Intrinsic value of Sanofi ADR - SNY

Previous Close

$44.60

  Intrinsic Value

$40.06

stock screener

  Rating & Target

hold

-10%

Previous close

$44.60

 
Intrinsic value

$40.06

 
Up/down potential

-10%

 
Rating

hold

We calculate the intrinsic value of SNY 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -0.44
  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
  36,632
  37,365
  38,224
  39,206
  40,309
  41,531
  42,872
  44,332
  45,913
  47,615
  49,443
  51,398
  53,484
  55,705
  58,065
  60,570
  63,224
  66,034
  69,005
  72,145
  75,460
  78,958
  82,646
  86,535
  90,631
  94,946
  99,489
  104,270
  109,302
  114,595
  120,163
Variable operating expenses, $m
 
  31,301
  31,923
  32,635
  33,433
  34,318
  35,288
  36,345
  37,489
  38,722
  40,045
  37,208
  38,718
  40,326
  42,035
  43,848
  45,770
  47,804
  49,955
  52,228
  54,627
  57,160
  59,830
  62,645
  65,610
  68,734
  72,023
  75,484
  79,127
  82,959
  86,989
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
  30,249
  31,301
  31,923
  32,635
  33,433
  34,318
  35,288
  36,345
  37,489
  38,722
  40,045
  37,208
  38,718
  40,326
  42,035
  43,848
  45,770
  47,804
  49,955
  52,228
  54,627
  57,160
  59,830
  62,645
  65,610
  68,734
  72,023
  75,484
  79,127
  82,959
  86,989
Operating income, $m
  6,382
  6,063
  6,301
  6,572
  6,876
  7,214
  7,584
  7,987
  8,423
  8,893
  9,398
  14,190
  14,765
  15,379
  16,030
  16,722
  17,455
  18,230
  19,051
  19,917
  20,832
  21,798
  22,816
  23,890
  25,021
  26,212
  27,466
  28,786
  30,175
  31,637
  33,174
EBITDA, $m
  9,866
  11,557
  11,823
  12,127
  12,468
  12,846
  13,260
  13,712
  14,201
  14,727
  15,293
  15,897
  16,542
  17,229
  17,960
  18,734
  19,555
  20,424
  21,343
  22,314
  23,340
  24,422
  25,562
  26,765
  28,032
  29,367
  30,772
  32,251
  33,807
  35,444
  37,166
Interest expense (income), $m
  423
  621
  655
  695
  740
  790
  846
  907
  974
  1,047
  1,124
  1,208
  1,297
  1,393
  1,494
  1,602
  1,717
  1,838
  1,967
  2,103
  2,247
  2,398
  2,558
  2,727
  2,905
  3,092
  3,290
  3,497
  3,716
  3,946
  4,189
Earnings before tax, $m
  5,993
  5,442
  5,645
  5,877
  6,137
  6,424
  6,738
  7,080
  7,449
  7,847
  8,273
  12,982
  13,468
  13,986
  14,536
  15,119
  15,738
  16,392
  17,084
  17,814
  18,586
  19,400
  20,258
  21,163
  22,116
  23,120
  24,177
  25,289
  26,459
  27,690
  28,985
Tax expense, $m
  1,400
  1,469
  1,524
  1,587
  1,657
  1,734
  1,819
  1,911
  2,011
  2,119
  2,234
  3,505
  3,636
  3,776
  3,925
  4,082
  4,249
  4,426
  4,613
  4,810
  5,018
  5,238
  5,470
  5,714
  5,971
  6,242
  6,528
  6,828
  7,144
  7,476
  7,826
Net income, $m
  4,970
  3,973
  4,121
  4,290
  4,480
  4,689
  4,919
  5,168
  5,438
  5,728
  6,040
  9,477
  9,832
  10,210
  10,611
  11,037
  11,488
  11,966
  12,471
  13,004
  13,568
  14,162
  14,789
  15,449
  16,145
  16,877
  17,649
  18,461
  19,315
  20,214
  21,159

