Intrinsic value of Koninklijke Philips ADR - PHG

Previous Close

$37.12

  Intrinsic Value

$20.15

stock screener

  Rating & Target

sell

-46%

  Value-price divergence*

-90%

Previous close

$37.12

 
Intrinsic value

$20.15

 
Up/down potential

-46%

 
Rating

sell

 
Value-price divergence*

-90%

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

We calculate the intrinsic value of PHG 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 34.6

 

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, %
  1.12
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  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
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
Revenue, $m
  25,875
  26,832
  27,860
  28,960
  30,133
  31,383
  32,711
  34,121
  35,615
  37,196
  38,868
  40,636
  42,502
  44,471
  46,547
  48,736
  51,043
  53,472
  56,029
  58,722
  61,555
  64,535
  67,670
  70,967
  74,433
  78,078
  81,909
  85,936
  90,167
  94,614
  99,287
Variable operating expenses, $m
 
  25,751
  26,701
  27,718
  28,803
  29,959
  31,187
  32,491
  33,872
  35,334
  36,881
  37,576
  39,302
  41,122
  43,043
  45,067
  47,199
  49,446
  51,811
  54,300
  56,920
  59,676
  62,575
  65,623
  68,829
  72,199
  75,742
  79,465
  83,378
  87,490
  91,811
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
  23,917
  25,751
  26,701
  27,718
  28,803
  29,959
  31,187
  32,491
  33,872
  35,334
  36,881
  37,576
  39,302
  41,122
  43,043
  45,067
  47,199
  49,446
  51,811
  54,300
  56,920
  59,676
  62,575
  65,623
  68,829
  72,199
  75,742
  79,465
  83,378
  87,490
  91,811
Operating income, $m
  1,958
  1,081
  1,159
  1,241
  1,330
  1,424
  1,524
  1,630
  1,742
  1,862
  1,987
  3,060
  3,200
  3,348
  3,505
  3,670
  3,843
  4,026
  4,219
  4,421
  4,635
  4,859
  5,095
  5,343
  5,604
  5,879
  6,167
  6,470
  6,789
  7,124
  7,476
EBITDA, $m
  3,295
  2,578
  2,677
  2,782
  2,895
  3,015
  3,143
  3,278
  3,422
  3,574
  3,734
  3,904
  4,083
  4,273
  4,472
  4,682
  4,904
  5,137
  5,383
  5,642
  5,914
  6,200
  6,501
  6,818
  7,151
  7,501
  7,870
  8,256
  8,663
  9,090
  9,539
Interest expense (income), $m
  328
  233
  273
  315
  359
  407
  458
  512
  569
  630
  694
  762
  834
  910
  990
  1,075
  1,164
  1,257
  1,356
  1,460
  1,570
  1,685
  1,806
  1,933
  2,068
  2,209
  2,357
  2,512
  2,676
  2,848
  3,029
Earnings before tax, $m
  1,466
  848
  886
  927
  970
  1,017
  1,066
  1,118
  1,173
  1,232
  1,293
  2,297
  2,366
  2,438
  2,515
  2,595
  2,680
  2,769
  2,863
  2,961
  3,065
  3,174
  3,289
  3,410
  3,537
  3,670
  3,811
  3,958
  4,113
  4,276
  4,447
Tax expense, $m
  345
  229
  239
  250
  262
  275
  288
  302
  317
  333
  349
  620
  639
  658
  679
  701
  723
  748
  773
  800
  828
  857
  888
  921
  955
  991
  1,029
  1,069
  1,110
  1,154
  1,201
Net income, $m
  1,528
  619
  647
  677
  708
  742
  778
  816
  856
  899
  944
  1,677
  1,727
  1,780
  1,836
  1,894
  1,956
  2,021
  2,090
  2,162
  2,237
  2,317
  2,401
  2,489
  2,582
  2,679
  2,782
  2,889
  3,002
  3,121
  3,246

