Intrinsic value of Amgen - AMGN

Previous Close

$190.49

  Intrinsic Value

$91.73

stock screener

  Rating & Target

str. sell

-52%

Previous close

$190.49

 
Intrinsic value

$91.73

 
Up/down potential

-52%

 
Rating

str. sell

We calculate the intrinsic value of AMGN 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 2017), $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 139.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  23,306
  23,842
  24,455
  25,143
  25,905
  26,741
  27,652
  28,638
  29,700
  30,840
  32,059
  33,360
  34,746
  36,218
  37,780
  39,436
  41,188
  43,042
  45,000
  47,068
  49,249
  51,550
  53,975
  56,531
  59,222
  62,055
  65,038
  68,176
  71,478
  74,951
Variable operating expenses, $m
  13,331
  13,584
  13,873
  14,197
  14,557
  14,951
  15,381
  15,846
  16,347
  16,885
  15,123
  15,737
  16,390
  17,085
  17,822
  18,603
  19,429
  20,304
  21,227
  22,203
  23,232
  24,317
  25,461
  26,667
  27,936
  29,273
  30,680
  32,160
  33,718
  35,356
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
  13,331
  13,584
  13,873
  14,197
  14,557
  14,951
  15,381
  15,846
  16,347
  16,885
  15,123
  15,737
  16,390
  17,085
  17,822
  18,603
  19,429
  20,304
  21,227
  22,203
  23,232
  24,317
  25,461
  26,667
  27,936
  29,273
  30,680
  32,160
  33,718
  35,356
Operating income, $m
  9,975
  10,258
  10,582
  10,945
  11,348
  11,790
  12,271
  12,792
  13,353
  13,955
  16,936
  17,624
  18,355
  19,133
  19,959
  20,833
  21,759
  22,738
  23,773
  24,865
  26,017
  27,233
  28,514
  29,864
  31,286
  32,783
  34,358
  36,016
  37,761
  39,595
EBITDA, $m
  15,288
  15,640
  16,042
  16,493
  16,993
  17,542
  18,139
  18,786
  19,483
  20,230
  21,030
  21,884
  22,792
  23,758
  24,783
  25,869
  27,019
  28,235
  29,519
  30,875
  32,307
  33,816
  35,407
  37,083
  38,848
  40,707
  42,664
  44,722
  46,888
  49,166
Interest expense (income), $m
  1,300
  1,846
  1,299
  1,353
  1,415
  1,484
  1,561
  1,645
  1,736
  1,836
  1,942
  2,057
  2,180
  2,311
  2,450
  2,598
  2,755
  2,922
  3,098
  3,285
  3,482
  3,690
  3,909
  4,141
  4,385
  4,642
  4,913
  5,198
  5,498
  5,814
  6,146
Earnings before tax, $m
  8,129
  8,959
  9,229
  9,531
  9,864
  10,229
  10,626
  11,055
  11,517
  12,013
  14,879
  15,444
  16,045
  16,683
  17,360
  18,078
  18,837
  19,640
  20,488
  21,383
  22,328
  23,323
  24,373
  25,479
  26,644
  27,870
  29,160
  30,518
  31,947
  33,449
Tax expense, $m
  2,195
  2,419
  2,492
  2,573
  2,663
  2,762
  2,869
  2,985
  3,110
  3,243
  4,017
  4,170
  4,332
  4,504
  4,687
  4,881
  5,086
  5,303
  5,532
  5,773
  6,028
  6,297
  6,581
  6,879
  7,194
  7,525
  7,873
  8,240
  8,626
  9,031
Net income, $m
  5,934
  6,540
  6,737
  6,957
  7,201
  7,467
  7,757
  8,070
  8,408
  8,769
  10,862
  11,274
  11,713
  12,179
  12,673
  13,197
  13,751
  14,337
  14,956
  15,610
  16,299
  17,026
  17,792
  18,600
  19,450
  20,345
  21,287
  22,278
  23,321
  24,418

