Intrinsic value of Sanofi ADR - SNY

Previous Close

$48.24

  Intrinsic Value

$50.74

stock screener

  Rating & Target

hold

+5%

  Value-price divergence*

-53%

Previous close

$48.24

 
Intrinsic value

$50.74

 
Up/down potential

+5%

 
Rating

hold

 
Value-price divergence*

-53%

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

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

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 125.0

 

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
  12.20
  11.48
  10.83
  10.25
  9.72
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
Revenue, $m
  36,632
  41,101
  45,820
  50,783
  55,987
  61,431
  67,115
  73,039
  79,206
  85,621
  92,290
  99,222
  106,425
  113,910
  121,690
  129,779
  138,192
  146,945
  156,057
  165,546
  175,434
  185,741
  196,492
  207,709
  219,420
  231,652
  244,432
  257,790
  271,759
  286,371
  301,661
Variable operating expenses, $m
 
  34,006
  37,422
  41,015
  44,783
  48,724
  52,838
  57,127
  61,591
  66,235
  71,063
  71,829
  77,044
  82,463
  88,095
  93,951
  100,041
  106,378
  112,974
  119,844
  127,001
  134,463
  142,246
  150,366
  158,844
  167,699
  176,950
  186,621
  196,734
  207,312
  218,380
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
  34,006
  37,422
  41,015
  44,783
  48,724
  52,838
  57,127
  61,591
  66,235
  71,063
  71,829
  77,044
  82,463
  88,095
  93,951
  100,041
  106,378
  112,974
  119,844
  127,001
  134,463
  142,246
  150,366
  158,844
  167,699
  176,950
  186,621
  196,734
  207,312
  218,380
Operating income, $m
  6,382
  7,095
  8,398
  9,768
  11,205
  12,708
  14,277
  15,912
  17,615
  19,386
  21,227
  27,392
  29,381
  31,448
  33,595
  35,829
  38,151
  40,568
  43,083
  45,703
  48,433
  51,278
  54,246
  57,343
  60,576
  63,953
  67,481
  71,169
  75,025
  79,059
  83,280
EBITDA, $m
  9,866
  12,713
  14,172
  15,707
  17,317
  19,001
  20,759
  22,591
  24,498
  26,482
  28,545
  30,689
  32,917
  35,232
  37,639
  40,141
  42,743
  45,450
  48,268
  51,203
  54,262
  57,450
  60,775
  64,244
  67,867
  71,650
  75,602
  79,734
  84,055
  88,574
  93,303
Interest expense (income), $m
  423
  621
  826
  1,042
  1,269
  1,507
  1,756
  2,016
  2,287
  2,570
  2,863
  3,168
  3,485
  3,815
  4,157
  4,513
  4,883
  5,268
  5,669
  6,085
  6,519
  6,972
  7,443
  7,935
  8,448
  8,984
  9,544
  10,128
  10,739
  11,378
  12,047
Earnings before tax, $m
  5,993
  6,473
  7,571
  8,725
  9,935
  11,200
  12,520
  13,896
  15,327
  16,816
  18,364
  24,224
  25,896
  27,633
  29,438
  31,315
  33,268
  35,300
  37,415
  39,618
  41,913
  44,306
  46,803
  49,408
  52,128
  54,969
  57,937
  61,041
  64,286
  67,681
  71,234
Tax expense, $m
  1,400
  1,748
  2,044
  2,356
  2,683
  3,024
  3,380
  3,752
  4,138
  4,540
  4,958
  6,541
  6,992
  7,461
  7,948
  8,455
  8,982
  9,531
  10,102
  10,697
  11,317
  11,963
  12,637
  13,340
  14,075
  14,842
  15,643
  16,481
  17,357
  18,274
  19,233
Net income, $m
  4,970
  4,726
  5,527
  6,370
  7,253
  8,176
  9,140
  10,144
  11,189
  12,276
  13,406
  17,684
  18,904
  20,172
  21,490
  22,860
  24,286
  25,769
  27,313
  28,921
  30,597
  32,344
  34,166
  36,068
  38,053
  40,127
  42,294
  44,560
  46,929
  49,407
  52,001

