Intrinsic value of Teva Pharmaceutical Industries ADR - TEVA

Previous Close

$21.48

  Intrinsic Value

$42.97

stock screener

  Rating & Target

str. buy

+100%

Previous close

$21.48

 
Intrinsic value

$42.97

 
Up/down potential

+100%

 
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

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, %
  11.45
  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
  21,903
  22,341
  22,855
  23,442
  24,102
  24,832
  25,634
  26,507
  27,452
  28,470
  29,563
  30,732
  31,979
  33,307
  34,718
  36,216
  37,803
  39,483
  41,260
  43,137
  45,119
  47,210
  49,416
  51,741
  54,190
  56,770
  59,486
  62,345
  65,354
  68,519
  71,848
Variable operating expenses, $m
 
  19,326
  19,668
  20,059
  20,499
  20,985
  21,520
  22,101
  22,731
  23,409
  24,137
  20,475
  21,306
  22,191
  23,131
  24,129
  25,186
  26,306
  27,489
  28,740
  30,060
  31,454
  32,923
  34,472
  36,104
  37,823
  39,633
  41,537
  43,542
  45,650
  47,868
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
  19,326
  19,668
  20,059
  20,499
  20,985
  21,520
  22,101
  22,731
  23,409
  24,137
  20,475
  21,306
  22,191
  23,131
  24,129
  25,186
  26,306
  27,489
  28,740
  30,060
  31,454
  32,923
  34,472
  36,104
  37,823
  39,633
  41,537
  43,542
  45,650
  47,868
Operating income, $m
  1,270
  3,015
  3,187
  3,383
  3,603
  3,847
  4,115
  4,406
  4,721
  5,061
  5,426
  10,257
  10,673
  11,116
  11,587
  12,087
  12,617
  13,178
  13,771
  14,397
  15,059
  15,757
  16,493
  17,269
  18,086
  18,947
  19,854
  20,808
  21,812
  22,868
  23,979
EBITDA, $m
  2,794
  8,200
  8,389
  8,605
  8,847
  9,115
  9,409
  9,730
  10,076
  10,450
  10,851
  11,280
  11,738
  12,225
  12,743
  13,293
  13,876
  14,492
  15,145
  15,834
  16,561
  17,329
  18,138
  18,992
  19,891
  20,838
  21,835
  22,884
  23,988
  25,150
  26,372
Interest expense (income), $m
  290
  1,218
  1,259
  1,307
  1,362
  1,424
  1,493
  1,568
  1,650
  1,738
  1,834
  1,936
  2,046
  2,163
  2,288
  2,420
  2,561
  2,710
  2,867
  3,034
  3,210
  3,396
  3,592
  3,799
  4,017
  4,247
  4,489
  4,744
  5,012
  5,294
  5,591
Earnings before tax, $m
  824
  1,797
  1,928
  2,076
  2,241
  2,423
  2,622
  2,838
  3,072
  3,323
  3,592
  8,320
  8,627
  8,953
  9,300
  9,667
  10,056
  10,468
  10,903
  11,363
  11,849
  12,361
  12,901
  13,470
  14,069
  14,700
  15,365
  16,064
  16,800
  17,574
  18,388
Tax expense, $m
  521
  485
  521
  561
  605
  654
  708
  766
  829
  897
  970
  2,247
  2,329
  2,417
  2,511
  2,610
  2,715
  2,826
  2,944
  3,068
  3,199
  3,337
  3,483
  3,637
  3,799
  3,969
  4,148
  4,337
  4,536
  4,745
  4,965
Net income, $m
  329
  1,312
  1,408
  1,515
  1,636
  1,769
  1,914
  2,072
  2,242
  2,426
  2,622
  6,074
  6,298
  6,536
  6,789
  7,057
  7,341
  7,642
  7,959
  8,295
  8,649
  9,023
  9,417
  9,833
  10,270
  10,731
  11,216
  11,727
  12,264
  12,829
  13,423