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,570
  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
  34,093
  32,683
  33,934
  35,274
  36,703
  38,225
  39,843
  41,560
  43,379
  45,306
  47,343
  49,495
  51,768
  54,167
  56,696
  59,362
  62,171
  65,130
  68,245
  71,524
  74,975
  78,605
  82,424
  86,439
  90,662
  95,101
  99,767
  104,672
  109,826
  115,243
  120,934
Adjusted assets (=assets-cash), $m
  31,523
  32,683
  33,934
  35,274
  36,703
  38,225
  39,843
  41,560
  43,379
  45,306
  47,343
  49,495
  51,768
  54,167
  56,696
  59,362
  62,171
  65,130
  68,245
  71,524
  74,975
  78,605
  82,424
  86,439
  90,662
  95,101
  99,767
  104,672
  109,826
  115,243
  120,934
Revenue / Adjusted assets
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
  0.821
Average production assets, $m
  6,187
  6,413
  6,659
  6,921
  7,202
  7,501
  7,818
  8,155
  8,512
  8,890
  9,290
  9,712
  10,158
  10,629
  11,125
  11,648
  12,199
  12,780
  13,391
  14,034
  14,712
  15,424
  16,173
  16,961
  17,790
  18,661
  19,576
  20,539
  21,550
  22,613
  23,730
Working capital, $m
  3,802
  3,005
  3,120
  3,243
  3,375
  3,515
  3,664
  3,822
  3,989
  4,166
  4,353
  4,551
  4,760
  4,981
  5,213
  5,458
  5,717
  5,989
  6,275
  6,577
  6,894
  7,228
  7,579
  7,948
  8,337
  8,745
  9,174
  9,625
  10,099
  10,597
  11,120
Total debt, $m
  5,917
  4,961
  5,721
  6,534
  7,402
  8,326
  9,308
  10,350
  11,454
  12,624
  13,860
  15,167
  16,546
  18,002
  19,537
  21,156
  22,861
  24,657
  26,548
  28,538
  30,633
  32,836
  35,154
  37,592
  40,155
  42,849
  45,682
  48,659
  51,788
  55,075
  58,530
Total liabilities, $m
  20,794
  19,838
  20,598
  21,411
  22,279
  23,203
  24,185
  25,227
  26,331
  27,501
  28,737
  30,044
  31,423
  32,879
  34,414
  36,033
  37,738
  39,534
  41,425
  43,415
  45,510
  47,713
  50,031
  52,469
  55,032
  57,726
  60,559
  63,536
  66,665
  69,952
  73,407
Total equity, $m
  13,299
  12,844
  13,336
  13,863
  14,424
  15,022
  15,658
  16,333
  17,048
  17,805
  18,606
  19,452
  20,345
  21,287
  22,281
  23,329
  24,433
  25,596
  26,820
  28,109
  29,465
  30,892
  32,393
  33,971
  35,630
  37,375
  39,209
  41,136
  43,162
  45,290
  47,527
Total liabilities and equity, $m
  34,093
  32,682
  33,934
  35,274
  36,703
  38,225
  39,843
  41,560
  43,379
  45,306
  47,343
  49,496
  51,768
  54,166
  56,695
  59,362
  62,171
  65,130
  68,245
  71,524
  74,975
  78,605
  82,424
  86,440
  90,662
  95,101
  99,768
  104,672
  109,827
  115,242
  120,934
Debt-to-equity ratio
  0.445
  0.390
  0.430
  0.470
  0.510
  0.550
  0.590
  0.630
  0.670
  0.710
  0.740
  0.780
  0.810
  0.850
  0.880
  0.910
  0.940
  0.960
  0.990
  1.020
  1.040
  1.060
  1.090
  1.110
  1.130
  1.150
  1.170
  1.180
  1.200
  1.220
  1.230
Adjusted equity ratio
  0.340
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393
  0.393

