Intrinsic value of Mallinckrodt - MNK

Previous Close

$35.94

  Intrinsic Value

$34.25

stock screener

  Rating & Target

hold

-5%

  Value-price divergence*

-61%

Previous close

$35.94

 
Intrinsic value

$34.25

 
Up/down potential

-5%

 
Rating

hold

 
Value-price divergence*

-61%

*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 3.6

 

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
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  3,381
  3,449
  3,528
  3,619
  3,720
  3,833
  3,957
  4,092
  4,238
  4,395
  4,563
  4,744
  4,936
  5,141
  5,359
  5,590
  5,835
  6,095
  6,369
  6,659
  6,965
  7,288
  7,628
  7,987
  8,365
  8,763
  9,182
  9,624
  10,088
  10,577
  11,091
Variable operating expenses, $m
 
  1,462
  1,487
  1,515
  1,548
  1,583
  1,623
  1,665
  1,711
  1,761
  1,814
  1,501
  1,562
  1,627
  1,696
  1,769
  1,846
  1,928
  2,015
  2,107
  2,204
  2,306
  2,414
  2,527
  2,647
  2,773
  2,905
  3,045
  3,192
  3,347
  3,509
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
  2,853
  2,913
  2,976
  3,046
  3,118
  3,197
  3,278
  3,364
  3,456
  3,551
  3,282
  3,387
  3,498
  3,613
  3,734
  3,860
  3,993
  4,131
  4,276
  4,428
  4,585
  4,750
  4,922
  5,101
  5,289
  5,484
  5,688
  5,901
  6,124
  6,355
Operating income, $m
  617
  596
  615
  642
  675
  714
  761
  813
  873
  939
  1,012
  1,462
  1,549
  1,644
  1,746
  1,856
  1,974
  2,101
  2,237
  2,382
  2,537
  2,702
  2,878
  3,065
  3,264
  3,475
  3,698
  3,935
  4,187
  4,453
  4,735
EBITDA, $m
  1,452
  1,592
  1,626
  1,669
  1,720
  1,780
  1,849
  1,926
  2,012
  2,107
  2,210
  2,323
  2,445
  2,576
  2,718
  2,870
  3,033
  3,207
  3,392
  3,590
  3,801
  4,024
  4,262
  4,514
  4,781
  5,064
  5,364
  5,681
  6,017
  6,371
  6,747
Interest expense (income), $m
  332
  307
  318
  330
  344
  360
  378
  397
  418
  441
  466
  492
  520
  550
  582
  616
  652
  691
  731
  774
  820
  867
  918
  971
  1,027
  1,086
  1,149
  1,214
  1,283
  1,356
  1,432
Earnings before tax, $m
  233
  289
  298
  312
  331
  354
  383
  416
  455
  498
  546
  970
  1,029
  1,094
  1,164
  1,240
  1,322
  1,411
  1,506
  1,608
  1,718
  1,835
  1,960
  2,094
  2,236
  2,388
  2,550
  2,721
  2,904
  3,097
  3,303
Tax expense, $m
  -256
  78
  80
  84
  89
  96
  103
  112
  123
  134
  148
  262
  278
  295
  314
  335
  357
  381
  407
  434
  464
  495
  529
  565
  604
  645
  688
  735
  784
  836
  892
Net income, $m
  644
  211
  217
  228
  241
  259
  280
  304
  332
  364
  399
  708
  751
  798
  850
  905
  965
  1,030
  1,099
  1,174
  1,254
  1,340
  1,431
  1,529
  1,633
  1,743
  1,861
  1,987
  2,120
  2,261
  2,411

