Intrinsic value of Teva Pharmaceutical Industries ADR - TEVA

Previous Close

$13.84

  Intrinsic Value

$58.78

stock screener

  Rating & Target

str. buy

+325%

Previous close

$13.84

 
Intrinsic value

$58.78

 
Up/down potential

+325%

 
Rating

str. buy

We calculate the intrinsic value of TEVA 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 13.7

 

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, %
  11.45
  12.90
  12.11
  11.40
  10.76
  10.18
  9.66
  9.20
  8.78
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
Revenue, $m
  21,903
  24,728
  27,723
  30,883
  34,206
  37,689
  41,332
  45,134
  49,096
  53,220
  57,510
  61,970
  66,605
  71,421
  76,426
  81,629
  87,038
  92,664
  98,518
  104,612
  110,959
  117,573
  124,468
  131,659
  139,164
  146,999
  155,183
  163,734
  172,673
  182,020
  191,799
Variable operating expenses, $m
 
  20,916
  22,911
  25,017
  27,231
  29,551
  31,978
  34,511
  37,151
  39,899
  42,757
  41,287
  44,375
  47,584
  50,919
  54,385
  57,989
  61,737
  65,637
  69,697
  73,926
  78,332
  82,926
  87,718
  92,718
  97,938
  103,390
  109,087
  115,043
  121,271
  127,785
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
  20,633
  20,916
  22,911
  25,017
  27,231
  29,551
  31,978
  34,511
  37,151
  39,899
  42,757
  41,287
  44,375
  47,584
  50,919
  54,385
  57,989
  61,737
  65,637
  69,697
  73,926
  78,332
  82,926
  87,718
  92,718
  97,938
  103,390
  109,087
  115,043
  121,271
  127,785
Operating income, $m
  1,270
  3,812
  4,812
  5,866
  6,975
  8,138
  9,354
  10,623
  11,945
  13,322
  14,753
  20,683
  22,229
  23,837
  25,507
  27,244
  29,049
  30,927
  32,881
  34,915
  37,033
  39,240
  41,541
  43,942
  46,446
  49,061
  51,793
  54,647
  57,630
  60,750
  64,013
EBITDA, $m
  2,794
  9,077
  10,176
  11,336
  12,555
  13,834
  15,171
  16,566
  18,021
  19,535
  21,109
  22,746
  24,447
  26,215
  28,052
  29,962
  31,947
  34,013
  36,161
  38,398
  40,728
  43,155
  45,686
  48,326
  51,081
  53,956
  56,960
  60,099
  63,380
  66,811
  70,400
Interest expense (income), $m
  290
  1,194
  1,459
  1,736
  2,028
  2,336
  2,659
  2,996
  3,348
  3,715
  4,097
  4,494
  4,907
  5,336
  5,782
  6,246
  6,728
  7,229
  7,750
  8,292
  8,856
  9,444
  10,056
  10,695
  11,361
  12,056
  12,781
  13,539
  14,331
  15,159
  16,024
Earnings before tax, $m
  824
  2,618
  3,353
  4,131
  4,947
  5,802
  6,695
  7,627
  8,597
  9,606
  10,656
  16,188
  17,322
  18,501
  19,725
  20,998
  22,321
  23,698
  25,131
  26,623
  28,177
  29,796
  31,485
  33,247
  35,086
  37,006
  39,011
  41,108
  43,299
  45,591
  47,989
Tax expense, $m
  521
  707
  905
  1,115
  1,336
  1,566
  1,808
  2,059
  2,321
  2,594
  2,877
  4,371
  4,677
  4,995
  5,326
  5,669
  6,027
  6,399
  6,785
  7,188
  7,608
  8,045
  8,501
  8,977
  9,473
  9,992
  10,533
  11,099
  11,691
  12,310
  12,957
Net income, $m
  329
  1,911
  2,448
  3,015
  3,611
  4,235
  4,887
  5,567
  6,276
  7,013
  7,779
  11,818
  12,645
  13,505
  14,399
  15,328
  16,295
  17,300
  18,346
  19,435
  20,569
  21,751
  22,984
  24,270
  25,613
  27,014
  28,478
  30,009
  31,608
  33,281
  35,032

