Intrinsic value of Amgen - AMGN

Previous Close

$200.81

  Intrinsic Value

$119.85

stock screener

  Rating & Target

sell

-40%

Previous close

$200.81

 
Intrinsic value

$119.85

 
Up/down potential

-40%

 
Rating

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 0001), $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 132.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.30
  4.37
  4.43
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.89
  4.91
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
Revenue, $m
  23,832
  24,873
  25,976
  27,142
  28,374
  29,676
  31,049
  32,498
  34,024
  35,633
  37,328
  39,113
  40,991
  42,967
  45,047
  47,234
  49,535
  51,954
  54,497
  57,170
  59,980
  62,933
  66,036
  69,297
  72,723
  76,323
  80,105
  84,077
  88,250
  92,634
Variable operating expenses, $m
  13,579
  14,070
  14,590
  15,140
  15,722
  16,336
  16,983
  17,667
  18,387
  19,146
  17,608
  18,450
  19,336
  20,269
  21,250
  22,281
  23,367
  24,508
  25,707
  26,968
  28,294
  29,687
  31,151
  32,689
  34,305
  36,003
  37,787
  39,661
  41,629
  43,697
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
  13,579
  14,070
  14,590
  15,140
  15,722
  16,336
  16,983
  17,667
  18,387
  19,146
  17,608
  18,450
  19,336
  20,269
  21,250
  22,281
  23,367
  24,508
  25,707
  26,968
  28,294
  29,687
  31,151
  32,689
  34,305
  36,003
  37,787
  39,661
  41,629
  43,697
Operating income, $m
  10,253
  10,803
  11,385
  12,001
  12,653
  13,340
  14,066
  14,831
  15,637
  16,487
  19,720
  20,662
  21,655
  22,699
  23,797
  24,953
  26,168
  27,446
  28,790
  30,202
  31,686
  33,246
  34,886
  36,608
  38,418
  40,320
  42,318
  44,416
  46,621
  48,937
EBITDA, $m
  13,784
  14,387
  15,025
  15,699
  16,412
  17,165
  17,959
  18,797
  19,680
  20,611
  21,591
  22,623
  23,710
  24,853
  26,056
  27,321
  28,652
  30,051
  31,522
  33,068
  34,693
  36,401
  38,196
  40,083
  42,064
  44,146
  46,334
  48,632
  51,045
  53,581
Interest expense (income), $m
  1,300
  1,908
  1,356
  1,458
  1,567
  1,681
  1,802
  1,930
  2,065
  2,207
  2,357
  2,515
  2,681
  2,856
  3,041
  3,235
  3,439
  3,654
  3,880
  4,117
  4,367
  4,629
  4,905
  5,195
  5,500
  5,820
  6,156
  6,510
  6,881
  7,271
  7,681
Earnings before tax, $m
  8,344
  9,447
  9,927
  10,435
  10,972
  11,538
  12,136
  12,766
  13,431
  14,131
  17,205
  17,981
  18,798
  19,658
  20,563
  21,514
  22,515
  23,567
  24,673
  25,835
  27,057
  28,341
  29,691
  31,109
  32,598
  34,164
  35,808
  37,535
  39,350
  41,256
Tax expense, $m
  2,253
  2,551
  2,680
  2,817
  2,962
  3,115
  3,277
  3,447
  3,626
  3,815
  4,645
  4,855
  5,076
  5,308
  5,552
  5,809
  6,079
  6,363
  6,662
  6,975
  7,305
  7,652
  8,016
  8,399
  8,802
  9,224
  9,668
  10,135
  10,624
  11,139
Net income, $m
  6,091
  6,896
  7,247
  7,618
  8,009
  8,423
  8,859
  9,319
  9,804
  10,315
  12,560
  13,126
  13,723
  14,350
  15,011
  15,705
  16,436
  17,204
  18,011
  18,860
  19,752
  20,689
  21,674
  22,709
  23,797
  24,939
  26,140
  27,401
  28,725
  30,117

