Intrinsic value of Anthem, Inc. - ANTM

Previous Close

$287.33

  Intrinsic Value

$526.88

stock screener

  Rating & Target

str. buy

+83%

Previous close

$287.33

 
Intrinsic value

$526.88

 
Up/down potential

+83%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as ANTM.

We calculate the intrinsic value of ANTM 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 73.8

 

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, %
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.57
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
Revenue, $m
  94,960
  98,084
  101,479
  105,148
  109,094
  113,325
  117,847
  122,668
  127,798
  133,248
  139,027
  145,150
  151,628
  158,477
  165,712
  173,350
  181,407
  189,902
  198,856
  208,288
  218,222
  228,679
  239,685
  251,266
  263,448
  276,261
  289,735
  303,902
  318,795
  334,449
Variable operating expenses, $m
  55,935
  57,678
  59,572
  61,619
  63,821
  66,182
  68,705
  71,395
  74,257
  77,298
  77,572
  80,988
  84,602
  88,424
  92,461
  96,722
  101,218
  105,958
  110,954
  116,216
  121,759
  127,594
  133,735
  140,196
  146,993
  154,143
  161,660
  169,565
  177,875
  186,609
Fixed operating expenses, $m
  33,368
  34,102
  34,853
  35,619
  36,403
  37,204
  38,022
  38,859
  39,714
  40,587
  41,480
  42,393
  43,326
  44,279
  45,253
  46,248
  47,266
  48,306
  49,369
  50,455
  51,565
  52,699
  53,858
  55,043
  56,254
  57,492
  58,757
  60,049
  61,370
  62,721
Total operating expenses, $m
  89,303
  91,780
  94,425
  97,238
  100,224
  103,386
  106,727
  110,254
  113,971
  117,885
  119,052
  123,381
  127,928
  132,703
  137,714
  142,970
  148,484
  154,264
  160,323
  166,671
  173,324
  180,293
  187,593
  195,239
  203,247
  211,635
  220,417
  229,614
  239,245
  249,330
Operating income, $m
  5,657
  6,304
  7,054
  7,909
  8,870
  9,939
  11,120
  12,414
  13,827
  15,362
  19,975
  21,769
  23,700
  25,775
  27,999
  30,379
  32,923
  35,639
  38,534
  41,617
  44,898
  48,386
  52,092
  56,026
  60,201
  64,627
  69,318
  74,288
  79,550
  85,120
EBITDA, $m
  9,239
  9,906
  10,679
  11,558
  12,546
  13,643
  14,853
  16,180
  17,627
  19,198
  20,899
  22,733
  24,707
  26,827
  29,099
  31,531
  34,128
  36,900
  39,855
  43,001
  46,348
  49,905
  53,684
  57,695
  61,950
  66,462
  71,243
  76,306
  81,667
  87,341
Interest expense (income), $m
  595
  1,037
  1,105
  1,180
  1,262
  1,350
  1,445
  1,547
  1,656
  1,772
  1,895
  2,026
  2,165
  2,312
  2,468
  2,633
  2,807
  2,990
  3,184
  3,389
  3,604
  3,831
  4,070
  4,321
  4,586
  4,864
  5,157
  5,465
  5,790
  6,130
  6,488
Earnings before tax, $m
  4,619
  5,199
  5,874
  6,647
  7,520
  8,494
  9,573
  10,759
  12,056
  13,467
  17,949
  19,604
  21,388
  23,307
  25,366
  27,572
  29,933
  32,455
  35,145
  38,013
  41,067
  44,317
  47,771
  51,441
  55,336
  59,470
  63,853
  68,498
  73,420
  78,631
Tax expense, $m
  1,247
  1,404
  1,586
  1,795
  2,030
  2,293
  2,585
  2,905
  3,255
  3,636
  4,846
  5,293
  5,775
  6,293
  6,849
  7,445
  8,082
  8,763
  9,489
  10,264
  11,088
  11,966
  12,898
  13,889
  14,941
  16,057
  17,240
  18,494
  19,823
  21,230
Net income, $m
  3,372
  3,795
  4,288
  4,852
  5,489
  6,201
  6,988
  7,854
  8,801
  9,831
  13,103
  14,311
  15,613
  17,014
  18,517
  20,128
  21,851
  23,692
  25,656
  27,750
  29,979
  32,351
  34,873
  37,552
  40,395
  43,413
  46,612
  50,004
  53,596
  57,401