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  48,253
  49,362
  50,631
  52,055
  53,633
  55,365
  57,250
  59,292
  61,490
  63,850
  66,375
  69,069
  71,937
  74,985
  78,220
  81,648
  85,276
  89,113
  93,168
  97,449
  101,966
  106,729
  111,750
  117,041
  122,613
  128,479
  134,654
  141,152
  147,988
  155,178
Adjusted assets (=assets-cash), $m
  48,253
  49,362
  50,631
  52,055
  53,633
  55,365
  57,250
  59,292
  61,490
  63,850
  66,375
  69,069
  71,937
  74,985
  78,220
  81,648
  85,276
  89,113
  93,168
  97,449
  101,966
  106,729
  111,750
  117,041
  122,613
  128,479
  134,654
  141,152
  147,988
  155,178
Revenue / Adjusted assets
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
  0.483
Average production assets, $m
  29,762
  30,446
  31,229
  32,107
  33,081
  34,149
  35,312
  36,570
  37,927
  39,382
  40,939
  42,601
  44,370
  46,250
  48,245
  50,360
  52,598
  54,964
  57,465
  60,105
  62,891
  65,830
  68,927
  72,190
  75,626
  79,245
  83,054
  87,061
  91,278
  95,713
Working capital, $m
  1,515
  1,550
  1,590
  1,634
  1,684
  1,738
  1,797
  1,861
  1,930
  2,005
  2,084
  2,168
  2,258
  2,354
  2,456
  2,563
  2,677
  2,798
  2,925
  3,059
  3,201
  3,351
  3,508
  3,674
  3,849
  4,034
  4,227
  4,431
  4,646
  4,872
Total debt, $m
  24,056
  25,055
  26,197
  27,479
  28,899
  30,457
  32,154
  33,991
  35,970
  38,094
  40,366
  42,791
  45,372
  48,116
  51,027
  54,112
  57,378
  60,831
  64,480
  68,333
  72,398
  76,685
  81,204
  85,966
  90,980
  96,260
  101,818
  107,666
  113,818
  120,289
Total liabilities, $m
  43,427
  44,426
  45,568
  46,850
  48,270
  49,828
  51,525
  53,362
  55,341
  57,465
  59,737
  62,162
  64,743
  67,487
  70,398
  73,483
  76,749
  80,202
  83,851
  87,704
  91,769
  96,056
  100,575
  105,337
  110,351
  115,631
  121,189
  127,037
  133,189
  139,660
Total equity, $m
  4,825
  4,936
  5,063
  5,206
  5,363
  5,536
  5,725
  5,929
  6,149
  6,385
  6,637
  6,907
  7,194
  7,499
  7,822
  8,165
  8,528
  8,911
  9,317
  9,745
  10,197
  10,673
  11,175
  11,704
  12,261
  12,848
  13,465
  14,115
  14,799
  15,518
Total liabilities and equity, $m
  48,252
  49,362
  50,631
  52,056
  53,633
  55,364
  57,250
  59,291
  61,490
  63,850
  66,374
  69,069
  71,937
  74,986
  78,220
  81,648
  85,277
  89,113
  93,168
  97,449
  101,966
  106,729
  111,750
  117,041
  122,612
  128,479
  134,654
  141,152
  147,988
  155,178
Debt-to-equity ratio
  4.990
  5.080
  5.170
  5.280
  5.390
  5.500
  5.620
  5.730
  5.850
  5.970
  6.080
  6.200
  6.310
  6.420
  6.520
  6.630
  6.730
  6.830
  6.920
  7.010
  7.100
  7.190
  7.270
  7.340
  7.420
  7.490
  7.560
  7.630
  7.690
  7.750
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,934
  6,540
  6,737
  6,957
  7,201
  7,467
  7,757
  8,070
  8,408
  8,769
  10,862
  11,274
  11,713
  12,179
  12,673
  13,197
  13,751
  14,337
  14,956
  15,610
  16,299
  17,026
  17,792
  18,600
  19,450
  20,345
  21,287
  22,278
  23,321
  24,418
Depreciation, amort., depletion, $m
  5,313
  5,382
  5,460
  5,548
  5,645
  5,752
  5,868
  5,994
  6,130
  6,275
  4,094
  4,260
  4,437
  4,625
  4,825
  5,036
  5,260
  5,496
  5,747
  6,011
  6,289
  6,583
  6,893
  7,219
  7,563
  7,924
  8,305
  8,706
  9,128
  9,571
Funds from operations, $m
  11,247
  11,922
  12,197
  12,505
  12,846
  13,219
  13,625
  14,065
  14,537
  15,044
  14,956
  15,534
  16,150
  16,804
  17,498
  18,233
  19,011
  19,833
  20,703
  21,620
  22,588
  23,609
  24,685
  25,819
  27,012
  28,269
  29,592
  30,984
  32,449
  33,989
Change in working capital, $m
  30
  35
  40
  45
  50
  54
  59
  64
  69
  74
  79
  85
  90
  96
  102
  108
  114
  120
  127
  134
  142
  150
  158
  166
  175
  184
  194
  204
  215
  226
Cash from operations, $m
  11,218
  11,887
  12,157
  12,460
  12,796
  13,165
  13,566
  14,000
  14,468
  14,970
  14,876
  15,449
  16,060
  16,708
  17,396
  18,125
  18,897
  19,713
  20,575
  21,486
  22,446
  23,460
  24,527
  25,653
  26,838
  28,085
  29,398
  30,780
  32,234
  33,763
Maintenance CAPEX, $m
  -2,918
  -2,976
  -3,045
  -3,123
  -3,211