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,528
  619
  647
  677
  708
  742
  778
  816
  856
  899
  944
  1,677
  1,727
  1,780
  1,836
  1,894
  1,956
  2,021
  2,090
  2,162
  2,237
  2,317
  2,401
  2,489
  2,582
  2,679
  2,782
  2,889
  3,002
  3,121
  3,246
Depreciation, amort., depletion, $m
  1,337
  1,497
  1,518
  1,541
  1,565
  1,591
  1,619
  1,648
  1,679
  1,712
  1,747
  845
  883
  924
  967
  1,013
  1,061
  1,111
  1,164
  1,220
  1,279
  1,341
  1,406
  1,475
  1,547
  1,623
  1,702
  1,786
  1,874
  1,966
  2,063
Funds from operations, $m
  2,009
  2,116
  2,165
  2,217
  2,274
  2,334
  2,397
  2,464
  2,536
  2,611
  2,691
  2,522
  2,610
  2,704
  2,803
  2,907
  3,017
  3,132
  3,254
  3,382
  3,517
  3,658
  3,807
  3,964
  4,129
  4,302
  4,484
  4,675
  4,876
  5,087
  5,309
Change in working capital, $m
  -283
  107
  115
  123
  131
  140
  149
  158
  167
  177
  187
  198
  209
  221
  233
  245
  258
  272
  286
  302
  317
  334
  351
  369
  388
  408
  429
  451
  474
  498
  523
Cash from operations, $m
  2,292
  2,008
  2,050
  2,094
  2,142
  2,194
  2,248
  2,307
  2,368
  2,434
  2,504
  2,324
  2,401
  2,484
  2,570
  2,662
  2,759
  2,860
  2,968
  3,081
  3,199
  3,325
  3,456
  3,595
  3,741
  3,894
  4,055
  4,224
  4,402
  4,589
  4,786
Maintenance CAPEX, $m
  0
  -538
  -558
  -579
  -602
  -626
  -652
  -680
  -709
  -740
  -773
  -808
  -845
  -883
  -924
  -967
  -1,013
  -1,061
  -1,111
  -1,164
  -1,220
  -1,279
  -1,341
  -1,406
  -1,475
  -1,547
  -1,623
  -1,702
  -1,786
  -1,874
  -1,966
New CAPEX, $m
  -917
  -226
  -246
  -263
  -280
  -299
  -317
  -337
  -357
  -378
  -400
  -422
  -446
  -471
  -496
  -523
  -551
  -581
  -611
  -643
  -677
  -712
  -749
  -788
  -829
  -871
  -916
  -962
  -1,011
  -1,063
  -1,117
Cash from investing activities, $m
  -1,232
  -764
  -804
  -842
  -882
  -925
  -969
  -1,017
  -1,066
  -1,118
  -1,173
  -1,230
  -1,291
  -1,354
  -1,420
  -1,490
  -1,564
  -1,642
  -1,722
  -1,807
  -1,897
  -1,991
  -2,090
  -2,194
  -2,304
  -2,418
  -2,539
  -2,664
  -2,797
  -2,937
  -3,083
Free cash flow, $m
  1,060
  1,244
  1,246
  1,252
  1,260
  1,269
  1,279
  1,290
  1,302
  1,316
  1,331
  1,093
  1,111
  1,130
  1,150
  1,172
  1,195
  1,219
  1,245
  1,273
  1,302
  1,333
  1,366
  1,401
  1,437
  1,476
  1,517
  1,560
  1,605
  1,653
  1,703
Issuance/(repayment) of debt, $m
  -398
  717
  760
  813
  868
  924
  982
  1,042
  1,104
  1,169
  1,237
  1,307
  1,380
  1,456
  1,535
  1,618
  1,705
  1,796
  1,891
  1,990
  2,095
  2,204
  2,318
  2,438
  2,563
  2,695
  2,832
  2,977
  3,129
  3,288
  3,455
Issuance/(repurchase) of shares, $m
  -555
  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  
  -95
  717
  760
  813
  868
  924
  982
  1,042
  1,104
  1,169
  1,237
  1,307
  1,380
  1,456
  1,535
  1,618
  1,705
  1,796
  1,891
  1,990
  2,095
  2,204
  2,318
  2,438
  2,563
  2,695
  2,832
  2,977
  3,129
  3,288
  3,455
Total cash flow (excl. dividends), $m
  947
  1,961
  2,006
  2,065
  2,128
  2,193
  2,261
  2,332
  2,407
  2,485
  2,567
  2,400
  2,491
  2,586
  2,685
  2,790
  2,900
  3,015
  3,136
  3,263
  3,397
  3,537
  3,684
  3,838
  4,000
  4,170
  4,349
  4,537
  4,734
  4,941
  5,158
Retained Cash Flow (-), $m
  -991
  -442
  -492
  -526
  -562
  -598
  -636
  -675
  -715
  -757
  -801
  -846
  -893
  -943
  -994
  -1,048
  -1,104
  -1,163
  -1,224
  -1,289
  -1,356
  -1,427
  -1,501
  -1,578
  -1,659
  -1,745
  -1,834
  -1,927
  -2,026
  -2,129
  -2,237
Prev. year cash balance distribution, $m
 
