Intrinsic value of Amgen - AMGN

Previous Close

$188.01

  Intrinsic Value

$96.45

stock screener

  Rating & Target

sell

-49%

Previous close

$188.01

 
Intrinsic value

$96.45

 
Up/down potential

-49%

 
Rating

sell

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

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

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, %
  6.14
  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
  22,991
  23,451
  23,990
  24,607
  25,299
  26,066
  26,907
  27,824
  28,816
  29,884
  31,031
  32,258
  33,568
  34,961
  36,443
  38,015
  39,681
  41,444
  43,309
  45,280
  47,360
  49,555
  51,871
  54,311
  56,882
  59,590
  62,441
  65,442
  68,600
  71,922
  75,417
Variable operating expenses, $m
 
  2,831
  2,863
  2,898
  2,938
  2,983
  3,031
  3,084
  3,142
  3,204
  3,270
  1,866
  1,942
  2,022
  2,108
  2,199
  2,295
  2,397
  2,505
  2,619
  2,739
  2,866
  3,000
  3,141
  3,290
  3,447
  3,612
  3,785
  3,968
  4,160
  4,362
Fixed operating expenses, $m
 
  11,088
  11,366
  11,650
  11,941
  12,240
  12,546
  12,859
  13,181
  13,510
  13,848
  14,194
  14,549
  14,913
  15,286
  15,668
  16,059
  16,461
  16,872
  17,294
  17,727
  18,170
  18,624
  19,090
  19,567
  20,056
  20,557
  21,071
  21,598
  22,138
  22,691
Total operating expenses, $m
  13,197
  13,919
  14,229
  14,548
  14,879
  15,223
  15,577
  15,943
  16,323
  16,714
  17,118
  16,060
  16,491
  16,935
  17,394
  17,867
  18,354
  18,858
  19,377
  19,913
  20,466
  21,036
  21,624
  22,231
  22,857
  23,503
  24,169
  24,856
  25,566
  26,298
  27,053
Operating income, $m
  9,794
  9,531
  9,762
  10,059
  10,419
  10,844
  11,330
  11,880
  12,493
  13,171
  13,913
  16,198
  17,077
  18,027
  19,050
  20,149
  21,326
  22,586
  23,932
  25,367
  26,894
  28,519
  30,246
  32,080
  34,025
  36,087
  38,272
  40,586
  43,034
  45,624
  48,363
EBITDA, $m
  11,899
  12,030
  12,284
  12,608
  12,999
  13,457
  13,980
  14,570
  15,226
  15,950
  16,743
  17,607
  18,542
  19,553
  20,641
  21,808
  23,059
  24,396
  25,823
  27,343
  28,962
  30,683
  32,511
  34,451
  36,508
  38,689
  40,998
  43,443
  46,029
  48,764
  51,656
Interest expense (income), $m
  1,300
  1,178
  904
  936
  974
  1,015
  1,062
  1,113
  1,168
  1,228
  1,292
  1,362
  1,436
  1,515
  1,599
  1,689
  1,784
  1,884
  1,991
  2,103
  2,222
  2,348
  2,481
  2,621
  2,768
  2,923
  3,087
  3,259
  3,441
  3,631
  3,832
Earnings before tax, $m
  9,163
  8,353
  8,858
  9,122
  9,446
  9,828
  10,269
  10,768
  11,325
  11,943
  12,621
  14,837
  15,641
  16,512
  17,450
  18,460
  19,543
  20,702
  21,941
  23,263
  24,672
  26,171
  27,766
  29,459
  31,257
  33,164
  35,185
  37,326
  39,594
  41,993
  44,531
Tax expense, $m
  1,441
  2,255
  2,392
  2,463
  2,550
  2,654
  2,773
  2,907
  3,058
  3,225
  3,408
  4,006
  4,223
  4,458
  4,712
  4,984
  5,277
  5,590
  5,924
  6,281
  6,661
  7,066
  7,497
  7,954
  8,439
  8,954
  9,500
  10,078
  10,690
  11,338
  12,023
Net income, $m
  7,722
  6,098
  6,466
  6,659
  6,896
  7,175
  7,496
  7,860
  8,268
  8,718
  9,213
  10,831
  11,418
  12,054
  12,739
  13,476
  14,266
  15,113
  16,017
  16,982
  18,010
  19,105
  20,269
  21,505
  22,818
  24,210
  25,685
  27,248
  28,903
  30,655
  32,508