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,677
  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
  92,890
  103,035
  115,513
  128,680
  142,525
  157,039
  172,216
  188,057
  204,566
  221,751
  239,626
  258,208
  277,519
  297,587
  318,442
  340,119
  362,658
  386,099
  410,491
  435,883
  462,329
  489,886
  518,615
  548,580
  579,850
  612,497
  646,595
  682,225
  719,470
  758,419
  799,162
Adjusted assets (=assets-cash), $m
  91,213
  103,035
  115,513
  128,680
  142,525
  157,039
  172,216
  188,057
  204,566
  221,751
  239,626
  258,208
  277,519
  297,587
  318,442
  340,119
  362,658
  386,099
  410,491
  435,883
  462,329
  489,886
  518,615
  548,580
  579,850
  612,497
  646,595
  682,225
  719,470
  758,419
  799,162
Revenue / Adjusted assets
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
  0.240
Average production assets, $m
  21,890
  24,704
  27,695
  30,852
  34,172
  37,652
  41,291
  45,089
  49,047
  53,167
  57,453
  61,908
  66,538
  71,349
  76,350
  81,547
  86,951
  92,571
  98,419
  104,507
  110,848
  117,455
  124,343
  131,528
  139,025
  146,852
  155,028
  163,570
  172,500
  181,838
  191,607
Working capital, $m
  -1,558
  49
  55
  62
  68
  75
  83
  90
  98
  106
  115
  124
  133
  143
  153
  163
  174
  185
  197
  209
  222
  235
  249
  263
  278
  294
  310
  327
  345
  364
  384
Total debt, $m
  35,798
  41,672
  49,596
  57,957
  66,748
  75,965
  85,602
  95,661
  106,144
  117,057
  128,407
  140,207
  152,470
  165,213
  178,456
  192,221
  206,533
  221,418
  236,907
  253,031
  269,824
  287,322
  305,565
  324,593
  344,450
  365,180
  386,833
  409,458
  433,109
  457,841
  483,713
Total liabilities, $m
  59,553
  65,427
  73,351
  81,712
  90,503
  99,720
  109,357
  119,416
  129,899
  140,812
  152,162
  163,962
  176,225
  188,968
  202,211
  215,976
  230,288
  245,173
  260,662
  276,786
  293,579
  311,077
  329,320
  348,348
  368,205
  388,935
  410,588
  433,213
  456,864
  481,596
  507,468
Total equity, $m
  33,337
  37,608
  42,162
  46,968
  52,022
  57,319
  62,859
  68,641
  74,667
  80,939
  87,463
  94,246
  101,294
  108,619
  116,231
  124,144
  132,370
  140,926
  149,829
  159,097
  168,750
  178,808
  189,294
  200,232
  211,645
  223,561
  236,007
  249,012
  262,607
  276,823
  291,694
Total liabilities and equity, $m
  92,890
  103,035
  115,513
  128,680
  142,525
  157,039
  172,216
  188,057
  204,566
  221,751
  239,625
  258,208
  277,519
  297,587
  318,442
  340,120
  362,658
  386,099
  410,491
  435,883
  462,329
  489,885
  518,614
  548,580
  579,850
  612,496
  646,595
  682,225
  719,471
  758,419
  799,162
Debt-to-equity ratio
  1.074
  1.110
  1.180
  1.230
  1.280
  1.330
  1.360
  1.390
  1.420
  1.450
  1.470
  1.490
  1.510
  1.520
  1.540
  1.550
  1.560
  1.570
  1.580
  1.590
  1.600
  1.610
  1.610
  1.620
  1.630
  1.630
  1.640
  1.640
  1.650
  1.650
  1.660
Adjusted equity ratio
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  329
  1,911
  2,448
  3,015
  3,611
  4,235
  4,887
  5,567
  6,276
  7,013
  7,779
  11,818
  12,645
  13,505
  14,399
  15,328
  16,295
  17,300
  18,346
  19,435
  20,569
  21,751
  22,984
  24,270
  25,613
  27,014
  28,478
  30,009
  31,608
  33,281
  35,032
Depreciation, amort., depletion, $m
  1,524
  5,264
  5,364
  5,469
  5,580
  5,696
  5,817
  5,944
  6,076
  6,213
  6,356
  2,064
  2,218
  2,378
  2,545
  2,718
  2,898
  3,086
  3,281
  3,484