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  998
  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
  93,057
  93,870
  96,029
  98,497
  101,268
  104,338
  107,706
  111,375
  115,345
  119,623
  124,214
  129,125
  134,366
  139,945
  145,876
  152,168
  158,837
  165,896
  173,360
  181,248
  189,576
  198,363
  207,630
  217,398
  227,690
  238,530
  249,942
  261,955
  274,596
  287,894
  301,882
Adjusted assets (=assets-cash), $m
  92,059
  93,870
  96,029
  98,497
  101,268
  104,338
  107,706
  111,375
  115,345
  119,623
  124,214
  129,125
  134,366
  139,945
  145,876
  152,168
  158,837
  165,896
  173,360
  181,248
  189,576
  198,363
  207,630
  217,398
  227,690
  238,530
  249,942
  261,955
  274,596
  287,894
  301,882
Revenue / Adjusted assets
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
Average production assets, $m
  21,890
  22,319
  22,832
  23,419
  24,078
  24,808
  25,608
  26,481
  27,425
  28,442
  29,533
  30,701
  31,947
  33,274
  34,684
  36,180
  37,765
  39,444
  41,218
  43,094
  45,074
  47,163
  49,367
  51,689
  54,136
  56,713
  59,427
  62,283
  65,288
  68,450
  71,776
Working capital, $m
  -1,260
  1,028
  1,051
  1,078
  1,109
  1,142
  1,179
  1,219
  1,263
  1,310
  1,360
  1,414
  1,471
  1,532
  1,597
  1,666
  1,739
  1,816
  1,898
  1,984
  2,075
  2,172
  2,273
  2,380
  2,493
  2,611
  2,736
  2,868
  3,006
  3,152
  3,305
Total debt, $m
  35,798
  35,967
  37,345
  38,919
  40,687
  42,646
  44,795
  47,135
  49,668
  52,397
  55,326
  58,460
  61,803
  65,363
  69,147
  73,161
  77,416
  81,919
  86,682
  91,714
  97,027
  102,634
  108,546
  114,778
  121,344
  128,260
  135,541
  143,205
  151,270
  159,755
  168,679
Total liabilities, $m
  59,720
  59,889
  61,267
  62,841
  64,609
  66,568
  68,717
  71,057
  73,590
  76,319
  79,248
  82,382
  85,725
  89,285
  93,069
  97,083
  101,338
  105,841
  110,604
  115,636
  120,949
  126,556
  132,468
  138,700
  145,266
  152,182
  159,463
  167,127
  175,192
  183,677
  192,601
Total equity, $m
  33,337
  33,981
  34,763
  35,656
  36,659
  37,770
  38,990
  40,318
  41,755
  43,303
  44,965
  46,743
  48,640
  50,660
  52,807
  55,085
  57,499
  60,054
  62,756
  65,612
  68,626
  71,807
  75,162
  78,698
  82,424
  86,348
  90,479
  94,828
  99,404
  104,218
  109,281
Total liabilities and equity, $m
  93,057
  93,870
  96,030
  98,497
  101,268
  104,338
  107,707
  111,375
  115,345
  119,622
  124,213
  129,125
  134,365
  139,945
  145,876
  152,168
  158,837
  165,895
  173,360
  181,248
  189,575
  198,363
  207,630
  217,398
  227,690
  238,530
  249,942
  261,955
  274,596
  287,895
  301,882
Debt-to-equity ratio
  1.074
  1.060
  1.070
  1.090
  1.110
  1.130
  1.150
  1.170
  1.190
  1.210
  1.230
  1.250
  1.270
  1.290
  1.310
  1.330
  1.350
  1.360
  1.380
  1.400
  1.410
  1.430
  1.440
  1.460
  1.470
  1.490
  1.500
  1.510
  1.520
  1.530
  1.540
Adjusted equity ratio
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  329
  1,312
  1,408
  1,515
  1,636
  1,769
  1,914
  2,072
  2,242
  2,426
  2,622
  6,074
  6,298
  6,536
  6,789
  7,057
  7,341
  7,642
  7,959
  8,295
  8,649
  9,023
  9,417
  9,833
  10,270
  10,731
  11,216
  11,727
  12,264
  12,829
  13,423
Depreciation, amort., depletion, $m
  1,524
  5,185
  5,202
  5,222
  5,243
  5,268
  5,295
  5,324