  -3,308
  -3,415
  -3,531
  -3,657
  -3,793
  -3,938
  -4,094
  -4,260
  -4,437
  -4,625
  -4,825
  -5,036
  -5,260
  -5,496
  -5,747
  -6,011
  -6,289
  -6,583
  -6,893
  -7,219
  -7,563
  -7,924
  -8,305
  -8,706
  -9,128
New CAPEX, $m
  -587
  -685
  -782
  -878
  -973
  -1,068
  -1,163
  -1,259
  -1,356
  -1,456
  -1,557
  -1,662
  -1,769
  -1,880
  -1,995
  -2,114
  -2,238
  -2,367
  -2,501
  -2,640
  -2,786
  -2,938
  -3,097
  -3,263
  -3,437
  -3,618
  -3,809
  -4,008
  -4,216
  -4,435
Cash from investing activities, $m
  -3,505
  -3,661
  -3,827
  -4,001
  -4,184
  -4,376
  -4,578
  -4,790
  -5,013
  -5,249
  -5,495
  -5,756
  -6,029
  -6,317
  -6,620
  -6,939
  -7,274
  -7,627
  -7,997
  -8,387
  -8,797
  -9,227
  -9,680
  -10,156
  -10,656
  -11,181
  -11,733
  -12,313
  -12,922
  -13,563
Free cash flow, $m
  7,713
  8,226
  8,330
  8,459
  8,612
  8,789
  8,988
  9,210
  9,455
  9,722
  9,381
  9,694
  10,030
  10,391
  10,776
  11,186
  11,623
  12,086
  12,578
  13,099
  13,650
  14,232
  14,847
  15,497
  16,182
  16,904
  17,665
  18,467
  19,312
  20,201
Issuance/(repayment) of debt, $m
  -10,134
  999
  1,142
  1,282
  1,420
  1,558
  1,697
  1,837
  1,979
  2,124
  2,272
  2,424
  2,581
  2,743
  2,911
  3,085
  3,266
  3,453
  3,649
  3,853
  4,065
  4,287
  4,519
  4,761
  5,015
  5,280
  5,557
  5,848
  6,152
  6,471
Issuance/(repurchase) of shares, $m
  5,156
  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  
  -4,978
  999
  1,142
  1,282
  1,420
  1,558
  1,697
  1,837
  1,979
  2,124
  2,272
  2,424
  2,581
  2,743
  2,911
  3,085
  3,266
  3,453
  3,649
  3,853
  4,065
  4,287
  4,519
  4,761
  5,015
  5,280
  5,557
  5,848
  6,152
  6,471
Total cash flow (excl. dividends), $m
  2,736
  9,225
  9,472
  9,741
  10,033
  10,347
  10,685
  11,047
  11,434
  11,846
  11,653
  12,118
  12,612
  13,134
  13,687
  14,271
  14,889
  15,540
  16,227
  16,952
  17,715
  18,519
  19,366
  20,258
  21,197
  22,184
  23,223
  24,315
  25,464
  26,672
Retained Cash Flow (-), $m
  -11,090
  -111
  -127
  -142
  -158
  -173
  -189
  -204
  -220
  -236
  -252
  -269
  -287
  -305
  -323
  -343
  -363
  -384
  -405
  -428
  -452
  -476
  -502
  -529
  -557
  -587
  -617
  -650
  -684
  -719
Prev. year cash balance distribution, $m
  31,506
  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
  320
  326
  334
  342
  352
  363
  374
  387
  401
  416
  432
  449
  467
  486
  507
  529
  552
  577
  603
  630
  659
  689
  722
  756
  791
  829
  869
  911
  954
  1,001
Cash available for distribution, $m
  23,152
  9,114
  9,345
  9,599
  9,875
  10,174
  10,497
  10,843
  11,214
  11,610
  11,401
  11,849
  12,325
  12,829
  13,364
  13,929
  14,526
  15,156
  15,822
  16,524
  17,263
  18,043
  18,864
  19,729
  20,639
  21,597
  22,605
  23,665
  24,780
  25,953
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
  22,197
  8,344
  8,133
  7,903
  7,654
  7,384
  7,091
  6,777
  6,442
  6,087
  5,414
  5,056
  4,686
  4,307
  3,923
  3,540
  3,161
  2,791
  2,436
  2,100
  1,786
  1,497
  1,236
  1,005
  803
  630
  485
  366
  271
  195
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Amgen Inc. is a biotechnology company. The Company discovers, develops, manufactures and delivers various human therapeutics. It operates in human therapeutics segment. Its marketed products portfolio includes Neulasta (pegfilgrastim); erythropoiesis-stimulating agents (ESAs), such as Aranesp (darbepoetin alfa) and EPOGEN (epoetin alfa); Sensipar/Mimpara (cinacalcet); XGEVA (denosumab); Prolia (denosumab); NEUPOGEN (filgrastim), and other marketed products, such as KYPROLIS (carfilzomib), Vectibix (panitumumab), Nplate (romiplostim), Repatha (evolocumab), BLINCYTO (blinatumomab), IMLYGIC (talimogene laherparepvec) and Corlanor (ivabradine). It focuses on human therapeutics for the treatment of serious illness in the areas of oncology/hematology, cardiovascular disease and neuroscience. Its product candidates in Phase III include Erenumab for episodic migraine, Aranesp for myelodysplastic syndromes, BLINCYTO for acute lymphoblastic leukemia and IMLYGIC for metastatic melanoma.