  3,695
  3,915
  4,145
  4,384
  4,634
  4,895
  5,168
  5,452
  5,750
  6,061
  6,387
Funds from operations, $m
  6,444
  7,176
  7,812
  8,485
  9,191
  9,931
  10,705
  11,511
  12,351
  13,226
  14,135
  13,881
  14,863
  15,884
  16,944
  18,047
  19,193
  20,385
  21,626
  22,918
  24,264
  25,667
  27,129
  28,654
  30,247
  31,909
  33,646
  35,461
  37,358
  39,343
  41,419
Change in working capital, $m
  1,219
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Cash from operations, $m
  5,225
  7,170
  7,806
  8,478
  9,185
  9,924
  10,697
  11,504
  12,344
  13,218
  14,127
  13,872
  14,854
  15,874
  16,934
  18,036
  19,182
  20,374
  21,615
  22,906
  24,251
  25,653
  27,115
  28,640
  30,232
  31,894
  33,630
  35,444
  37,340
  39,324
  41,399
Maintenance CAPEX, $m
  0
  -730
  -823
  -923
  -1,028
  -1,139
  -1,255
  -1,376
  -1,503
  -1,635
  -1,772
  -1,915
  -2,064
  -2,218
  -2,378
  -2,545
  -2,718
  -2,898
  -3,086
  -3,281
  -3,484
  -3,695
  -3,915
  -4,145
  -4,384
  -4,634
  -4,895
  -5,168
  -5,452
  -5,750
  -6,061
New CAPEX, $m
  -901
  -2,814
  -2,992
  -3,157
  -3,319
  -3,480
  -3,639
  -3,798
  -3,958
  -4,120
  -4,286
  -4,455
  -4,630
  -4,811
  -5,000
  -5,197
  -5,404
  -5,620
  -5,848
  -6,088
  -6,341
  -6,607
  -6,888
  -7,185
  -7,497
  -7,827
  -8,175
  -8,543
  -8,930
  -9,338
  -9,769
Cash from investing activities, $m
  -35,740
  -3,544
  -3,815
  -4,080
  -4,347
  -4,619
  -4,894
  -5,174
  -5,461
  -5,755
  -6,058
  -6,370
  -6,694
  -7,029
  -7,378
  -7,742
  -8,122
  -8,518
  -8,934
  -9,369
  -9,825
  -10,302
  -10,803
  -11,330
  -11,881
  -12,461
  -13,070
  -13,711
  -14,382
  -15,088
  -15,830
Free cash flow, $m
  -30,515
  3,626
  3,991
  4,398
  4,837
  5,305
  5,803
  6,329
  6,882
  7,462
  8,069
  7,502
  8,160
  8,845
  9,556
  10,294
  11,060
  11,855
  12,681
  13,537
  14,427
  15,351
  16,312
  17,311
  18,350
  19,432
  20,559
  21,734
  22,958
  24,236
  25,569
Issuance/(repayment) of debt, $m
  26,251
  7,551
  7,923
  8,361
  8,791
  9,216
  9,638
  10,059
  10,483
  10,912
  11,350
  11,800
  12,263
  12,743
  13,243
  13,765
  14,312
  14,886
  15,489
  16,124
  16,793
  17,499
  18,243
  19,028
  19,856
  20,730
  21,653
  22,625
  23,651
  24,732
  25,872
Issuance/(repurchase) of shares, $m
  693
  2,360
  2,106
  1,791
  1,442
  1,062
  652
  215
  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  
  26,775
  9,911
  10,029
  10,152
  10,233
  10,278
  10,290
  10,274
  10,483
  10,912
  11,350
  11,800
  12,263
  12,743
  13,243
  13,765
  14,312
  14,886
  15,489
  16,124
  16,793
  17,499
  18,243
  19,028
  19,856
  20,730
  21,653
  22,625
  23,651
  24,732
  25,872
Total cash flow (excl. dividends), $m
  -4,400
  13,537
  14,021
  14,550
  15,070
  15,584
  16,094
  16,603
  17,366
  18,375
  19,419
  19,301
  20,423
  21,588
  22,799
  24,059
  25,372
  26,741
  28,169
  29,661
  31,220
  32,850
  34,555
  36,339
  38,207
  40,163
  42,212
  44,359
  46,609
  48,968
  51,441
Retained Cash Flow (-), $m
  -3,568
  -4,271
  -4,554
  -4,806
  -5,053
  -5,297
  -5,540
  -5,782
  -6,026
  -6,273
  -6,524
  -6,782
  -7,049
  -7,325
  -7,612
  -7,912
  -8,226
  -8,556
  -8,903
  -9,268
  -9,653
  -10,058
  -10,486
  -10,937
  -11,414
  -11,916
  -12,446
  -13,005
  -13,595
  -14,216
  -14,871
Prev. year cash balance distribution, $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 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
 