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10,875
  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
  110,473
  101,534
  103,870
  106,539
  109,536
  112,857
  116,500
  120,468
  124,763
  129,390
  134,355
  139,668
  145,336
  151,372
  157,786
  164,592
  171,805
  179,441
  187,515
  196,046
  205,054
  214,559
  224,583
  235,148
  246,280
  258,005
  270,350
  283,343
  297,016
  311,400
  326,531
Adjusted assets (=assets-cash), $m
  99,598
  101,534
  103,870
  106,539
  109,536
  112,857
  116,500
  120,468
  124,763
  129,390
  134,355
  139,668
  145,336
  151,372
  157,786
  164,592
  171,805
  179,441
  187,515
  196,046
  205,054
  214,559
  224,583
  235,148
  246,280
  258,005
  270,350
  283,343
  297,016
  311,400
  326,531
Revenue / Adjusted assets
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
Average production assets, $m
  22,622
  23,091
  23,622
  24,230
  24,911
  25,666
  26,495
  27,397
  28,374
  29,426
  30,556
  31,764
  33,053
  34,426
  35,884
  37,432
  39,073
  40,809
  42,645
  44,586
  46,634
  48,796
  51,075
  53,478
  56,010
  58,677
  61,484
  64,439
  67,549
  70,820
  74,261
Working capital, $m
  10,821
  1,831
  1,873
  1,921
  1,975
  2,035
  2,101
  2,172
  2,250
  2,333
  2,423
  2,518
  2,621
  2,730
  2,845
  2,968
  3,098
  3,236
  3,381
  3,535
  3,698
  3,869
  4,050
  4,240
  4,441
  4,652
  4,875
  5,109
  5,356
  5,615
  5,888
Total debt, $m
  19,619
  18,728
  19,851
  21,135
  22,577
  24,174
  25,927
  27,835
  29,901
  32,127
  34,515
  37,070
  39,797
  42,700
  45,785
  49,059
  52,528
  56,201
  60,085
  64,188
  68,521
  73,093
  77,914
  82,996
  88,351
  93,990
  99,928
  106,178
  112,755
  119,674
  126,951
Total liabilities, $m
  49,729
  48,838
  49,961
  51,245
  52,687
  54,284
  56,037
  57,945
  60,011
  62,237
  64,625
  67,180
  69,907
  72,810
  75,895
  79,169
  82,638
  86,311
  90,195
  94,298
  98,631
  103,203
  108,024
  113,106
  118,461
  124,100
  130,038
  136,288
  142,865
  149,784
  157,061
Total equity, $m
  60,744
  52,696
  53,908
  55,294
  56,849
  58,573
  60,464
  62,523
  64,752
  67,153
  69,731
  72,488
  75,430
  78,562
  81,891
  85,424
  89,167
  93,130
  97,320
  101,748
  106,423
  111,356
  116,558
  122,042
  127,820
  133,905
  140,311
  147,055
  154,151
  161,617
  169,469
Total liabilities and equity, $m
  110,473
  101,534
  103,869
  106,539
  109,536
  112,857
  116,501
  120,468
  124,763
  129,390
  134,356
  139,668
  145,337
  151,372
  157,786
  164,593
  171,805
  179,441
  187,515
  196,046
  205,054
  214,559
  224,582
  235,148
  246,281
  258,005
  270,349
  283,343
  297,016
  311,401
  326,530
Debt-to-equity ratio
  0.323
  0.360
  0.370
  0.380
  0.400
  0.410
  0.430
  0.450
  0.460
  0.480
  0.490
  0.510
  0.530
  0.540
  0.560
  0.570
  0.590
  0.600
  0.620
  0.630
  0.640
  0.660
  0.670
  0.680
  0.690
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
Adjusted equity ratio
  0.503
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,970
  3,973
  4,121
  4,290
  4,480
  4,689
  4,919
  5,168
  5,438
  5,728
  6,040
  9,477
  9,832
  10,210
  10,611
  11,037
  11,488
  11,966
  12,471
  13,004
  13,568
  14,162
  14,789
  15,449
  16,145
  16,877
  17,649
  18,461
  19,315
  20,214
  21,159
Depreciation, amort., depletion, $m
  3,484
  5,493
  5,522
  5,555
  5,591
  5,632
  5,676
  5,725
  5,777
  5,834