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
  111,688
  124,510
  137,996
  152,139
  166,933
  182,377
  198,474
  215,233
  232,666
  250,789
  269,624
  289,198
  309,538
  330,680
  352,661
  375,522
  399,308
  424,068
  449,855
  476,723
  504,732
  533,945
  564,428
  596,251
  629,488
  664,216
  700,517
  738,476
  778,182
  819,730
Adjusted assets (=assets-cash), $m
  99,598
  111,688
  124,510
  137,996
  152,139
  166,933
  182,377
  198,474
  215,233
  232,666
  250,789
  269,624
  289,198
  309,538
  330,680
  352,661
  375,522
  399,308
  424,068
  449,855
  476,723
  504,732
  533,945
  564,428
  596,251
  629,488
  664,216
  700,517
  738,476
  778,182
  819,730
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
  25,400
  28,316
  31,384
  34,600
  37,965
  41,477
  45,138
  48,949
  52,914
  57,035
  61,319
  65,770
  70,396
  75,205
  80,204
  85,403
  90,812
  96,443
  102,308
  108,418
  114,788
  121,432
  128,364
  135,602
  143,161
  151,059
  159,314
  167,947
  176,977
  186,426
Working capital, $m
  10,821
  2,014
  2,245
  2,488
  2,743
  3,010
  3,289
  3,579
  3,881
  4,195
  4,522
  4,862
  5,215
  5,582
  5,963
  6,359
  6,771
  7,200
  7,647
  8,112
  8,596
  9,101
  9,628
  10,178
  10,752
  11,351
  11,977
  12,632
  13,316
  14,032
  14,781
Total debt, $m
  19,619
  23,612
  29,779
  36,266
  43,069
  50,185
  57,613
  65,356
  73,417
  81,802
  90,519
  99,579
  108,994
  118,778
  128,947
  139,520
  150,516
  161,957
  173,867
  186,270
  199,194
  212,666
  226,717
  241,380
  256,687
  272,674
  289,378
  306,839
  325,097
  344,196
  364,180
Total liabilities, $m
  49,729
  53,722
  59,889
  66,376
  73,179
  80,295
  87,723
  95,466
  103,527
  111,912
  120,629
  129,689
  139,104
  148,888
  159,057
  169,630
  180,626
  192,067
  203,977
  216,380
  229,304
  242,776
  256,827
  271,490
  286,797
  302,784
  319,488
  336,949
  355,207
  374,306
  394,290
Total equity, $m
  60,744
  57,966
  64,620
  71,620
  78,960
  86,638
  94,654
  103,008
  111,706
  120,753
  130,159
  139,935
  150,094
  160,650
  171,623
  183,031
  194,896
  207,241
  220,091
  233,475
  247,419
  261,956
  277,117
  292,938
  309,454
  326,704
  344,728
  363,568
  383,269
  403,876
  425,440
Total liabilities and equity, $m
  110,473
  111,688
  124,509
  137,996
  152,139
  166,933
  182,377
  198,474
  215,233
  232,665
  250,788
  269,624
  289,198
  309,538
  330,680
  352,661
  375,522
  399,308
  424,068
  449,855
  476,723
  504,732
  533,944
  564,428
  596,251
  629,488
  664,216
  700,517
  738,476
  778,182
  819,730
Debt-to-equity ratio
  0.323
  0.410
  0.460
  0.510
  0.550
  0.580
  0.610
  0.630
  0.660
  0.680
  0.700
  0.710
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.810
  0.810
  0.820
  0.820
  0.830
  0.830
  0.840
  0.840
  0.850
  0.850
  0.860
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
  4,726
  5,527
  6,370
  7,253
  8,176
  9,140
  10,144
  11,189
  12,276
  13,406
  17,684
  18,904
  20,172
  21,490
  22,860
  24,286
  25,769
  27,313
  28,921
  30,597
  32,344
  34,166
  36,068
  38,053
  40,127
  42,294
  44,560
  46,929
  49,407
  52,001
Depreciation, amort., depletion, $m
  3,484
  5,618
  5,774
  5,939
  6,112
  6,293
  6,482
  6,679
  6,884
  7,097
  7,318
  3,297
  3,536
  3,785
  4,043
  4,312
  4,592
  4,882
  5,185
  5,500
  5,829
  6,171
  6,529
  6,901
  7,290
  7,697
  8,121