  9,266
  9,466
  9,744
  10,017
  10,286
  10,554
  10,821
  11,340
  12,102
  12,895
  12,519
  13,374
  14,263
  15,187
  16,147
  17,145
  18,185
  19,266
  20,393
  21,567
  22,792
  24,069
  25,401
  26,793
  28,247
  29,766
  31,354
  33,014
  34,752
  36,570
Discount rate, %
 
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
 
  8,532
  7,963
  7,425
  6,853
  6,257
  5,650
  5,043
  4,547
  4,124
  3,686
  2,960
  2,577
  2,205
  1,852
  1,527
  1,234
  976
  756
  572
  422
  304
  213
  146
  97
  62
  39
  23
  14
  8
  4
Current shareholders' claim on cash, %
  100
  90.8
  84.1
  79.3
  75.9
  73.8
  72.6
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3
  72.3

Teva Pharmaceutical Industries Limited is a pharmaceutical company. The Company is engaged in developing, producing and marketing generic medicines and a portfolio of specialty medicines. The Company operates through two segments: Generic medicines and Specialty medicines. The Company develops, manufactures and sells generic medicines in a range of dosage forms, including tablets, capsules, injectables, inhalants, liquids, ointments and creams. Its specialty medicines business focuses on delivering a range of solutions to patients and providers through medicines, devices and services in various regions and markets around the world. Its specialty medicines business includes its core therapeutic areas of central nervous system (CNS) and respiratory medicines with a focus on asthma and chronic obstructive pulmonary disease. It also has specialty products in oncology, women's health and selected other areas.

FINANCIAL RATIOS  of  Teva Pharmaceutical Industries ADR (TEVA)

Valuation Ratios
P/E Ratio 42.7
Price to Sales 0.6
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 2.7
Price to Free Cash Flow 3.2
Growth Rates
Sales Growth Rate 11.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.7%
Cap. Spend. - 3 Yr. Gr. Rate -2.7%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 97.6%
Total Debt to Equity 107.4%
Interest Coverage 4
Management Effectiveness
Return On Assets 0.6%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 0.6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity 1%
Return On Equity - 3 Yr. Avg. 6.8%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 54.1%
Gross Margin - 3 Yr. Avg. 55.5%
EBITDA Margin 12%
EBITDA Margin - 3 Yr. Avg. 19.6%
Operating Margin 5.8%
Oper. Margin - 3 Yr. Avg. 12.8%
Pre-Tax Margin 3.8%
Pre-Tax Margin - 3 Yr. Avg. 11.2%
Net Profit Margin 1.5%
Net Profit Margin - 3 Yr. Avg. 8.2%
Effective Tax Rate 63.2%
Eff/ Tax Rate - 3 Yr. Avg. 35.5%
Payout Ratio 473.6%

TEVA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TEVA stock intrinsic value calculation we used $21903 million for the last fiscal year's total revenue generated by Teva Pharmaceutical Industries ADR. The default revenue input number comes from 2016 income statement of Teva Pharmaceutical Industries 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 TEVA stock valuation model: a) initial revenue growth rate of 12.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.6%, whose default value for TEVA is calculated based on our internal credit rating of Teva Pharmaceutical Industries 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 Teva Pharmaceutical Industries 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 TEVA stock the variable cost ratio is equal to 86.9%.