  5,895
  1,708
  1,777
  1,851
  1,929
  2,012
  2,101
  2,194
  2,293
  2,397
  2,507
  2,623
  2,746
  2,875
  3,011
  3,155
  3,306
  3,464
  3,632
  3,808
  3,993
Funds from operations, $m
  8,725
  9,466
  9,643
  9,845
  10,071
  10,321
  10,595
  10,893
  11,215
  11,562
  11,934
  11,184
  11,609
  12,060
  12,540
  13,050
  13,589
  14,160
  14,764
  15,402
  16,075
  16,785
  17,534
  18,324
  19,156
  20,032
  20,954
  21,925
  22,947
  24,021
  25,152
Change in working capital, $m
  437
  36
  42
  48
  54
  60
  66
  72
  77
  83
  90
  96
  102
  109
  116
  123
  130
  138
  146
  154
  162
  171
  181
  191
  201
  211
  223
  234
  247
  259
  273
Cash from operations, $m
  8,288
  9,430
  9,601
  9,797
  10,017
  10,261
  10,529
  10,821
  11,138
  11,479
  11,845
  11,088
  11,506
  11,952
  12,425
  12,927
  13,459
  14,022
  14,618
  15,248
  15,912
  16,614
  17,354
  18,134
  18,955
  19,821
  20,732
  21,691
  22,700
  23,762
  24,879
Maintenance CAPEX, $m
  0
  -1,216
  -1,241
  -1,270
  -1,303
  -1,339
  -1,380
  -1,424
  -1,473
  -1,525
  -1,582
  -1,643
  -1,708
  -1,777
  -1,851
  -1,929
  -2,012
  -2,101
  -2,194
  -2,293
  -2,397
  -2,507
  -2,623
  -2,746
  -2,875
  -3,011
  -3,155
  -3,306
  -3,464
  -3,632
  -3,808
New CAPEX, $m
  -2,198
  -470
  -531
  -607
  -682
  -755
  -829
  -902
  -977
  -1,052
  -1,129
  -1,208
  -1,289
  -1,373
  -1,459
  -1,548
  -1,640
  -1,736
  -1,836
  -1,940
  -2,049
  -2,162
  -2,280
  -2,403
  -2,532
  -2,666
  -2,807
  -2,955
  -3,110
  -3,271
  -3,441
Cash from investing activities, $m
  -2,783
  -1,686
  -1,772
  -1,877
  -1,985
  -2,094
  -2,209
  -2,326
  -2,450
  -2,577
  -2,711
  -2,851
  -2,997
  -3,150
  -3,310
  -3,477
  -3,652
  -3,837
  -4,030
  -4,233
  -4,446
  -4,669
  -4,903
  -5,149
  -5,407
  -5,677
  -5,962
  -6,261
  -6,574
  -6,903
  -7,249
Free cash flow, $m
  5,505
  7,744
  7,828
  7,920
  8,033
  8,167
  8,321
  8,495
  8,688
  8,901
  9,133
  8,238
  8,510
  8,802
  9,115
  9,450
  9,806
  10,185
  10,588
  11,015
  11,467
  11,945
  12,451
  12,985
  13,548
  14,143
  14,770
  15,430
  16,126
  16,859
  17,631
Issuance/(repayment) of debt, $m
  2,420
  972
  1,123
  1,284
  1,442
  1,597
  1,753
  1,908
  2,066
  2,226
  2,388
  2,555
  2,727
  2,903
  3,085
  3,274
  3,469
  3,673
  3,884
  4,104
  4,333
  4,572
  4,821
  5,082
  5,355
  5,640
  5,938
  6,250
  6,577
  6,919
  7,278
Issuance/(repurchase) of shares, $m
  -2,747
  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  
  -244
  972
  1,123
  1,284
  1,442
  1,597
  1,753
  1,908
  2,066
  2,226
  2,388
  2,555
  2,727
  2,903
  3,085
  3,274
  3,469
  3,673
  3,884
  4,104
  4,333
  4,572
  4,821
  5,082
  5,355
  5,640
  5,938
  6,250
  6,577
  6,919
  7,278
Total cash flow (excl. dividends), $m
  5,154
  8,716
  8,952
  9,204
  9,474
  9,764
  10,073
  10,403
  10,754
  11,127
  11,522
  10,793
  11,236
  11,705
  12,200
  12,724
  13,276
  13,858
  14,472
  15,118
  15,800
  16,517
  17,272
  18,067
  18,903
  19,782
  20,707
  21,680
  22,703
  23,778
  24,908
Retained Cash Flow (-), $m
  522
  -964
  -1,212
  -1,385
  -1,555
  -1,723
  -1,891
  -2,059
  -2,229
  -2,401
  -2,577
  -2,757
  -2,942
  -3,132
  -3,329
  -3,533
  -3,744
  -3,963
  -4,191
  -4,428
  -4,675
  -4,933
  -5,202
  -5,484
  -5,778
  -6,085
  -6,407
  -6,744
  -7,096
  -7,466
  -7,852
Prev. year cash balance distribution, $m
 