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
  48,144
  50,248
  52,476
  54,832
  57,322
  59,951
  62,725
  65,652
  68,736
  71,987
  75,410
  79,015
  82,810
  86,803
  91,004
  95,423
  100,071
  104,957
  110,095
  115,495
  121,172
  127,138
  133,407
  139,995
  146,916
  154,188
  161,828
  169,853
  178,284
  187,139
Adjusted assets (=assets-cash), $m
  48,144
  50,248
  52,476
  54,832
  57,322
  59,951
  62,725
  65,652
  68,736
  71,987
  75,410
  79,015
  82,810
  86,803
  91,004
  95,423
  100,071
  104,957
  110,095
  115,495
  121,172
  127,138
  133,407
  139,995
  146,916
  154,188
  161,828
  169,853
  178,284
  187,139
Revenue / Adjusted assets
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
  0.495
Average production assets, $m
  17,802
  18,580
  19,404
  20,275
  21,196
  22,168
  23,194
  24,276
  25,416
  26,618
  27,884
  29,217
  30,620
  32,097
  33,650
  35,284
  37,003
  38,810
  40,709
  42,706
  44,805
  47,011
  49,329
  51,765
  54,324
  57,013
  59,838
  62,806
  65,923
  69,197
Working capital, $m
  -71
  -75
  -78
  -81
  -85
  -89
  -93
  -97
  -102
  -107
  -112
  -117
  -123
  -129
  -135
  -142
  -149
  -156
  -163
  -172
  -180
  -189
  -198
  -208
  -218
  -229
  -240
  -252
  -265
  -278
Total debt, $m
  25,111
  27,005
  29,009
  31,130
  33,370
  35,737
  38,234
  40,867
  43,644
  46,569
  49,650
  52,895
  56,310
  59,904
  63,685
  67,662
  71,844
  76,242
  80,866
  85,727
  90,836
  96,205
  101,847
  107,776
  114,005
  120,550
  127,426
  134,649
  142,236
  150,206
Total liabilities, $m
  43,330
  45,224
  47,228
  49,349
  51,589
  53,956
  56,453
  59,086
  61,863
  64,788
  67,869
  71,114
  74,529
  78,123
  81,904
  85,881
  90,063
  94,461
  99,085
  103,946
  109,055
  114,424
  120,066
  125,995
  132,224
  138,769
  145,645
  152,868
  160,455
  168,425
Total equity, $m
  4,814
  5,025
  5,248
  5,483
  5,732
  5,995
  6,273
  6,565
  6,874
  7,199
  7,541
  7,902
  8,281
  8,680
  9,100
  9,542
  10,007
  10,496
  11,009
  11,550
  12,117
  12,714
  13,341
  13,999
  14,692
  15,419
  16,183
  16,985
  17,828
  18,714
Total liabilities and equity, $m
  48,144
  50,249
  52,476
  54,832
  57,321
  59,951
  62,726
  65,651
  68,737
  71,987
  75,410
  79,016
  82,810
  86,803
  91,004
  95,423
  100,070
  104,957
  110,094
  115,496
  121,172
  127,138
  133,407
  139,994
  146,916
  154,188
  161,828
  169,853
  178,283
  187,139
Debt-to-equity ratio
  5.220
  5.370
  5.530
  5.680
  5.820
  5.960
  6.100
  6.220
  6.350
  6.470
  6.580
  6.690
  6.800
  6.900
  7.000
  7.090
  7.180
  7.260
  7.350
  7.420
  7.500
  7.570
  7.630
  7.700
  7.760
  7.820
  7.870
  7.930
  7.980
  8.030
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
  6,091
  6,896
  7,247
  7,618
  8,009
  8,423
  8,859
  9,319
  9,804
  10,315
  12,560
  13,126
  13,723
  14,350
  15,011
  15,705
  16,436
  17,204
  18,011
  18,860
  19,752
  20,689
  21,674
  22,709
  23,797
  24,939
  26,140
  27,401
  28,725
  30,117
Depreciation, amort., depletion, $m
  3,532
  3,584
  3,639
  3,698
  3,760
  3,825
  3,894
  3,966
  4,043
  4,123
  1,871
  1,961
  2,055
  2,154
  2,258
  2,368
  2,483
  2,605
  2,732
  2,866
  3,007
  3,155
  3,311
  3,474
  3,646
  3,826
  4,016
  4,215
  4,424
  4,644
Funds from operations, $m
  9,623
  10,480
  10,886
  11,315
  11,769
  12,248
  12,753
  13,286
  13,847
  14,439
  14,431
  15,087
  15,778
  16,505
  17,269
  18,073
  18,919
  19,808
  20,743
  21,726
  22,759
  23,844
  24,985
  26,183
  27,443
  28,766
  30,156
  31,616
  33,150
  34,761
Change in working capital, $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
