Intrinsic value of Novo Nordisk ADR - NVO

Previous Close

$52.51

  Intrinsic Value

$44.17

stock screener

  Rating & Target

hold

-16%

Previous close

$52.51

 
Intrinsic value

$44.17

 
Up/down potential

-16%

 
Rating

hold

We calculate the intrinsic value of NVO 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 103.5

 

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, %
  3.57
  4.30
  4.37
  4.43
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.89
  4.91
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
Revenue, $m
  15,873
  16,556
  17,279
  18,045
  18,855
  19,711
  20,615
  21,569
  22,576
  23,637
  24,754
  25,932
  27,171
  28,476
  29,849
  31,294
  32,813
  34,411
  36,092
  37,859
  39,716
  41,668
  43,719
  45,875
  48,140
  50,520
  53,021
  55,648
  58,408
  61,307
  64,352
Variable operating expenses, $m
 
  8,973
  9,365
  9,780
  10,219
  10,684
  11,174
  11,691
  12,236
  12,811
  13,417
  14,055
  14,727
  15,434
  16,178
  16,961
  17,785
  18,651
  19,562
  20,519
  21,526
  22,584
  23,696
  24,864
  26,092
  27,382
  28,737
  30,161
  31,657
  33,228
  34,879
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
  8,995
  8,973
  9,365
  9,780
  10,219
  10,684
  11,174
  11,691
  12,236
  12,811
  13,417
  14,055
  14,727
  15,434
  16,178
  16,961
  17,785
  18,651
  19,562
  20,519
  21,526
  22,584
  23,696
  24,864
  26,092
  27,382
  28,737
  30,161
  31,657
  33,228
  34,879
Operating income, $m
  6,877
  7,582
  7,914
  8,265
  8,636
  9,028
  9,442
  9,879
  10,340
  10,826
  11,337
  11,877
  12,444
  13,042
  13,671
  14,333
  15,029
  15,760
  16,530
  17,339
  18,190
  19,084
  20,023
  21,011
  22,048
  23,138
  24,284
  25,487
  26,751
  28,079
  29,473
EBITDA, $m
  7,330
  8,055
  8,407
  8,779
  9,174
  9,590
  10,030
  10,494
  10,984
  11,500
  12,044
  12,616
  13,219
  13,854
  14,522
  15,225
  15,965
  16,742
  17,560
  18,419
  19,323
  20,272
  21,271
  22,319
  23,421
  24,579
  25,796
  27,074
  28,417
  29,827
  31,309
Interest expense (income), $m
  9
  0
  30
  63
  98
  134
  173
  214
  257
  302
  350
  400
  454
  509
  568
  630
  696
  764
  836
  912
  992
  1,076
  1,164
  1,256
  1,354
  1,456
  1,563
  1,676
  1,795
  1,919
  2,050
Earnings before tax, $m
  6,787
  7,582
  7,883
  8,202
  8,538
  8,894
  9,269
  9,665
  10,083
  10,523
  10,987
  11,476
  11,991
  12,533
  13,103
  13,702
  14,333
  14,996
  15,694
  16,427
  17,198
  18,008
  18,860
  19,754
  20,695
  21,682
  22,720
  23,811
  24,956
  26,159
  27,423
Tax expense, $m
  1,402
  2,047
  2,129
  2,214
  2,305
  2,401
  2,503
  2,610
  2,722
  2,841
  2,967
  3,099
  3,238
  3,384
  3,538
  3,700
  3,870
  4,049
  4,237
  4,435
  4,643
  4,862
  5,092
  5,334
  5,588
  5,854
  6,134
  6,429
  6,738
  7,063
  7,404
Net income, $m
  5,385
  5,535
  5,755
  5,987
  6,233
  6,492
  6,766
  7,056
  7,361
  7,682
  8,021
  8,378
  8,753
  9,149
  9,565
  10,003
  10,463
  10,947
  11,456
  11,992
  12,554
  13,146
  13,767
  14,421
  15,107
  15,828
  16,586
  17,382
  18,218
  19,096
  20,019