  9,012
  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
 
  16,764
  7,740
  7,818
  7,919
  8,040
  8,182
  8,344
  8,525
  8,725
  8,945
  8,036
  8,294
  8,573
  8,871
  9,191
  9,532
  9,895
  10,281
  10,691
  11,125
  11,584
  12,070
  12,583
  13,125
  13,697
  14,301
  14,937
  15,607
  16,312
  17,056
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
 
  16,073
  7,085
  6,804
  6,520
  6,232
  5,938
  5,637
  5,328
  5,012
  4,689
  3,816
  3,539
  3,259
  2,978
  2,698
  2,422
  2,153
  1,893
  1,646
  1,414
  1,198
  1,001
  825
  668
  533
  417
  321
  241
  178
  128
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

Sanofi is a healthcare company, focused on patient needs and engaged in the research, development, manufacture and marketing of therapeutic solutions. The Company's segments are Pharmaceuticals, Human Vaccines (Vaccines), and Other. The Pharmaceuticals segment comprises the commercial operations of various franchises, including Speciality Care (Rare Diseases, Multiple Sclerosis, and Oncology), Diabetes and Cardiovascular, Established Prescription Products, Consumer Healthcare and Generics, and research and development, production and marketing activities for all of the Company's pharmaceuticals operations. The Vaccines segment is dedicated to vaccines and includes the commercial operations of the Company's vaccines division Sanofi Pasteur and dedicated research and development, production and marketing activities for the Company's vaccines operations. Its Rare Diseases products include Cerezyme, Cerdelga, Myozyme and Lumizyme, Fabrazyme, and Aldurazyme.

FINANCIAL RATIOS  of  Sanofi ADR (SNY)

Valuation Ratios
P/E Ratio 11.4
Price to Sales 1.5
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 6.8
Price to Free Cash Flow 9.3
Growth Rates
Sales Growth Rate -0.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.9%
Cap. Spend. - 3 Yr. Gr. Rate 9.8%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 29.2%
Total Debt to Equity 32.3%
Interest Coverage 15
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 5.4%
Return On Total Capital 6.2%
Ret/ On T. Cap. - 3 Yr. Avg. 6.1%
Return On Equity 8.1%
Return On Equity - 3 Yr. Avg. 7.8%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 69.2%
Gross Margin - 3 Yr. Avg. 68.6%
EBITDA Margin 27%
EBITDA Margin - 3 Yr. Avg. 30.3%
Operating Margin 17.4%
Oper. Margin - 3 Yr. Avg. 17.4%
Pre-Tax Margin 16.4%
Pre-Tax Margin - 3 Yr. Avg. 16.4%
Net Profit Margin 13.6%
Net Profit Margin - 3 Yr. Avg. 13.2%
Effective Tax Rate 23.4%
Eff/ Tax Rate - 3 Yr. Avg. 19.5%
Payout Ratio 79.8%

SNY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SNY stock intrinsic value calculation we used $36632 million for the last fiscal year's total revenue generated by Sanofi ADR. The default revenue input number comes from 2016 income statement of Sanofi 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 SNY 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 4.3%, whose default value for SNY is calculated based on our internal credit rating of Sanofi 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 Sanofi 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 SNY stock the variable cost ratio is equal to 84%.

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 SNY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Sanofi ADR.

Corporate tax rate of 27% is the nominal tax rate for Sanofi 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 SNY 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 SNY are equal to 61.8%.

Life of production assets of 18.6 years is the average useful life of capital assets used in Sanofi 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 SNY is equal to 4.9%. 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 - $60744 million for Sanofi 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 2519.07 million for Sanofi 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 Sanofi ADR at the current share price and the inputted number of shares is $112.4 billion.

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Financial statements of SNY
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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