Cash from operations, $m
  9,626
  10,483
  10,889
  11,319
  11,772
  12,251
  12,757
  13,290
  13,852
  14,444
  14,436
  15,093
  15,783
  16,511
  17,275
  18,080
  18,926
  19,816
  20,751
  21,734
  22,767
  23,853
  24,994
  26,193
  27,453
  28,777
  30,167
  31,628
  33,162
  34,774
Maintenance CAPEX, $m
  -1,146
  -1,195
  -1,247
  -1,302
  -1,361
  -1,423
  -1,488
  -1,557
  -1,629
  -1,706
  -1,786
  -1,871
  -1,961
  -2,055
  -2,154
  -2,258
  -2,368
  -2,483
  -2,605
  -2,732
  -2,866
  -3,007
  -3,155
  -3,311
  -3,474
  -3,646
  -3,826
  -4,016
  -4,215
  -4,424
New CAPEX, $m
  -727
  -778
  -824
  -871
  -921
  -972
  -1,026
  -1,082
  -1,141
  -1,202
  -1,266
  -1,333
  -1,403
  -1,477
  -1,553
  -1,634
  -1,718
  -1,807
  -1,900
  -1,997
  -2,099
  -2,206
  -2,318
  -2,436
  -2,559
  -2,689
  -2,825
  -2,968
  -3,117
  -3,274
Cash from investing activities, $m
  -1,873
  -1,973
  -2,071
  -2,173
  -2,282
  -2,395
  -2,514
  -2,639
  -2,770
  -2,908
  -3,052
  -3,204
  -3,364
  -3,532
  -3,707
  -3,892
  -4,086
  -4,290
  -4,505
  -4,729
  -4,965
  -5,213
  -5,473
  -5,747
  -6,033
  -6,335
  -6,651
  -6,984
  -7,332
  -7,698
Free cash flow, $m
  7,753
  8,511
  8,819
  9,145
  9,491
  9,857
  10,243
  10,651
  11,082
  11,536
  11,384
  11,888
  12,419
  12,979
  13,568
  14,187
  14,839
  15,525
  16,246
  17,005
  17,802
  18,640
  19,521
  20,447
  21,420
  22,442
  23,516
  24,644
  25,830
  27,075
Issuance/(repayment) of debt, $m
  -10,231
  1,894
  2,005
  2,120
  2,241
  2,366
  2,497
  2,634
  2,776
  2,925
  3,081
  3,244
  3,415
  3,594
  3,781
  3,977
  4,183
  4,398
  4,624
  4,861
  5,109
  5,369
  5,642
  5,929
  6,229
  6,545
  6,876
  7,223
  7,587
  7,970
Issuance/(repurchase) of shares, $m
  6,140
  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  
  -4,091
  1,894
  2,005
  2,120
  2,241
  2,366
  2,497
  2,634
  2,776
  2,925
  3,081
  3,244
  3,415
  3,594
  3,781
  3,977
  4,183
  4,398
  4,624
  4,861
  5,109
  5,369
  5,642
  5,929
  6,229
  6,545
  6,876
  7,223
  7,587
  7,970
Total cash flow (excl. dividends), $m
  3,662
  10,404
  10,823
  11,266
  11,732
  12,223
  12,740
  13,285
  13,858
  14,461
  14,465
  15,133
  15,835
  16,573
  17,349
  18,165
  19,022
  19,923
  20,870
  21,865
  22,911
  24,009
  25,163
  26,376
  27,649
  28,987
  30,392
  31,867
  33,417
  35,045
Retained Cash Flow (-), $m
  -12,231
  -210
  -223
  -236
  -249
  -263
  -277
  -293
  -308
  -325
  -342
  -360
  -379
  -399
  -420
  -442
  -465
  -489
  -514
  -540
  -568
  -597
  -627
  -659
  -692
  -727
  -764
  -803
  -843
  -886
Prev. year cash balance distribution, $m
  32,658
  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
  24,089
  10,194
  10,601
  11,030
  11,483
  11,960
  12,463
  12,992
  13,550
  14,136
  14,123
  14,772
  15,455
  16,173
  16,929
  17,723
  18,557
  19,435
  20,356
  21,325
  22,343
  23,413
  24,536
  25,717
  26,957
  28,259
  29,628
  31,065
  32,574
  34,160
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
  23,096
  9,332
  9,225
  9,082
  8,901
  8,680
  8,420
  8,120
  7,784
  7,411
  6,707
  6,304
  5,876
  5,430
  4,970
  4,504
  4,038
  3,579
  3,134
  2,710
  2,311
  1,943
  1,608
  1,310
  1,049
  824
  636
  481
  356
  257
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 19.2
Price to Sales 6.4
Price to Book 5
Price to Tangible Book
Price to Cash Flow 14.3
Price to Free Cash Flow 15.6
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 0001 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 4.3% 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 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 AMGN are equal to 74.7%.