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,939
  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
  13,851
  11,378
  11,876
  12,402
  12,959
  13,547
  14,169
  14,824
  15,516
  16,245
  17,013
  17,822
  18,674
  19,571
  20,515
  21,508
  22,552
  23,650
  24,805
  26,020
  27,296
  28,638
  30,048
  31,529
  33,086
  34,722
  36,441
  38,246
  40,143
  42,135
  44,228
Adjusted assets (=assets-cash), $m
  10,912
  11,378
  11,876
  12,402
  12,959
  13,547
  14,169
  14,824
  15,516
  16,245
  17,013
  17,822
  18,674
  19,571
  20,515
  21,508
  22,552
  23,650
  24,805
  26,020
  27,296
  28,638
  30,048
  31,529
  33,086
  34,722
  36,441
  38,246
  40,143
  42,135
  44,228
Revenue / Adjusted assets
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
Average production assets, $m
  4,302
  4,487
  4,683
  4,890
  5,110
  5,342
  5,587
  5,845
  6,118
  6,405
  6,708
  7,027
  7,363
  7,717
  8,089
  8,481
  8,892
  9,326
  9,781
  10,260
  10,763
  11,292
  11,848
  12,432
  13,046
  13,691
  14,369
  15,081
  15,829
  16,614
  17,439
Working capital, $m
  1,751
  -1,209
  -1,261
  -1,317
  -1,376
  -1,439
  -1,505
  -1,575
  -1,648
  -1,725
  -1,807
  -1,893
  -1,983
  -2,079
  -2,179
  -2,284
  -2,395
  -2,512
  -2,635
  -2,764
  -2,899
  -3,042
  -3,191
  -3,349
  -3,514
  -3,688
  -3,871
  -4,062
  -4,264
  -4,475
  -4,698
Total debt, $m
  33
  313
  650
  1,006
  1,383
  1,782
  2,202
  2,646
  3,114
  3,608
  4,128
  4,676
  5,253
  5,860
  6,499
  7,171
  7,878
  8,621
  9,403
  10,225
  11,089
  11,998
  12,952
  13,955
  15,009
  16,117
  17,280
  18,503
  19,787
  21,136
  22,552
Total liabilities, $m
  7,422
  7,703
  8,040
  8,396
  8,773
  9,172
  9,592
  10,036
  10,504
  10,998
  11,518
  12,066
  12,643
  13,250
  13,889
  14,561
  15,268
  16,011
  16,793
  17,615
  18,479
  19,388
  20,342
  21,345
  22,399
  23,507
  24,670
  25,893
  27,177
  28,526
  29,942
Total equity, $m
  6,428
  3,675
  3,836
  4,006
  4,186
  4,376
  4,576
  4,788
  5,012
  5,247
  5,495
  5,757
  6,032
  6,321
  6,626
  6,947
  7,284
  7,639
  8,012
  8,404
  8,817
  9,250
  9,705
  10,184
  10,687
  11,215
  11,770
  12,353
  12,966
  13,610
  14,286
Total liabilities and equity, $m
  13,850
  11,378
  11,876
  12,402
  12,959
  13,548
  14,168
  14,824
  15,516
  16,245
  17,013
  17,823
  18,675
  19,571
  20,515
  21,508
  22,552
  23,650
  24,805
  26,019
  27,296
  28,638
  30,047
  31,529
  33,086
  34,722
  36,440
  38,246
  40,143
  42,136
  44,228
Debt-to-equity ratio
  0.005
  0.090
  0.170
  0.250
  0.330
  0.410
  0.480
  0.550
  0.620
  0.690
  0.750
  0.810
  0.870
  0.930
  0.980
  1.030
  1.080
  1.130
  1.170
  1.220
  1.260
  1.300
  1.330
  1.370
  1.400
  1.440
  1.470
  1.500
  1.530
  1.550
  1.580
Adjusted equity ratio
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,385
  5,535
  5,755
  5,987
  6,233
  6,492
  6,766
  7,056
  7,361
  7,682
  8,021
  8,378
  8,753
  9,149
  9,565
  10,003
  10,463
  10,947
  11,456
  11,992
  12,554
  13,146
  13,767
  14,421
  15,107
  15,828
  16,586
  17,382
  18,218
  19,096
  20,019
Depreciation, amort., depletion, $m
  453
  472
  493
  515
  538