FINANCIAL RATIOS  of  Amgen (AMGN)

Valuation Ratios
P/E Ratio 18.2
Price to Sales 6.1
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 14.8
Growth Rates
Sales Growth Rate 6.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 29%
Cap. Spend. - 3 Yr. Gr. Rate 3.8%
Financial Strength
Quick Ratio 9
Current Ratio 0.2
LT Debt to Equity 101.1%
Total Debt to Equity 115.8%
Interest Coverage 8
Management Effectiveness
Return On Assets 11.8%
Ret/ On Assets - 3 Yr. Avg. 10.7%
Return On Total Capital 12.5%
Ret/ On T. Cap. - 3 Yr. Avg. 11.2%
Return On Equity 26.6%
Return On Equity - 3 Yr. Avg. 24.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 81.9%
Gross Margin - 3 Yr. Avg. 80.1%
EBITDA Margin 54.7%
EBITDA Margin - 3 Yr. Avg. 50%
Operating Margin 42.6%
Oper. Margin - 3 Yr. Avg. 37.5%
Pre-Tax Margin 39.9%
Pre-Tax Margin - 3 Yr. Avg. 34.8%
Net Profit Margin 33.6%
Net Profit Margin - 3 Yr. Avg. 30.4%
Effective Tax Rate 15.7%
Eff/ Tax Rate - 3 Yr. Avg. 12.1%
Payout Ratio 38.8%

AMGN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMGN stock intrinsic value calculation we used $22849 million for the last fiscal year's total revenue generated by Amgen. The default revenue input number comes from 2017 income statement of Amgen. 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 AMGN 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 AMGN is calculated based on our internal credit rating of Amgen, 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 Amgen.
    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 AMGN stock the variable cost ratio is equal to 57.4%.