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  38,085
  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
  77,626
  40,363
  41,291
  42,352
  43,544
  44,864
  46,312
  47,890
  49,597
  51,436
  53,410
  55,522
  57,775
  60,175
  62,725
  65,430
  68,298
  71,333
  74,543
  77,934
  81,515
  85,293
  89,278
  93,478
  97,904
  102,565
  107,472
  112,637
  118,073
  123,791
  129,805
Adjusted assets (=assets-cash), $m
  39,541
  40,363
  41,291
  42,352
  43,544
  44,864
  46,312
  47,890
  49,597
  51,436
  53,410
  55,522
  57,775
  60,175
  62,725
  65,430
  68,298
  71,333
  74,543
  77,934
  81,515
  85,293
  89,278
  93,478
  97,904
  102,565
  107,472
  112,637
  118,073
  123,791
  129,805
Revenue / Adjusted assets
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
Average production assets, $m
  13,441
  13,719
  14,034
  14,395
  14,800
  15,249
  15,741
  16,277
  16,857
  17,482
  18,153
  18,871
  19,637
  20,452
  21,319
  22,239
  23,213
  24,245
  25,336
  26,489
  27,706
  28,990
  30,344
  31,772
  33,276
  34,860
  36,528
  38,284
  40,131
  42,075
  44,119
Working capital, $m
  34,806
  1,149
  1,176
  1,206
  1,240
  1,277
  1,318
  1,363
  1,412
  1,464
  1,521
  1,581
  1,645
  1,713
  1,786
  1,863
  1,944
  2,031
  2,122
  2,219
  2,321
  2,428
  2,542
  2,661
  2,787
  2,920
  3,060
  3,207
  3,361
  3,524
  3,695
Total debt, $m
  34,596
  23,172
  24,007
  24,962
  26,034
  27,222
  28,526
  29,946
  31,482
  33,138
  34,914
  36,815
  38,843
  41,002
  43,297
  45,732
  48,313
  51,045
  53,933
  56,986
  60,208
  63,609
  67,195
  70,975
  74,958
  79,153
  83,570
  88,218
  93,110
  98,257
  103,670
Total liabilities, $m
  47,751
  36,327
  37,162
  38,117
  39,189
  40,377
  41,681
  43,101
  44,637
  46,293
  48,069
  49,970
  51,998
  54,157
  56,452
  58,887
  61,468
  64,200
  67,088
  70,141
  73,363
  76,764
  80,350
  84,130
  88,113
  92,308
  96,725
  101,373
  106,265
  111,412
  116,825
Total equity, $m
  29,875
  4,036
  4,129
  4,235
  4,354
  4,486
  4,631
  4,789
  4,960
  5,144
  5,341
  5,552
  5,778
  6,017
  6,272
  6,543
  6,830
  7,133
  7,454
  7,793
  8,151
  8,529
  8,928
  9,348
  9,790
  10,256
  10,747
  11,264
  11,807
  12,379
  12,981
Total liabilities and equity, $m
  77,626
  40,363
  41,291
  42,352
  43,543
  44,863
  46,312
  47,890
  49,597
  51,437
  53,410
  55,522
  57,776
  60,174
  62,724
  65,430
  68,298
  71,333
  74,542
  77,934
  81,514
  85,293
  89,278
  93,478
  97,903
  102,564
  107,472
  112,637
  118,072
  123,791
  129,806
Debt-to-equity ratio
  1.158
  5.740
  5.810
  5.890
  5.980
  6.070
  6.160
  6.250
  6.350
  6.440
  6.540
  6.630
  6.720
  6.810
  6.900
  6.990
  7.070
  7.160
  7.240
  7.310
  7.390
  7.460
  7.530
  7.590
  7.660
  7.720
  7.780
  7.830
  7.890
  7.940
  7.990
Adjusted equity ratio
  -0.208
  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
  7,722
  6,098
  6,466
  6,659
  6,896
  7,175
  7,496
  7,860
  8,268
  8,718
  9,213
  10,831
  11,418
  12,054
  12,739
  13,476
  14,266
  15,113
  16,017
  16,982
  18,010
  19,105
  20,269
  21,505
  22,818
  24,210
  25,685
  27,248
  28,903
  30,655
  32,508
Depreciation, amort., depletion, $m
  2,105
  2,499
  2,522
  2,549
  2,580
  2,613
  2,650
  2,690
  2,733
  2,780
  2,830
  1,408
  1,465
  1,526
  1,591
  1,660
  1,732
  1,809
  1,891
  1,977
  2,068
  2,163
  2,264
  2,371
  2,483
  2,602
  2,726
  2,857
  2,995
  3,140
  3,292
Funds from operations, $m
  10,355
  8,597
  8,989
  9,209
  9,475
  9,788
  10,146
  10,550
  11,001
  11,498
  12,043
  12,239
  12,884
  13,580
  14,330
  15,135
  15,999
  16,922
  17,908
  18,959
  20,078
  21,269
  22,533
  23,876
  25,301
  26,811
  28,411
  30,105
  31,898
  33,795
  35,800
Change in working capital, $m
  1
  23
  26
  30
  34
  38
  41
  45
  49
  52
  56
  60
  64
  68
  73
  77
  82
  86
  91
  97
  102
  108
  113
  120
  126
  133
  140
  147
  155
  163
  171
Cash from operations, $m
  10,354
  8,574
  8,962
  9,178
  9,441
  9,750
  10,105
  10,505
  10,952
  11,446
  11,987
  12,179
  12,819
  13,512
  14,257
  15,058
  15,917
  16,836
  17,816