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
  15,534
  15,892
  16,300
  16,759
  17,267
  17,824
  18,431
  19,088
  19,796
  20,556
  21,369
  22,236
  23,159
  24,141
  25,182
  26,286
  27,454
  28,689
  29,994
  31,372
  32,827
  34,360
  35,977
  37,680
  39,474
  41,362
  43,350
  45,442
  47,643
  49,958
Adjusted assets (=assets-cash), $m
  15,218
  15,534
  15,892
  16,300
  16,759
  17,267
  17,824
  18,431
  19,088
  19,796
  20,556
  21,369
  22,236
  23,159
  24,141
  25,182
  26,286
  27,454
  28,689
  29,994
  31,372
  32,827
  34,360
  35,977
  37,680
  39,474
  41,362
  43,350
  45,442
  47,643
  49,958
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
  10,446
  10,686
  10,961
  11,269
  11,611
  11,986
  12,394
  12,836
  13,312
  13,823
  14,369
  14,952
  15,573
  16,233
  16,933
  17,675
  18,461
  19,292
  20,169
  21,096
  22,074
  23,105
  24,192
  25,337
  26,544
  27,814
  29,150
  30,557
  32,037
  33,594
Working capital, $m
  272
  252
  258
  264
  272
  280
  289
  299
  309
  321
  333
  346
  360
  375
  391
  408
  426
  445
  465
  486
  508
  532
  557
  583
  611
  640
  670
  703
  736
  772
  810
Total debt, $m
  6,045
  5,992
  6,226
  6,494
  6,794
  7,127
  7,492
  7,889
  8,320
  8,783
  9,281
  9,813
  10,381
  10,986
  11,629
  12,311
  13,034
  13,799
  14,608
  15,463
  16,366
  17,318
  18,323
  19,382
  20,497
  21,672
  22,909
  24,211
  25,582
  27,023
  28,539
Total liabilities, $m
  10,228
  10,175
  10,409
  10,677
  10,977
  11,310
  11,675
  12,072
  12,503
  12,966
  13,464
  13,996
  14,564
  15,169
  15,812
  16,494
  17,217
  17,982
  18,791
  19,646
  20,549
  21,501
  22,506
  23,565
  24,680
  25,855
  27,092
  28,394
  29,765
  31,206
  32,722
Total equity, $m
  5,271
  5,359
  5,483
  5,624
  5,782
  5,957
  6,149
  6,359
  6,585
  6,830
  7,092
  7,372
  7,671
  7,990
  8,329
  8,688
  9,069
  9,472
  9,898
  10,348
  10,823
  11,325
  11,854
  12,412
  13,000
  13,618
  14,270
  14,956
  15,678
  16,437
  17,235
Total liabilities and equity, $m
  15,499
  15,534
  15,892
  16,301
  16,759
  17,267
  17,824
  18,431
  19,088
  19,796
  20,556
  21,368
  22,235
  23,159
  24,141
  25,182
  26,286
  27,454
  28,689
  29,994
  31,372
  32,826
  34,360
  35,977
  37,680
  39,473
  41,362
  43,350
  45,443
  47,643
  49,957
Debt-to-equity ratio
  1.147
  1.120
  1.140
  1.150
  1.180
  1.200
  1.220
  1.240
  1.260
  1.290
  1.310
  1.330
  1.350
  1.380
  1.400
  1.420
  1.440
  1.460
  1.480
  1.490
  1.510
  1.530
  1.550
  1.560
  1.580
  1.590
  1.610
  1.620
  1.630
  1.640
  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
  211
  217
  228
  241
  259
  280
  304
  332
  364
  399
  708
  751
  798
  850
  905
  965
  1,030
  1,099
  1,174
  1,254
  1,340
  1,431
  1,529
  1,633
  1,743
  1,861
  1,987
  2,120
  2,261
  2,411
Depreciation, amort., depletion, $m
  835
  996
  1,010
  1,027
  1,045
  1,066
  1,088
  1,113
  1,139
  1,168
  1,198
  860
  895
  933
  972
  1,014
  1,058
  1,105
  1,155
  1,208
  1,263
  1,322
  1,384
  1,449
  1,517
  1,589
  1,665
  1,746
  1,830
  1,918
  2,012
Funds from operations, $m
  1,301
  1,207
  1,228
  1,254
  1,287
  1,324
  1,368
  1,417
  1,471
  1,531
  1,597
  1,569
  1,647
  1,731
  1,822
  1,919
  2,023
  2,135
  2,254
  2,382
  2,517
  2,661
  2,815
  2,977
  3,150
  3,333
  3,527
  3,732
  3,949
  4,179
  4,423
Change in working capital, $m
  116
  5
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
Cash from operations, $m
  1,185
  1,202
  1,222
  1,248
  1,279
  1,316
  1,359
  1,407
  1,460
  1,520
  1,585
  1,556
  1,633
  1,716
  1,806
  1,902
  2,006
  2,116
  2,234
  2,361
  2,495
  2,638
  2,790
  2,951
  3,122
  3,304
  3,496
  3,700
  3,916
  4,144
  4,385
Maintenance CAPEX, $m
  0
  -613
  -626
  -640
  -656
  -675
  -695
  -718
  -742
  -769
  -797
  -828
  -860
  -895
  -933
  -972
  -1,014
  -1,058
  -1,105
  -1,155
  -1,208
  -1,263
  -1,322
  -1,384
  -1,449
  -1,517
  -1,589
  -1,665
  -1,746
  -1,830
  -1,918
New CAPEX, $m
  -183
  -203
  -240
  -275
  -308
  -342
  -375
  -408
  -442
  -476
  -511
  -547
  -583
  -621
  -660
  -700
  -742
  -786
  -831
  -878
  -927
  -978
  -1,031
  -1,087
  -1,145
  -1,206
  -1,270
  -1,337
  -1,407
  -1,480
  -1,557
Cash from investing activities, $m
  -108
  -816
  -866
  -915
  -964
  -1,017
  -1,070
  -1,126
  -1,184
  -1,245
  -1,308
  -1,375
  -1,443
  -1,516
  -1,593
  -1,672
  -1,756
  -1,844
  -1,936
  -2,033
  -2,135
  -2,241
  -2,353
  -2,471
  -2,594
  -2,723
  -2,859
  -3,002
  -3,153
  -3,310
  -3,475
Free cash flow, $m
  1,077
  385
  356
  333
  315
  300
  289
  281
  276
  275
  277
  181
  189
  200
  213
  230
  250
  272
  298
  328
  360
  397
  437
  480
  528
  580
  637
  698
  763
  834
  910
Issuance/(repayment) of debt, $m
  -470
  203
  234
  268
  300
  333
  365
  398
  430
  464
  498
  532
  568
  605
  643
  682
  723
  765
  809
  855
  903
  952
  1,004
  1,059
  1,116
  1,175
  1,237
  1,302
  1,370
  1,442
  1,516
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
  203
  234
  268
  300
  333
  365
  398
  430
  464
  498
  532
  568
  605
  643
  682
  723
  765
  809
  855
  903
  952
  1,004
  1,059
  1,116
  1,175
  1,237
  1,302
  1,370
  1,442
  1,516
Total cash flow (excl. dividends), $m
  -85
  588
  590
  601
  615
  633
  654
  678
  707
  739
  774
  714
  757
  805
  856
  912
  972
  1,037
  1,107
  1,183
  1,263
  1,349
  1,441
  1,539
  1,644
  1,755
  1,874
  2,000
  2,134
  2,276
  2,426
Retained Cash Flow (-), $m
  40
  -113
  -123
  -141
  -158
  -175
  -192
  -209
  -227
  -244
  -262
  -280
  -299
  -319
  -339
  -359
  -381
  -403
  -426
  -450
  -475
  -502
  -529
  -558
  -588
  -619
  -652
  -686
  -722
  -759
  -799
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
 