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

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Amgen.

Corporate tax rate of 27% is the nominal tax rate for Amgen. 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 AMGN stock is equal to 1.4%.

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 AMGN are equal to 127.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Amgen 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 AMGN is equal to 6.5%. 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 - $25241 million for Amgen - 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 731 million for Amgen 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 Amgen at the current share price and the inputted number of shares is $139.2 billion.

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COMPANY NEWS

▶ Better Buy: Biogen Inc. vs. Amgen   [Jul-15-18 08:00AM  Motley Fool]
▶ Better Buy: Amgen Inc. vs. Johnson & Johnson   [Jul-13-18 10:15AM  Motley Fool]
▶ 2 Overlooked Biotech Stocks to Buy Now   [08:16AM  Motley Fool]
▶ 7 High-Margin Stocks Poised to Beat the Market   [Jul-12-18 01:30PM  Investopedia]
▶ Your first trade for Wednesday, July 11   [Jul-11-18 09:17AM  CNBC]
▶ 3 Huge Biotech Winners in 2018 (So Far)   [09:15AM  Motley Fool]
▶ Moving Average Crossover Alert: Amgen (AMGN)   [Jul-10-18 09:23AM  Zacks]
▶ Bullish options traders target Amgen, this energy ETF   [Jul-09-18 01:23PM  CNBC Videos]
▶ Amgen Is Ready to Breakout on the Upside   [12:05PM  TheStreet.com]
▶ Drug pricing debate could heat up in July   [02:40PM  CNBC Videos]
▶ Amgen sues Durham generics company   [Jul-03-18 08:11AM  American City Business Journals]
▶ 4 Drug and Biotech Stocks Awaiting FDA Decisions in July   [Jul-02-18 03:23PM  InvestorPlace]
▶ Better Buy: Amgen Inc. vs. Pfizer Inc.   [Jul-01-18 06:32AM  Motley Fool]
▶ Ron Squarer's risk-taking pays off at Array   [08:30AM  American City Business Journals]
▶ 5 Cheap Large Cap Stocks to Buy Now   [11:10AM  InvestorPlace]
▶ Top Stock Reports for Facebook, Amgen & Abbott   [Jun-26-18 11:12AM  Zacks]
▶ Apple Led Company Stock Buybacks During Q1   [07:58AM  Investopedia]
▶ Cambridge biotech startup grabs $65M to tackle liver disease   [07:00AM  American City Business Journals]
▶ Mass. lost out to Rhode Island on Amgen plant, 300 jobs   [06:19AM  American City Business Journals]
▶ Amgen Inc (NASDAQ:AMGN): Time For A Financial Health Check   [Jun-14-18 08:21PM  Simply Wall St.]
▶ /C O R R E C T I O N -- Amgen/   [Jun-08-18 08:23PM  PR Newswire]
▶ Why Alder's CEO Hire Could Indicate It's Seeking A Buyer   [Jun-07-18 05:15PM  Investor's Business Daily]
▶ Mylan Spikes After FDA Approves Its Knockoff Of Amgen's Drug   [04:51PM  Investor's Business Daily]
▶ Watch Out Amgen, Here Comes Mylan   [03:00PM  Motley Fool]
▶ Is Amgen Inc. (AMGN) a Buy?   [Jun-03-18 10:33AM  Motley Fool]
▶ FDA Delays Amgen-Allergan Copycat Herceptin, Gives Roche Breathing Room   [Jun-01-18 05:09PM  Investor's Business Daily]
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