  897
  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
 
  2,416
  1,514
  1,539
  1,566
  1,594
  1,625
  1,657
  1,692
  1,728
  1,767
  1,554
  1,597
  1,643
  1,691
  1,742
  1,796
  1,852
  1,912
  1,974
  2,040
  2,110
  2,183
  2,260
  2,341
  2,426
  2,515
  2,609
  2,708
  2,812
  2,921
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
 
  2,316
  1,386
  1,339
  1,289
  1,236
  1,179
  1,120
  1,057
  993
  926
  738
  682
  625
  568
  511
  456
  403
  352
  304
  259
  218
  181
  148
  119
  94
  73
  56
  42
  31
  22
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

Koninklijke Philips N.V. operates as a health technology company worldwide. It offers diagnostic imaging solutions, magnetic resonance imaging, computed tomography, and diagnostic X-ray; advanced molecular imaging; integrated clinical solutions; and image-guided therapy solutions and therapy devices. The company also provides enterprise-wide patient monitoring solutions for clinical information at the patientÂ’s bedside; patient analytics and monitoring, and clinical decision support systems; therapeutic care products; respiratory monitoring devices; patient monitoring and therapeutic care consumables; and customer services. In addition, it offers advanced healthcare IT, clinical, and visualization and quantification informatics for radiology, cardiology, oncology, and neurology; picture archiving and communication systems, and integrated electronic medical record systems; and consulting, education, clinical and business performance improvement, program management, and system integration services. Further, the company provides mother and child care products, oral healthcare, and pain relief products; male grooming and beauty products; and kitchen appliances, coffee, garment care, and floor care products; and sleep, respiratory care, and respiratory drug delivery products. Additionally, it is involved in the development, manufacture, and application of various lighting products, systems, and services, including LED products, lamps, luminaires, electronics and controls, software, light sources, and modules for street lighting, retail, offices, homes, shops, schools, hotels, factories, hospitals, public spaces, and sports arenas, as well as for entertainment, horticulture, and water purification. The company was formerly known as Koninklijke Philips Electronics N.V. and changed its name to Koninklijke Philips N.V. in May 2013. Koninklijke Philips N.V. was founded in 1891 and is headquartered in Amsterdam, the Netherlands.

FINANCIAL RATIOS  of  Koninklijke Philips ADR (PHG)

Valuation Ratios
P/E Ratio 22.4
Price to Sales 1.3
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 14.9
Price to Free Cash Flow 24.9
Growth Rates
Sales Growth Rate 1.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.2%
Cap. Spend. - 3 Yr. Gr. Rate 0.3%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 31.9%
Total Debt to Equity 44.5%
Interest Coverage 5
Management Effectiveness
Return On Assets 5.3%
Ret/ On Assets - 3 Yr. Avg. 3.4%
Return On Total Capital 8.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5%
Return On Equity 11.9%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 43.3%
Gross Margin - 3 Yr. Avg. 40.8%
EBITDA Margin 12.1%
EBITDA Margin - 3 Yr. Avg. 9.5%
Operating Margin 7.6%
Oper. Margin - 3 Yr. Avg. 4.6%
Pre-Tax Margin 5.7%
Pre-Tax Margin - 3 Yr. Avg. 3%
Net Profit Margin 5.9%
Net Profit Margin - 3 Yr. Avg. 3.5%
Effective Tax Rate 23.5%
Eff/ Tax Rate - 3 Yr. Avg. 25.3%
Payout Ratio 22.8%

PHG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PHG stock intrinsic value calculation we used $25875 million for the last fiscal year's total revenue generated by Koninklijke Philips ADR. The default revenue input number comes from 2016 income statement of Koninklijke Philips 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 PHG stock valuation model: a) initial revenue growth rate of 3.7% 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 PHG is calculated based on our internal credit rating of Koninklijke Philips 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 Koninklijke Philips 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 PHG stock the variable cost ratio is equal to 96.1%.