Life of production assets of 14.9 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 -0.3%. 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 661.706 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 $132.9 billion.

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COMPANY NEWS

▶ 3 High-Quality Biotech Companies for 4th Quarter   [Sep-17-18 06:13PM  GuruFocus.com]
▶ Is Now a Good Time to Buy Amgen?   [Sep-15-18 08:45AM  Motley Fool]
▶ 3 Top Dividend Stocks to Buy Right Now   [09:38AM  Motley Fool]
▶ Amgen Rises 3.09%   [Sep-10-18 03:46PM  Investing.com]
▶ Looking For Growth? Take A Look At These Biotechnology Stocks   [Sep-05-18 05:15PM  Investor's Business Daily]
▶ Better Buy: Amgen Inc. vs. Gilead Sciences, Inc.   [Sep-02-18 06:35AM  Motley Fool]
▶ Is Amgen Inc. a Buy?   [06:01AM  Motley Fool]
▶ [$$] Gormley's Take: Cancer-Killing Viruses Catch On With VCs   [Aug-17-18 07:30AM  The Wall Street Journal]
▶ Amgen: Cramer Discusses the AAP Portfolio's New Edition   [Aug-15-18 08:51AM  TheStreet.com]
▶ 3 Strong Buy Stocks for the Week   [Aug-13-18 03:04PM  InvestorPlace]
▶ 4 Biotech Stocks That May Fall By as Much as 13%   [Aug-10-18 02:00PM  Investopedia]
▶ Mylan Exploring Options As 'Unsustainable' Trends Hound Sales, Profit   [Aug-08-18 04:23PM  Investor's Business Daily]
▶ 5 Companies Making Giant Buybacks   [10:15AM  InvestorPlace]
▶ 3 Healthcare Stocks to Buy for the Sector Rebound   [Aug-06-18 03:00PM  InvestorPlace]
▶ Amgen Rises 3.01% As Investors Eye Earnings   [03:29PM  Investing.com]
▶ [$$] Two Senior Amgen Executives to Leave   [07:50PM  The Wall Street Journal]
▶ [$$] Two Senior Amgen Executives to Leave   [05:47PM  The Wall Street Journal]
▶ Amgen: 2Q Earnings Snapshot   [04:13PM  Associated Press]

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