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 TEVA 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 Teva Pharmaceutical Industries ADR.

Corporate tax rate of 27% is the nominal tax rate for Teva Pharmaceutical Industries 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 TEVA 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 TEVA are equal to 99.9%.

Life of production assets of 35.2 years is the average useful life of capital assets used in Teva Pharmaceutical Industries 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 TEVA is equal to 0.2%. 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 - $33337 million for Teva Pharmaceutical Industries 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 993.289 million for Teva Pharmaceutical Industries 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 Teva Pharmaceutical Industries ADR at the current share price and the inputted number of shares is $13.7 billion.

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BMY Bristol-Myers 61.32 19.97  str.sell

COMPANY NEWS

▶ John Paulson 13F: Exited Facebook, Took New Stakes In Q3   [Nov-17-17 01:45PM  Investopedia]
▶ GE among IQ100 leaders   [01:28PM  CNBC Videos]
▶ Behind Sanofis 3Q17 Revenue Growth   [Nov-14-17 01:05PM  Market Realist]
▶ Teva: It's Never Too Late to Sell   [11:48AM  Barrons.com]
▶ Short Sellers Back Way Off Major Pharma   [Nov-10-17 11:25AM  24/7 Wall St.]
▶ Teva Will Sink 50% After Fitch Downgrade: HSBC   [Nov-09-17 09:53AM  Investopedia]
▶ Why Teva Pharma Could Fall Another 50%   [Nov-07-17 01:41PM  Barrons.com]
▶ CBS leading the IQ100 index   [01:03PM  CNBC Videos]
▶ Teva Pharma: Junk Rating Adds to Woes   [12:45PM  Barrons.com]
▶ Teva Pharmaceuticals Ratings Cut at Fitch   [08:36AM  TheStreet.com]
▶ Teva Survives Price Cut As Billionaire Reportedly Mulls Stake   [Nov-06-17 05:25PM  Investor's Business Daily]
▶ Will Mylan Crush Teva's Generic Dreams?   [02:27PM  Barrons.com]
▶ [$$] A Rare Bright Spot for Mylan   [12:19PM  The Wall Street Journal]
▶ $675M sale of Plan B One-Step contraceptive complete   [Nov-03-17 03:18PM  American City Business Journals]
▶ IQ100 beating the market, up 28%   [01:19PM  CNBC Videos]
▶ Say It Ain't So: Teva Dividend Must Go?   [01:18PM  Barrons.com]
▶ Teva's Misplaced Chinese Passion   [12:50AM  Bloomberg]
▶ Asia shares muted as investors assess Fed pick, US tax plan   [Nov-02-17 10:47PM  Associated Press]
▶ Why Teva Pharmaceutical Is Crashing Today   [02:06PM  Motley Fool]
▶ Teva Earnings Miss by Record   [11:55AM  Bloomberg]
▶ [$$] Teva Cuts Outlook Again in Perfect Storm of Problems   [10:44AM  The Wall Street Journal]
▶ [$$] Teva's Rebuild Is Going Nowhere   [10:40AM  The Wall Street Journal]
▶ Ouch! Teva Needs An IV, Stat   [10:07AM  Barrons.com]
▶ Another Headache for Teva Shareholders   [11:47AM  The Wall Street Journal]
▶ Mylan Topples As President Named In 'Mind-Blowing' Antitrust Scheme   [Oct-31-17 05:27PM  Investor's Business Daily]
▶ Teva Wins Generic Uceris® Patent Trial   [09:52AM  Business Wire]
▶ 3 Retiree Stocks You'll Want to Buy Now   [06:13AM  Motley Fool]
▶ Gilead Sciences, Inc. (GILD) Stock Isnt Worth It Here   [Oct-29-17 10:30AM  InvestorPlace]
▶ New Mexico sues pharma companies & drug distributors   [Oct-26-17 03:30PM  CNBC Videos]
Financial statements of TEVA
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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