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
  71,560
  73,914
  76,473
  79,237
  82,211
  85,399
  88,807
  92,440
  96,306
  100,413
  104,768
  109,382
  114,264
  119,425
  124,877
  130,633
  136,704
  143,107
  149,854
  156,962
  164,447
  172,328
  180,622
  189,349
  198,529
  208,185
  218,339
  229,014
  240,237
  252,034
Adjusted assets (=assets-cash), $m
  71,560
  73,914
  76,473
  79,237
  82,211
  85,399
  88,807
  92,440
  96,306
  100,413
  104,768
  109,382
  114,264
  119,425
  124,877
  130,633
  136,704
  143,107
  149,854
  156,962
  164,447
  172,328
  180,622
  189,349
  198,529
  208,185
  218,339
  229,014
  240,237
  252,034
Revenue / Adjusted assets
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
  1.327
Average production assets, $m
  17,283
  17,851
  18,469
  19,137
  19,855
  20,625
  21,448
  22,326
  23,259
  24,251
  25,303
  26,417
  27,596
  28,843
  30,160
  31,550
  33,016
  34,562
  36,192
  37,908
  39,716
  41,620
  43,623
  45,730
  47,948
  50,280
  52,732
  55,310
  58,021
  60,870
Working capital, $m
  -8,072
  -8,337
  -8,626
  -8,938
  -9,273
  -9,633
  -10,017
  -10,427
  -10,863
  -11,326
  -11,817
  -12,338
  -12,888
  -13,471
  -14,086
  -14,735
  -15,420
  -16,142
  -16,903
  -17,705
  -18,549
  -19,438
  -20,373
  -21,358
  -22,393
  -23,482
  -24,627
  -25,832
  -27,098
  -28,428
Total debt, $m
  20,467
  21,858
  23,370
  25,004
  26,762
  28,646
  30,660
  32,807
  35,092
  37,519
  40,093
  42,820
  45,705
  48,755
  51,978
  55,379
  58,967
  62,751
  66,739
  70,939
  75,363
  80,021
  84,922
  90,080
  95,506
  101,212
  107,213
  113,522
  120,155
  127,127
Total liabilities, $m
  42,292
  43,683
  45,195
  46,829
  48,587
  50,471
  52,485
  54,632
  56,917
  59,344
  61,918
  64,645
  67,530
  70,580
  73,803
  77,204
  80,792
  84,576
  88,564
  92,764
  97,188
  101,846
  106,747
  111,905
  117,331
  123,037
  129,038
  135,347
  141,980
  148,952
Total equity, $m
  29,268
  30,231
  31,277
  32,408
  33,624
  34,928
  36,322
  37,808
  39,389
  41,069
  42,850
  44,737
  46,734
  48,845
  51,075
  53,429
  55,912
  58,531
  61,290
  64,197
  67,259
  70,482
  73,874
  77,444
  81,198
  85,148
  89,300
  93,667
  98,257
  103,082
Total liabilities and equity, $m
  71,560
  73,914
  76,472
  79,237
  82,211
  85,399
  88,807
  92,440
  96,306
  100,413
  104,768
  109,382
  114,264
  119,425
  124,878
  130,633
  136,704
  143,107
  149,854
  156,961
  164,447
  172,328
  180,621
  189,349
  198,529
  208,185
  218,338
  229,014
  240,237
  252,034
Debt-to-equity ratio
  0.700
  0.720
  0.750
  0.770
  0.800
  0.820
  0.840
  0.870
  0.890
  0.910
  0.940
  0.960
  0.980
  1.000
  1.020
  1.040
  1.050
  1.070
  1.090
  1.110
  1.120
  1.140
  1.150
  1.160
  1.180
  1.190
  1.200
  1.210
  1.220
  1.230
Adjusted equity ratio
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,372
  3,795
  4,288
  4,852
  5,489
  6,201
  6,988
  7,854
  8,801
  9,831
  13,103
  14,311
  15,613
  17,014
  18,517
  20,128
  21,851
  23,692
  25,656
  27,750
  29,979