  8,565
  9,029
  9,515
  10,023
Funds from operations, $m
  8,725
  10,343
  11,301
  12,309
  13,365
  14,469
  15,622
  16,823
  18,072
  19,373
  20,724
  20,980
  22,440
  23,957
  25,533
  27,172
  28,877
  30,651
  32,498
  34,421
  36,426
  38,515
  40,695
  42,969
  45,344
  47,824
  50,416
  53,125
  55,958
  58,922
  62,023
Change in working capital, $m
  437
  219
  231
  243
  255
  267
  278
  290
  302
  314
  327
  340
  353
  367
  381
  396
  412
  429
  446
  465
  484
  505
  527
  550
  574
  599
  626
  655
  684
  716
  749
Cash from operations, $m
  8,288
  10,124
  11,070
  12,066
  13,110
  14,202
  15,343
  16,532
  17,770
  19,058
  20,397
  20,641
  22,087
  23,590
  25,152
  26,776
  28,465
  30,222
  32,051
  33,956
  35,941
  38,010
  40,168
  42,419
  44,770
  47,225
  49,790
  52,470
  55,274
  58,206
  61,274
Maintenance CAPEX, $m
  0
  -1,216
  -1,366
  -1,522
  -1,687
  -1,860
  -2,041
  -2,230
  -2,427
  -2,632
  -2,845
  -3,066
  -3,297
  -3,536
  -3,785
  -4,043
  -4,312
  -4,592
  -4,882
  -5,185
  -5,500
  -5,829
  -6,171
  -6,529
  -6,901
  -7,290
  -7,697
  -8,121
  -8,565
  -9,029
  -9,515
New CAPEX, $m
  -2,198
  -2,779
  -2,916
  -3,067
  -3,216
  -3,364
  -3,512
  -3,661
  -3,811
  -3,965
  -4,122
  -4,284
  -4,451
  -4,626
  -4,808
  -4,999
  -5,199
  -5,410
  -5,631
  -5,864
  -6,110
  -6,370
  -6,644
  -6,933
  -7,237
  -7,559
  -7,898
  -8,256
  -8,633
  -9,030
  -9,449
Cash from investing activities, $m
  -2,783
  -3,995
  -4,282
  -4,589
  -4,903
  -5,224
  -5,553
  -5,891
  -6,238
  -6,597
  -6,967
  -7,350
  -7,748
  -8,162
  -8,593
  -9,042
  -9,511
  -10,002
  -10,513
  -11,049
  -11,610
  -12,199
  -12,815
  -13,462
  -14,138
  -14,849
  -15,595
  -16,377
  -17,198
  -18,059
  -18,964
Free cash flow, $m
  5,505
  6,129
  6,789
  7,476
  8,206
  8,978
  9,790
  10,641
  11,532
  12,462
  13,431
  13,291
  14,339
  15,428
  16,559
  17,734
  18,954
  20,221
  21,538
  22,907
  24,330
  25,811
  27,353
  28,958
  30,631
  32,375
  34,195
  36,093
  38,076
  40,146
  42,310
Issuance/(repayment) of debt, $m
  2,420
  5,856
  6,167
  6,487
  6,803
  7,116
  7,429
  7,743
  8,061
  8,385
  8,717
  9,060
  9,415
  9,784
  10,169
  10,573
  10,996
  11,441
  11,910
  12,403
  12,924
  13,472
  14,051
  14,662
  15,307
  15,987
  16,704
  17,461
  18,258
  19,099
  19,985
Issuance/(repurchase) of shares, $m
  -2,747
  1,508
  1,128
  630
  87
  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
  7,364
  7,295
  7,117
  6,890
  7,116
  7,429
  7,743
  8,061
  8,385
  8,717
  9,060
  9,415
  9,784
  10,169
  10,573
  10,996
  11,441
  11,910
  12,403
  12,924
  13,472
  14,051
  14,662
  15,307
  15,987
  16,704
  17,461
  18,258
  19,099
  19,985
Total cash flow (excl. dividends), $m
  5,154
  13,493
  14,083
  14,593
  15,096
  16,094
  17,218
  18,384
  19,593
  20,847
  22,148
  22,351
  23,754
  25,212
  26,728
  28,306
  29,950
  31,662
  33,448
  35,310
  37,254
  39,284
  41,404
  43,621
  45,938
  48,362
  50,899
  53,554
  56,334
  59,245
  62,295
Retained Cash Flow (-), $m
  522
  -6,234
  -6,654
  -7,000
  -7,340
  -7,678
  -8,015
  -8,354
  -8,698
  -9,047
  -9,406
  -9,776
  -10,158
  -10,557
  -10,973
  -11,408
  -11,865
  -12,345
  -12,851
  -13,383
  -13,945
  -14,537
  -15,162
  -15,821
  -16,516
  -17,250
  -18,024
  -18,840
  -19,701
  -20,608
  -21,563
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
 
