,161
  -1,221
  -1,282
  -1,347
  -1,416
  -1,487
  -1,561
  -1,640
  -1,722
  -1,808
  -1,898
  -1,994
  -2,093
  -2,197
  -2,307
  -2,422
  -2,543
  -2,670
  -2,803
  -2,944
  -3,090
  -3,245
  -3,407
  -3,577
Free cash flow, $m
  1,077
  144
  337
  319
  304
  294
  286
  282
  281
  283
  287
  195
  205
  219
  235
  255
  277
  303
  332
  364
  400
  439
  483
  530
  581
  636
  696
  761
  831
  905
  986
Issuance/(repayment) of debt, $m
  -470
  233
  262
  294
  326
  358
  390
  422
  455
  488
  522
  557
  593
  630
  669
  709
  750
  793
  838
  885
  934
  985
  1,038
  1,094
  1,152
  1,213
  1,277
  1,343
  1,413
  1,486
  1,563
Issuance/(repurchase) of shares, $m
  -639
  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  
  -1,162
  233
  262
  294
  326
  358
  390
  422
  455
  488
  522
  557
  593
  630
  669
  709
  750
  793
  838
  885
  934
  985
  1,038
  1,094
  1,152
  1,213
  1,277
  1,343
  1,413
  1,486
  1,563
Total cash flow (excl. dividends), $m
  -85
  377
  599
  613
  631
  652
  676
  704
  735
  770
  809
  752
  798
  849
  904
  964
  1,028
  1,096
  1,170
  1,249
  1,334
  1,424
  1,521
  1,623
  1,733
  1,849
  1,973
  2,104
  2,244
  2,392
  2,549
Retained Cash Flow (-), $m
  40
  -129
  -138
  -155
  -172
  -189
  -205
  -222
  -239
  -257
  -275
  -293
  -312
  -332
  -352
  -373
  -395
  -418
  -441
  -466
  -492
  -519
  -547
  -576
  -607
  -639
  -672
  -708
  -744
  -783
  -823
Prev. year cash balance distribution, $m
 
  25
  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
 
  273
  461
  458
  459
  463
  471
  482
  496
  513
  534
  458
  486
  517
  552
  590
  632
  679
  729
  783
  842
  906
  974
  1,047
  1,126
  1,210
  1,300
  1,397
  1,499
  1,609
  1,725
Discount rate, %
 
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
 
  253
  391
  353
  319
  288
  259
  232
  207
  183
  161
  115
  101
  87
  74
  62
  51
  41
  33
  26
  19
  15
  11
  7
  5
  3
  2
  1
  1
  0
  0
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

Mallinckrodt public limited company develops, manufactures, markets, and distributes branded and generic specialty pharmaceutical products and therapies in the United States, Europe, the Middle East, Africa, and internationally. The company’s Specialty Brands segment markets branded pharmaceutical products for autoimmune and rare diseases, including the specialty areas of neurology, rheumatology, nephrology, ophthalmology, and pulmonology; and immunotherapy and neonatal respiratory critical care therapies, as well as analgesics and hemostasis products, and central nervous system drugs. This segment offers Acthar, an injectable drug for various indications, such as neurology, rheumatology, nephrology, and pulmonology; Ofirmev, an intravenous formulation of acetaminophen for pain management; Inomax for inhalation; Therakos, an immunotherapy treatment platform; and Exalgo, a form of hydromorphone. It is also developing StrataGraft, a full-thickness product for severe burns and other complex skin defects. Its Specialty Generics segment provides specialty generic pharmaceuticals and active pharmaceutical ingredients (APIs) consisting of hydrocodone and hydrocodone-containing tablets; oxycodone and oxycodone-containing tablets; methylphenidate HCl extended-release tablets; and other controlled substances, including acetaminophen products. The company markets its branded products to physicians, pharmacists, pharmacy buyers, hospital procurement departments, ambulatory surgical centers, and specialty pharmacies. It distributes its branded and generic products through independent channels, including wholesale drug distributors, specialty pharmaceutical distributors, retail pharmacy chains, hospital networks, ambulatory surgical centers, and governmental agencies; and APIs directly or through distributors to other pharmaceutical companies. Mallinckrodt public limited company is based in Chesterfield, the United Kingdom.

FINANCIAL RATIOS  of  Mallinckrodt (MNK)

Valuation Ratios
P/E Ratio 7.8
Price to Sales 1.5
Price to Book 1
Price to Tangible Book
Price to Cash Flow 4.2
Price to Free Cash Flow 5
Growth Rates
Sales Growth Rate 15.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 23.6%
Cap. Spend. - 3 Yr. Gr. Rate 4.3%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 109.8%
Total Debt to Equity 114.7%
Interest Coverage 2
Management Effectiveness
Return On Assets 8.4%
Ret/ On Assets - 3 Yr. Avg. 3.4%
Return On Total Capital 5.6%
Ret/ On T. Cap. - 3 Yr. Avg. 1%
Return On Equity 12.2%
Return On Equity - 3 Yr. Avg. 2.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 55%
Gross Margin - 3 Yr. Avg. 54.7%
EBITDA Margin 41.4%
EBITDA Margin - 3 Yr. Avg. 31%
Operating Margin 18.2%
Oper. Margin - 3 Yr. Avg. 11%
Pre-Tax Margin 6.9%
Pre-Tax Margin - 3 Yr. Avg. 2.8%
Net Profit Margin 19%
Net Profit Margin - 3 Yr. Avg. 3.6%
Effective Tax Rate -109.9%
Eff/ Tax Rate - 3 Yr. Avg. -64.7%
Payout Ratio 0%

MNK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MNK stock intrinsic value calculation we used $3381 million for the last fiscal year's total revenue generated by Mallinckrodt. The default revenue input number comes from 2016 income statement of Mallinckrodt. 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 MNK stock valuation model: a) initial revenue growth rate of 2.3% 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 8.2%, whose default value for MNK is calculated based on our internal credit rating of Mallinckrodt, 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 Mallinckrodt.
    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 MNK stock the variable cost ratio is equal to 42.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1357 million in the base year in the intrinsic value calculation for MNK 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 5.3% for Mallinckrodt.

Corporate tax rate of 27% is the nominal tax rate for Mallinckrodt. 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 MNK 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 MNK are equal to 302.9%.

Life of production assets of 16.7 years is the average useful life of capital assets used in Mallinckrodt 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 MNK is equal to 7.3%. 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 - $5271 million for Mallinckrodt - 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 102.76 million for Mallinckrodt 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 Mallinckrodt at the current share price and the inputted number of shares is $4.8 billion.


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COMPANY NEWS

▶ Mallinckrodt faces lawsuit from Illinois city   [Apr-10-17 08:25AM  American City Business Journals]
▶ Mallinckrodt resigns from pharmaceutical trade group   [Apr-06-17 08:05AM  American City Business Journals]
▶ Mallinckrodt to pay $35M in deal to end feds' opioid probe   [Apr-03-17 06:47PM  Associated Press]
▶ 3 Top Generic Drug Companies to Buy in 2017   [02:43PM  at Motley Fool]
▶ Mallinckrodt receives subpoenas   [04:05PM  at bizjournals.com]
▶ Stocks to Watch: General Motors, Mallinckrodt, Centene   [09:25AM  at The Wall Street Journal]
Stock chart of MNK Financial statements of MNK
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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