  500
  467
  460
  457
  457
  461
  469
  480
  495
  512
  433
  458
  486
  517
  553
  592
  634
  681
  732
  788
  848
  912
  982
  1,056
  1,136
  1,222
  1,314
  1,412
  1,516
  1,628
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
 
  462
  396
  355
  318
  284
  254
  226
  200
  177
  155
  109
  95
  81
  69
  58
  48
  39
  31
  24
  18
  14
  10
  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 6
Price to Sales 1.1
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 3.3
Price to Free Cash Flow 3.8
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% 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 100.485 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 $3.6 billion.

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COMPANY NEWS

▶ Mallinckrodt Was the S&P 500s Biggest Loser on August 8   [Aug-09-17 10:39AM  Market Realist]
▶ Mallinckrodt beats 2Q profit forecasts   [Aug-08-17 09:51PM  Associated Press]
▶ Multnomah County seeks $250M from Purdue, other opioid manufacturers   [Aug-07-17 05:06PM  American City Business Journals]
▶ Teva and 3D Systems slide while Kellogg and Tesla jump   [Aug-03-17 04:31PM  Associated Press]
▶ McCaskill expands opioid probe to include Mallinckrodt   [Jul-28-17 08:45AM  American City Business Journals]
▶ Mallinckrodt triples its spending on lobbying   [Jul-21-17 08:15AM  American City Business Journals]
▶ The Highs and Lows for Fallen S&P 500 Stocks   [Jul-20-17 03:05PM  The Wall Street Journal]
▶ Valeant Unloads Yet Another Unit   [Jul-17-17 11:30AM  Barrons.com]
▶ ETFs with exposure to Mallinckrodt Plc : July 14, 2017   [Jul-14-17 03:37PM  Capital Cube]
▶ After-hours buzz: AMG, MNK & more   [Jul-12-17 05:40PM  CNBC]
▶ L Brands Was the S&P 500s Top Loser on July 6   [Jul-07-17 11:36AM  Market Realist]
▶ ETFs with exposure to Mallinckrodt Plc : June 19, 2017   [Jun-19-17 03:43PM  Capital Cube]
▶ 3 Biotech Stocks That Could Become M&A Targets   [Jun-17-17 06:42AM  Motley Fool]
▶ Opioid Marketing Under Bipartisan Investigation   [Jun-15-17 11:19AM  TheStreet.com]
▶ Mallinckrodt sued by Tennessee prosecutors   [08:35AM  American City Business Journals]
▶ Is Mallinckrodt in Talks to Be Sold?   [Jun-13-17 04:01PM  Motley Fool]
▶ Stocks That Fell to 3-Year Lows in the Week of June 9   [Jun-11-17 01:05PM  GuruFocus.com]
▶ What Happened in the Stock Market Today   [Jun-05-17 04:57PM  Motley Fool]
▶ Mallinckrodt considering sale of generic drugs unit: Report   [Jun-01-17 08:50AM  American City Business Journals]
▶ Mallinckrodt Inquires Into Sale of Generic Drug Unit   [May-31-17 01:22PM  TheStreet.com]
▶ After-hours buzz: MNK, ARI, and more   [May-30-17 06:03PM  CNBC]
▶ Mallinckrodt Was the S&P 500s Top Gainer on May 26   [May-29-17 10:38AM  Market Realist]
▶ The Hot Stock: Mallinckrodt Jumps 5.6%   [May-26-17 05:01PM  Barrons.com]
▶ Mallinckrodt & Express Scripts: What Chanos Got Wrong   [May-22-17 09:32AM  Barrons.com]
▶ Short-seller criticizes 'murky alliance' between Mallinckrodt, Express Scripts   [May-19-17 06:50PM  American City Business Journals]
▶ [$$] Jim Chanos Predicts Stock Drop for Mallinckrodt   [May-18-17 07:38PM  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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