  16,271
  7,429
  7,594
  7,756
  8,416
  9,203
  10,030
  10,895
  11,800
  12,742
  12,575
  13,595
  14,655
  15,756
  16,898
  18,085
  19,317
  20,597
  21,927
  23,309
  24,747
  26,243
  27,800
  29,422
  31,112
  32,875
  34,714
  36,633
  38,638
  40,731
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
 
  15,600
  6,801
  6,609
  6,386
  6,523
  6,679
  6,776
  6,810
  6,778
  6,680
  5,972
  5,802
  5,572
  5,289
  4,961
  4,596
  4,203
  3,793
  3,376
  2,962
  2,560
  2,177
  1,822
  1,499
  1,210
  959
  745
  567
  422
  307
Current shareholders' claim on cash, %
  100
  98.6
  97.7
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2
  97.2

Sanofi researches, develops, manufactures, and markets various therapeutic solutions. The company operates in three segments: Pharmaceuticals, Vaccines, and Animal Health. It offers Lantus, Apidra, and Insuman that are human insulin analogs; Amaryl, an oral sulfonylurea; Lyxumia, a glucagon-like peptide-1 receptor agonist; Toujeo, an insulin glargine; and Afrezza, an inhaled insulin. The company also provides Praluent, a human monoclonal antibody; and Multaq, a multichannel blocker with anti-arrhythmic properties. In addition, it offers Cerezyme, an enzyme replacement therapy to treat gaucher disease; cerdelga, an oral therapy for Gaucher disease Type 1; Myozyme/Lumizyme for the pompe disease treatment; Fabrazyme for fabry disease treatment; and Aldurazyme to treat mucopolysaccharidosis Type 1, as well as provides Aubagio and Lemtrada for multiple sclerosis. In addition, it provides Jevtana for prostate cancer; Taxotere for breast, prostate, gastric, lungs, and head and neck cancer treatment; Eloxatin for the treatment of stage III colon cancer; Thymoglobulin to treat acute rejection; Mozobil for treating hematologic malignancies; and Zaltrap for oxaliplatin resistant metastatic colorectal cancer. Further, the company offers other prescription drugs, such as Plavix/Iscover for atherothrombosis and acute coronary syndrome; Lovenox/Clexane for the treatment of venous thromboembolism; Aprovel/Avapro/Karvea for hypertension and nephropathy; Renagel/Renvela to treat chronic kidney disease; Allegra/Telfast to treat seasonal allergic rhinitis and uncomplicated hives; Stilnox/Ambien/Myslee for insomnia treatment; and Synvisc/Synvisc-One for the treatment of osteoarthritis pain. Additionally, it offers consumer health care products and generic medicines; and vaccine and animal health products. The company was formerly known as Sanofi-Aventis and changed its name to Sanofi in May 2011. Sanofi was founded in 1973 and is headquartered in Paris, France.