  562
  588
  615
  644
  674
  706
  740
  775
  812
  851
  893
  936
  982
  1,030
  1,080
  1,133
  1,189
  1,247
  1,309
  1,373
  1,441
  1,512
  1,587
  1,666
  1,749
  1,836
Funds from operations, $m
  5,930
  6,007
  6,248
  6,502
  6,771
  7,055
  7,354
  7,671
  8,005
  8,356
  8,727
  9,117
  9,528
  9,961
  10,416
  10,895
  11,399
  11,929
  12,486
  13,072
  13,687
  14,335
  15,015
  15,729
  16,480
  17,269
  18,098
  18,969
  19,884
  20,845
  21,855
Change in working capital, $m
  -931
  -50
  -53
  -56
  -59
  -62
  -66
  -70
  -73
  -77
  -82
  -86
  -90
  -95
  -100
  -105
  -111
  -117
  -123
  -129
  -136
  -142
  -150
  -157
  -165
  -174
  -183
  -192
  -201
  -212
  -222
Cash from operations, $m
  6,861
  6,057
  6,301
  6,558
  6,830
  7,117
  7,420
  7,741
  8,078
  8,434
  8,809
  9,203
  9,619
  10,056
  10,517
  11,001
  11,510
  12,046
  12,609
  13,201
  13,823
  14,477
  15,164
  15,887
  16,646
  17,443
  18,281
  19,161
  20,086
  21,057
  22,077
Maintenance CAPEX, $m
  0
  -453
  -472
  -493
  -515
  -538
  -562
  -588
  -615
  -644
  -674
  -706
  -740
  -775
  -812
  -851
  -893
  -936
  -982
  -1,030
  -1,080
  -1,133
  -1,189
  -1,247
  -1,309
  -1,373
  -1,441
  -1,512
  -1,587
  -1,666
  -1,749
New CAPEX, $m
  -1,174
  -185
  -196
  -208
  -220
  -232
  -245
  -259
  -273
  -287
  -303
  -319
  -336
  -354
  -372
  -392
  -412
  -433
  -455
  -479
  -503
  -529
  -556
  -584
  -614
  -645
  -678
  -712
  -748
  -786
  -825
Cash from investing activities, $m
  -964
  -638
  -668
  -701
  -735
  -770
  -807
  -847
  -888
  -931
  -977
  -1,025
  -1,076
  -1,129
  -1,184
  -1,243
  -1,305
  -1,369
  -1,437
  -1,509
  -1,583
  -1,662
  -1,745
  -1,831
  -1,923
  -2,018
  -2,119
  -2,224
  -2,335
  -2,452
  -2,574
Free cash flow, $m
  5,897
  5,419
  5,632
  5,857
  6,095
  6,347
  6,613
  6,894
  7,190
  7,502
  7,831
  8,178
  8,543
  8,928
  9,332
  9,758
  10,206
  10,676
  11,172
  11,692
  12,240
  12,815
  13,420
  14,055
  14,723
  15,425
  16,162
  16,937
  17,750
  18,605
  19,503
Issuance/(repayment) of debt, $m
  0
  313
  337
  356
  377
  398
  421
  444
  468
  494
  520
  548
  577
  607
  639
  672
  707
  744
  782
  822
  864
  908
  955
  1,003
  1,054
  1,107
  1,164
  1,222
  1,284
  1,349
  1,417
Issuance/(repurchase) of shares, $m
  -2,138
  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  
  -2,138
  313
  337
  356
  377
  398
  421
  444
  468
  494
  520
  548
  577
  607
  639
  672
  707
  744
  782
  822
  864
  908
  955
  1,003
  1,054
  1,107
  1,164
  1,222
  1,284
  1,349
  1,417
Total cash flow (excl. dividends), $m
  3,755
  5,733
  5,969
  6,214
  6,472
  6,746
  7,034
  7,338
  7,658
  7,996
  8,352
  8,726
  9,120
  9,535
  9,971
  10,430
  10,913
  11,420
  11,954
  12,514
  13,104
  13,723
  14,374
  15,058
  15,777
  16,532
  17,326
  18,159
  19,034
  19,954
  20,920
Retained Cash Flow (-), $m
  242
  -153
  -161
  -170
  -180
  -190
  -201
  -212
  -223
  -235
  -248
  -261
  -275
  -290
  -305
  -321
  -337
  -355
  -373
  -392
  -412
  -433
  -455
  -479
  -503
  -528
  -555
  -583
  -613
  -644
  -676
Prev. year cash balance distribution, $m
 