  5,355
  5,389
  5,425
  1,023
  1,065
  1,109
  1,156
  1,206
  1,259
  1,315
  1,374
  1,436
  1,502
  1,572
  1,646
  1,723
  1,805
  1,890
  1,981
  2,076
  2,176
  2,282
  2,393
Funds from operations, $m
  6,444
  6,497
  6,610
  6,737
  6,879
  7,037
  7,209
  7,395
  7,597
  7,815
  8,047
  7,097
  7,363
  7,645
  7,945
  8,263
  8,600
  8,956
  9,333
  9,732
  10,152
  10,595
  11,063
  11,556
  12,075
  12,622
  13,197
  13,803
  14,440
  15,111
  15,816
Change in working capital, $m
  1,219
  20
  24
  27
  30
  34
  37
  40
  43
  47
  50
  54
  57
  61
  65
  69
  73
  77
  82
  86
  91
  96
  101
  107
  113
  119
  125
  132
  138
  146
  153
Cash from operations, $m
  5,225
  6,477
  6,586
  6,710
  6,849
  7,003
  7,172
  7,355
  7,554
  7,768
  7,997
  7,043
  7,305
  7,584
  7,880
  8,194
  8,527
  8,879
  9,252
  9,645
  10,061
  10,499
  10,961
  11,449
  11,962
  12,503
  13,072
  13,671
  14,302
  14,965
  15,663
Maintenance CAPEX, $m
  0
  -730
  -744
  -761
  -781
  -803
  -827
  -854
  -883
  -914
  -948
  -984
  -1,023
  -1,065
  -1,109
  -1,156
  -1,206
  -1,259
  -1,315
  -1,374
  -1,436
  -1,502
  -1,572
  -1,646
  -1,723
  -1,805
  -1,890
  -1,981
  -2,076
  -2,176
  -2,282
New CAPEX, $m
  -901
  -429
  -513
  -587
  -659
  -730
  -801
  -872
  -944
  -1,017
  -1,092
  -1,168
  -1,246
  -1,327
  -1,410
  -1,496
  -1,586
  -1,678
  -1,775
  -1,875
  -1,980
  -2,089
  -2,203
  -2,322
  -2,447
  -2,577
  -2,714
  -2,856
  -3,005
  -3,162
  -3,326
Cash from investing activities, $m
  -35,740
  -1,159
  -1,257
  -1,348
  -1,440
  -1,533
  -1,628
  -1,726
  -1,827
  -1,931
  -2,040
  -2,152
  -2,269
  -2,392
  -2,519
  -2,652
  -2,792
  -2,937
  -3,090
  -3,249
  -3,416
  -3,591
  -3,775
  -3,968
  -4,170
  -4,382
  -4,604
  -4,837
  -5,081
  -5,338
  -5,608
Free cash flow, $m
  -30,515
  5,318
  5,329
  5,362
  5,410
  5,470
  5,544
  5,630
  5,727
  5,836
  5,958
  4,891
  5,036
  5,192
  5,361
  5,542
  5,735
  5,942
  6,162
  6,396
  6,644
  6,907
  7,186
  7,481
  7,792
  8,121
  8,468
  8,834
  9,220
  9,627
  10,055
Issuance/(repayment) of debt, $m
  26,251
  1,167
  1,377
  1,575
  1,768
  1,959
  2,149
  2,340
  2,533
  2,729
  2,929
  3,133
  3,344
  3,560
  3,783
  4,015
  4,255
  4,504
  4,763
  5,032
  5,313
  5,606
  5,912
  6,232
  6,566
  6,916
  7,281
  7,664
  8,065
  8,485
  8,924
Issuance/(repurchase) of shares, $m
  693
  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  
  26,775
  1,167
  1,377
  1,575
  1,768
  1,959
  2,149
  2,340
  2,533
  2,729
  2,929
  3,133
  3,344
  3,560
  3,783
  4,015
  4,255
  4,504
  4,763
  5,032
  5,313
  5,606
  5,912
  6,232
  6,566
  6,916
  7,281
  7,664
  8,065
  8,485
  8,924
Total cash flow (excl. dividends), $m
  -4,400
  6,485
  6,706
  6,937
  7,177
  7,429
  7,693
  7,970
  8,260
  8,566
  8,887
  8,025
  8,379
  8,752
  9,144
  9,556
  9,990
  10,446
  10,925
  11,428
  11,957
  12,514
  13,098
  13,713
  14,358
  15,037
  15,750
  16,498
  17,285
  18,111
  18,980
Retained Cash Flow (-), $m
  -3,568
  -644
  -782
  -893
  -1,003
  -1,111
  -1,219
  -1,328
  -1,437
  -1,549
  -1,662
  -1,778
  -1,897
  -2,020
  -2,147
  -2,278
  -2,414
  -2,555
  -2,702
  -2,855
  -3,015
  -3,181
  -3,355
  -3,536
  -3,726
  -3,924
  -4,131
  -4,349
  -4,576
  -4,814
  -5,064
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
 