FINANCIAL RATIOS  of  Sanofi ADR (SNY)

Valuation Ratios
P/E Ratio 12.3
Price to Sales 1.7
Price to Book 1
Price to Tangible Book
Price to Cash Flow 7.4
Price to Free Cash Flow 10.1
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 12.2% 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 2591.54 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 $125.0 billion.

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COMPANY NEWS

▶ Top 10 Dividend-Paying Stocks Worldwide   [Aug-22-17 04:04PM  Forbes]
▶ One of the 33 Great Minds of Investing   [Aug-21-17 05:59PM  GuruFocus.com]
▶ A Look at Sanofi Pasteurs Performance in 2Q17   [Aug-18-17 10:37AM  Market Realist]
▶ Sanofis Revenue Growth in 2Q17   [07:37AM  Market Realist]
▶ ETFs with exposure to Sanofi : August 16, 2017   [Aug-16-17 06:41PM  Capital Cube]
▶ A Look at Sanofis Post-2Q17 Valuation   [04:44PM  Market Realist]
▶ Pfizers Important Product Developments in 2Q17   [Aug-15-17 09:06AM  Market Realist]
▶ Where Does Zika Virus Vaccine Research Stand Now?   [Aug-12-17 02:51PM  Benzinga]
▶ Forget Bayer, Buy These 3 Drug Stocks Instead   [Aug-08-17 09:25AM  Zacks]
▶ This Week's Pharma, Energy IPOs   [Aug-07-17 12:32PM  Benzinga]
▶ Why Sanofi Earnings Spooked Regeneron Shares To A 6-Week Low   [Aug-01-17 04:15PM  Investor's Business Daily]
▶ Regeneron: Time to Sell?   [03:08PM  Barrons.com]
▶ Sanofi meets 2Q profit forecasts   [Jul-31-17 11:02PM  Associated Press]
▶ Why Clovis, Regeneron Are Leading A Biotech Deluge Today   [04:11PM  Investor's Business Daily]
▶ Praluent Could Witness Steady Growth in 2017   [03:05PM  Market Realist]
▶ Story Stocks from Briefing.com   [12:22PM  Briefing.com]
▶ [$$] Sanofi Profit Declines, Hurt by Restructuring Costs   [11:11AM  The Wall Street Journal]
▶ Why Regeneron is Slumping   [10:17AM  Barrons.com]
▶ Sanofi's CFO Says Growth in EM Has Been Steady   [03:30AM  Bloomberg Video]
▶ Why Shares of ImmunoGen Inc. Shot Up Today   [Jul-28-17 05:05PM  Motley Fool]
▶ Eli Lilly: The Competition is Just Too Darn Intense!   [Jul-26-17 11:23AM  Barrons.com]
▶ These 2 Drug Giants In Buy Range Just Beat Earnings Views   [Jul-18-17 04:16PM  Investor's Business Daily]
▶ Emergent acquires Sanofi smallpox vaccine in deal worth up to $125 million   [Jul-14-17 01:50PM  American City Business Journals]
▶ How Sanofi Stock Performed in 2Q17   [Jul-10-17 02:35PM  Market Realist]
▶ Why Big Pharma Is Targeting China's Deadliest Diseases   [Jul-05-17 07:00AM  The Wall Street Journal]
▶ 'Despicable Me 3' Tops Weekend Box Office   [09:12AM  TheStreet.com]
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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