  2,906
  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
 
  8,485
  5,808
  6,044
  6,293
  6,556
  6,833
  7,126
  7,435
  7,760
  8,103
  8,465
  8,845
  9,245
  9,666
  10,109
  10,575
  11,065
  11,581
  12,122
  12,692
  13,290
  13,919
  14,580
  15,274
  16,004
  16,770
  17,576
  18,422
  19,310
  20,244
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
 
  8,136
  5,317
  5,260
  5,181
  5,081
  4,959
  4,814
  4,647
  4,458
  4,248
  4,020
  3,774
  3,515
  3,245
  2,968
  2,687
  2,408
  2,133
  1,866
  1,613
  1,375
  1,155
  956
  778
  623
  489
  377
  285
  211
  152
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

Novo Nordisk A/S is a global healthcare company engaged in diabetes care. The Company is also engaged in the discovery, development, manufacturing and marketing of pharmaceutical products. The Company operates through two business segments: diabetes and obesity care, and biopharmaceuticals. The Company's diabetes and obesity care segment covers insulin, GLP-1, other protein-related products, such as glucagon, protein-related delivery systems and needles, and oral anti-diabetic drugs. The Company's biopharmaceuticals segment covers the therapy areas of hemophilia care, growth hormone therapy and hormone replacement therapy. The Company also offers Saxenda product to treat obesity. It offers a range of products, including NovoLog/NovoRapid; NovoLog Mix/NovoMix; Prandin/NovoNorm; NovoSeven; Norditropin, and Vagifem. As of December 31, 2016, it marketed its products in over 180 countries. Its regional structure consists of two commercial units: North America and International Operations.

FINANCIAL RATIOS  of  Novo Nordisk ADR (NVO)

Valuation Ratios
P/E Ratio 24.4
Price to Sales 8.3
Price to Book 20.5
Price to Tangible Book
Price to Cash Flow 19.2
Price to Free Cash Flow 23.1
Growth Rates
Sales Growth Rate 3.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 29%
Cap. Spend. - 3 Yr. Gr. Rate 17.8%
Financial Strength
Quick Ratio 89
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0.5%
Interest Coverage 755
Management Effectiveness
Return On Assets 40.1%
Ret/ On Assets - 3 Yr. Avg. 39.2%
Return On Total Capital 81.1%
Ret/ On T. Cap. - 3 Yr. Avg. 74.2%
Return On Equity 82.2%
Return On Equity - 3 Yr. Avg. 75.3%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 84.6%
Gross Margin - 3 Yr. Avg. 84.4%
EBITDA Margin 45.7%
EBITDA Margin - 3 Yr. Avg. 43.7%
Operating Margin 43.3%
Oper. Margin - 3 Yr. Avg. 42.7%
Pre-Tax Margin 42.8%
Pre-Tax Margin - 3 Yr. Avg. 40.5%
Net Profit Margin 33.9%
Net Profit Margin - 3 Yr. Avg. 32%
Effective Tax Rate 20.7%
Eff/ Tax Rate - 3 Yr. Avg. 20.9%
Payout Ratio 62.8%