  5,841
  5,924
  6,043
  6,174
  6,318
  6,474
  6,642
  6,823
  7,017
  7,225
  6,247
  6,482
  6,732
  6,998
  7,279
  7,576
  7,890
  8,222
  8,573
  8,943
  9,333
  9,744
  10,177
  10,633
  11,113
  11,618
  12,150
  12,709
  13,297
  13,916
Discount rate, %
 
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
 
  5,369
  4,965
  4,578
  4,189
  3,801
  3,418
  3,044
  2,682
  2,336
  2,009
  1,431
  1,205
  999
  816
  654
  515
  398
  301
  223
  161
  114
  78
  52
  34
  22
  13
  8
  4
  2
  1
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

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 66.3
Price to Sales 1
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 4.2
Price to Free Cash Flow 5
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 0
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 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 8.8%, 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 4.6%. 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 1010.55 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 $21.7 billion.

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COMPANY NEWS

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▶ Pharma leading the IQ 100   [Jan-09-18 01:44PM  CNBC Videos]
▶ Teva Tightens Belt, Now a Buy   [10:56AM  Barrons.com]
▶ Why Alder Biopharma Is Winning Big on Monday   [10:50AM  24/7 Wall St.]
▶ 2 Reasons Why Allergan Stock Plunged in 2017   [Jan-07-18 02:00PM  Motley Fool]
▶ Here's where the rubber meets the road for the Fed: NYSE trader   [Jan-05-18 03:33PM  Yahoo Finance Video]
▶ Teva Vs Mylan: Wells Fargo Weighs In   [01:43PM  Benzinga]
▶ David Abrams: A Seth Klarman Disciple Makes It on His Own   [Jan-03-18 05:59PM  GuruFocus.com]
▶ Stocks blah blah blah   [Dec-29-17 12:42PM  Yahoo Finance Video]
▶ 8 Stocks To Avoid In 2018   [10:00AM  Forbes]
▶ Apotex Faces Uncertainty After Founders Mysterious Death   [01:13AM  The Wall Street Journal]
▶ Is Teva Finally Back on Track?   [Dec-27-17 11:55AM  24/7 Wall St.]
▶ Why Pfizer Inc. Stock Is One of the Few Safe Drug Stocks   [Dec-26-17 01:51PM  InvestorPlace]
▶ Measuring Sanofis Valuation This December   [11:45AM  Market Realist]
▶ The Philly Fed home run points to a blowout Q4 GDP   [10:59AM  Yahoo Finance Video]
▶ 3 Top Generic Drug Stocks to Consider Buying Now   [Dec-20-17 08:33AM  Motley Fool]
▶ Teva Pharma Dips After Reaffirming Plan To Cut Jobs In Israel Amid Strike   [Dec-19-17 04:27PM  Investor's Business Daily]
▶ Teva Pharma falls to laggard   [02:37PM  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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