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 PHG 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 5.5% for Koninklijke Philips ADR.

Corporate tax rate of 27% is the nominal tax rate for Koninklijke Philips 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 PHG 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 PHG are equal to 23.9%.

Life of production assets of 11.5 years is the average useful life of capital assets used in Koninklijke Philips 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 PHG is equal to 11.2%. 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 - $13299 million for Koninklijke Philips 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 931.685 million for Koninklijke Philips 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 Koninklijke Philips ADR at the current share price and the inputted number of shares is $34.6 billion.

RELATED COMPANIES Price Int.Val. Rating
GE General Electr 24.55 16.08  sell
HOLX Hologic 37.42 16.08  str.sell
OSIS OSI Systems 78.43 169.93  str.buy

COMPANY NEWS

▶ ETFs with exposure to Royal Philips NV : August 8, 2017   [Aug-08-17 05:01PM  Capital Cube]
▶ Inside General Electrics 2Q17 Energy Connections Revenue   [Jul-28-17 07:36AM  Market Realist]
▶ Philips posts 2Q profit   [Jul-24-17 09:58PM  Associated Press]
▶ Philips: Diagnostics Are Positive   [01:48PM  TheStreet.com]
▶ Story Stocks from Briefing.com   [09:48AM  Briefing.com]
▶ Philips posts 2Q profit   [05:02AM  Associated Press]
▶ [$$] Deal Close Announcements: July 3-7   [Jul-07-17 06:53PM  The Wall Street Journal]
▶ Could Philips' Rivals Stage A Coup For Spectranetics?   [Jun-28-17 04:05PM  Investor's Business Daily]
▶ Stocks rebound after Tuesday's tech meltdown   [09:18AM  Yahoo Finance]
▶ Philips to buy Colorado medical device maker for $2.2 billion   [08:45AM  American City Business Journals]
▶ Stocks Higher As Facebook, 4 Others Reach New Buy Zones   [Jun-19-17 01:31PM  Investor's Business Daily]
▶ Europe's Central Bank Is the World's Most Important   [Jun-07-17 05:00AM  Bloomberg]
▶ Toll Bros. Earnings Top On 'Affordable' Luxury Homes, But Builder Stocks Fall   [May-23-17 04:05PM  Investor's Business Daily]
▶ RespirTech to be sold to health care technology giant Philips   [May-22-17 01:56PM  American City Business Journals]
▶ ETFs with exposure to Royal Philips NV : May 8, 2017   [May-08-17 05:05PM  Capital Cube]
▶ ETFs with exposure to Royal Philips NV : April 28, 2017   [Apr-28-17 04:10PM  Capital Cube]
▶ Philips Pumps Up Profitability   [Apr-26-17 07:00AM  Morningstar]
▶ Story Stocks from Briefing.com   [09:53AM  Briefing.com]
▶ Philips posts 1Q profit   [05:12AM  Associated Press]
▶ Expect more innovation: Philips CEO   [01:16AM  CNBC Videos]
▶ /C O R R E C T I O N -- Royal Philips/   [Apr-21-17 10:48AM  PR Newswire]
▶ An Assessment of Royal Philips   [Apr-17-17 01:53PM  GuruFocus.com]
▶ Corrections & Amplifications   [Apr-10-17 12:09AM  The Wall Street Journal]
▶ Corrections & Amplifications for edition of Monday, April 10   [Apr-09-17 06:47PM  The Wall Street Journal]
Stock chart of PHG Financial statements of PHG
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

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

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