  18,862
  19,976
  21,161
  22,420
  23,757
  25,175
  26,679
  28,271
  29,958
  31,744
  33,632
  35,629
Maintenance CAPEX, $m
  0
  -1,003
  -1,024
  -1,047
  -1,074
  -1,104
  -1,138
  -1,175
  -1,215
  -1,258
  -1,305
  -1,355
  -1,408
  -1,465
  -1,526
  -1,591
  -1,660
  -1,732
  -1,809
  -1,891
  -1,977
  -2,068
  -2,163
  -2,264
  -2,371
  -2,483
  -2,602
  -2,726
  -2,857
  -2,995
  -3,140
New CAPEX, $m
  -837
  -278
  -316
  -361
  -405
  -449
  -492
  -536
  -580
  -625
  -671
  -718
  -766
  -815
  -867
  -920
  -975
  -1,032
  -1,091
  -1,153
  -1,217
  -1,284
  -1,354
  -1,428
  -1,504
  -1,584
  -1,668
  -1,756
  -1,847
  -1,944
  -2,044
Cash from investing activities, $m
  -8,658
  -1,281
  -1,340
  -1,408
  -1,479
  -1,553
  -1,630
  -1,711
  -1,795
  -1,883
  -1,976
  -2,073
  -2,174
  -2,280
  -2,393
  -2,511
  -2,635
  -2,764
  -2,900
  -3,044
  -3,194
  -3,352
  -3,517
  -3,692
  -3,875
  -4,067
  -4,270
  -4,482
  -4,704
  -4,939
  -5,184
Free cash flow, $m
  1,696
  7,293
  7,623
  7,770
  7,962
  8,197
  8,475
  8,795
  9,157
  9,562
  10,011
  10,106
  10,645
  11,231
  11,864
  12,548
  13,283
  14,072
  14,916
  15,819
  16,782
  17,809
  18,902
  20,065
  21,300
  22,611
  24,002
  25,477
  27,039
  28,694
  30,445
Issuance/(repayment) of debt, $m
  3,593
  -7,021
  836
  955
  1,072
  1,188
  1,304
  1,420
  1,537
  1,655
  1,777
  1,901
  2,028
  2,159
  2,295
  2,435
  2,581
  2,732
  2,889
  3,052
  3,223
  3,401
  3,586
  3,780
  3,983
  4,195
  4,417
  4,649
  4,892
  5,146
  5,413
Issuance/(repurchase) of shares, $m
  -2,910
  1,745
  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  
  399
  -5,276
  836
  955
  1,072
  1,188
  1,304
  1,420
  1,537
  1,655
  1,777
  1,901
  2,028
  2,159
  2,295
  2,435
  2,581
  2,732
  2,889
  3,052
  3,223
  3,401
  3,586
  3,780
  3,983
  4,195
  4,417
  4,649
  4,892
  5,146
  5,413
Total cash flow (excl. dividends), $m
  2,095
  2,017
  8,459
  8,725
  9,034
  9,385
  9,778
  10,214
  10,694
  11,218
  11,788
  12,007
  12,673
  13,390
  14,159
  14,983
  15,863
  16,803
  17,805
  18,871
  20,005
  21,210
  22,488
  23,845
  25,283
  26,806
  28,419
  30,125
  31,931
  33,840
  35,858
Retained Cash Flow (-), $m
  -1,792
  -7,843
  -93
  -106
  -119
  -132
  -145
  -158
  -171
  -184
  -197
  -211
  -225
  -240
  -255
  -271
  -287
  -304
  -321
  -339
  -358
  -378
  -398
  -420
  -443
  -466
  -491
  -517
  -544
  -572
  -601
Prev. year cash balance distribution, $m
 
  33,682
  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
 
  27,856
  8,366
  8,619
  8,915
  9,253
  9,633
  10,056
  10,523
  11,034
  11,591
  11,796
  12,448
  13,150
  13,904
  14,712
  15,577
  16,500
  17,484
  18,532
  19,647
  20,832
  22,090
  23,425
  24,840
  26,340
  27,928
  29,609
  31,387
  33,268
  35,257
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
 
  26,707
  7,659
  7,501
  7,341
  7,172
  6,991
  6,794
  6,577
  6,338
  6,077
  5,602
  5,312
  5,000
  4,668
  4,319
  3,958
  3,590
  3,220
  2,853
  2,497
  2,155
  1,833
  1,535
  1,265
  1,025
  815
  635
  486
  363
  265
Current shareholders' claim on cash, %
  100
  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
Price to Sales 6
Price to Book 4.6
Price to Tangible Book
Price to Cash Flow 13.4
Price to Free Cash Flow 14.6
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 $22991 million for the last fiscal year's total revenue generated by Amgen. The default revenue input number comes from 2016 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 12.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $10818 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 3.9% 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 58.5%.

Life of production assets of 13.4 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 4.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $29875 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 731.57 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 $137.5 billion.

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Financial statements of AMGN
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