NVO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NVO stock intrinsic value calculation we used $15873 million for the last fiscal year's total revenue generated by Novo Nordisk ADR. The default revenue input number comes from 2016 income statement of Novo Nordisk ADR. 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 NVO stock valuation model: a) initial revenue growth rate of 4.3% 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 4.3%, whose default value for NVO is calculated based on our internal credit rating of Novo Nordisk ADR, 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 Novo Nordisk ADR.
    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 NVO stock the variable cost ratio is equal to 54.2%.

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 NVO 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 9.7% for Novo Nordisk ADR.

Corporate tax rate of 27% is the nominal tax rate for Novo Nordisk ADR. 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 NVO 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 NVO are equal to 27.1%.

Life of production assets of 9.5 years is the average useful life of capital assets used in Novo Nordisk ADR 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 NVO 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 - $6428 million for Novo Nordisk ADR - 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 1970.52 million for Novo Nordisk ADR 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 Novo Nordisk ADR at the current share price and the inputted number of shares is $103.5 billion.

RELATED COMPANIES Price Int.Val. Rating
TEVA Teva Pharmaceu 18.61 58.78  str.buy
SNY Sanofi ADR 43.17 48.60  hold
LLY Eli Lilly 86.54 98.13  hold

COMPANY NEWS

▶ Behind Sanofis 3Q17 Revenue Growth   [01:05PM  Market Realist]
▶ ETFs with exposure to Novo Nordisk A/S : November 9, 2017   [Nov-09-17 01:00PM  Capital Cube]
▶ Novo Nordisk A/S Slogs Through the Year   [Nov-07-17 04:19PM  Motley Fool]
▶ Allergan Soft On Revenue Though Earnings Top; Novo Nordisk Mixed   [Nov-01-17 04:39PM  Investor's Business Daily]
▶ The 3 Best Diabetes Stocks to Buy in 2018   [Oct-30-17 09:33AM  Motley Fool]
▶ Novo Nordisk, Facing Pricing Pressure, Branches Out Beyond Insulin   [Oct-29-17 10:01PM  The Wall Street Journal]
▶ Novo Nordisk Stock: Performance in 3Q17   [04:36PM  Market Realist]
▶ Why MannKind Corporation Popped Today   [04:56PM  Motley Fool]
▶ A Look at Novo Nordisks Hemophilia Franchise after 2Q17   [Sep-22-17 07:36AM  Market Realist]
▶ How Is Novo Nordisks Victoza Positioned after 2Q17?   [Sep-21-17 10:37AM  Market Realist]
▶ Tresiba Could Boost Novo Nordisks Long-Term Growth   [Sep-20-17 03:37PM  Market Realist]
▶ Teva Rockets After Hiring Former Novo Nordisk Exec As CEO   [Sep-11-17 04:49PM  Investor's Business Daily]
▶ Here's Why Novo Nordisk A/S Gained 12% in August   [Sep-06-17 10:34AM  Motley Fool]
▶ Novo Nordisk's Tresiba Gets Canadian Nod   [Aug-29-17 05:21PM  Zacks]
▶ ETFs with exposure to Novo Nordisk A/S : August 28, 2017   [Aug-28-17 05:57PM  Capital Cube]
▶ 3 High-Yield Pharmaceutical Stocks   [Aug-22-17 06:30AM  Motley Fool]
Financial statements of NVO
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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