  32,351
  34,873
  37,552
  40,395
  43,413
  46,612
  50,004
  53,596
  57,401
Depreciation, amort., depletion, $m
  3,582
  3,603
  3,625
  3,650
  3,676
  3,704
  3,734
  3,766
  3,800
  3,836
  923
  964
  1,007
  1,053
  1,101
  1,151
  1,205
  1,261
  1,321
  1,384
  1,450
  1,519
  1,592
  1,669
  1,750
  1,835
  1,925
  2,019
  2,118
  2,222
Funds from operations, $m
  6,954
  7,398
  7,913
  8,502
  9,165
  9,905
  10,722
  11,620
  12,601
  13,667
  14,026
  15,275
  16,620
  18,066
  19,618
  21,279
  23,056
  24,953
  26,977
  29,133
  31,429
  33,870
  36,465
  39,221
  42,145
  45,248
  48,537
  52,022
  55,714
  59,622
Change in working capital, $m
  -243
  -266
  -289
  -312
  -335
  -360
  -384
  -410
  -436
  -463
  -491
  -520
  -551
  -582
  -615
  -649
  -685
  -722
  -761
  -802
  -844
  -889
  -936
  -984
  -1,036
  -1,089
  -1,145
  -1,204
  -1,266
  -1,331
Cash from operations, $m
  7,197
  7,663
  8,202
  8,814
  9,501
  10,264
  11,106
  12,030
  13,037
  14,130
  14,518
  15,795
  17,171
  18,649
  20,233
  21,928
  23,741
  25,675
  27,738
  29,935
  32,273
  34,759
  37,400
  40,205
  43,181
  46,337
  49,682
  53,226
  56,980
  60,953
Maintenance CAPEX, $m
  -611
  -631
  -652
  -674
  -698
  -725
  -753
  -783
  -815
  -849
  -885
  -923
  -964
  -1,007
  -1,053
  -1,101
  -1,151
  -1,205
  -1,261
  -1,321
  -1,384
  -1,450
  -1,519
  -1,592
  -1,669
  -1,750
  -1,835
  -1,925
  -2,019
  -2,118
New CAPEX, $m
  -550
  -569
  -618
  -668
  -718
  -770
  -823
  -877
  -934
  -992
  -1,052
  -1,114
  -1,179
  -1,247
  -1,317
  -1,390
  -1,466
  -1,546
  -1,630
  -1,717
  -1,808
  -1,903
  -2,003
  -2,108
  -2,217
  -2,332
  -2,452
  -2,578
  -2,711
  -2,849
Cash from investing activities, $m
  -1,161
  -1,200
  -1,270
  -1,342
  -1,416
  -1,495
  -1,576
  -1,660
  -1,749
  -1,841
  -1,937
  -2,037
  -2,143
  -2,254
  -2,370
  -2,491
  -2,617
  -2,751
  -2,891
  -3,038
  -3,192
  -3,353
  -3,522
  -3,700
  -3,886
  -4,082
  -4,287
  -4,503
  -4,730
  -4,967
Free cash flow, $m
  6,036
  6,464
  6,932
  7,472
  8,084
  8,769
  9,531
  10,369
  11,288
  12,290
  12,581
  13,758
  15,028
  16,395
  17,863
  19,438
  21,123
  22,924
  24,847
  26,897
  29,082
  31,406
  33,878
  36,505
  39,295
  42,255
  45,395
  48,724
  52,251
  55,986
Issuance/(repayment) of debt, $m
  1,256
  1,391
  1,512
  1,634
  1,758
  1,884
  2,014
  2,147
  2,285
  2,427
  2,574
  2,727
  2,885
  3,050
  3,222
  3,401
  3,588
  3,784
  3,988
  4,201
  4,424
  4,657
  4,902
  5,158
  5,426
  5,706
  6,001
  6,309
  6,633
  6,972
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  1,256
  1,391
  1,512
  1,634
  1,758
  1,884
  2,014
  2,147
  2,285
  2,427
  2,574
  2,727
  2,885
  3,050
  3,222
  3,401
  3,588
  3,784
  3,988
  4,201
  4,424
  4,657
  4,902
  5,158
  5,426
  5,706
  6,001
  6,309
  6,633
  6,972
Total cash flow (excl. dividends), $m
  7,292
  7,855
  8,444
  9,106
  9,842
  10,654
  11,545
  12,517
  13,573
  14,717
  15,155
  16,484
  17,913
  19,445
  21,086
  22,839
  24,711
  26,708
  28,835
  31,098
  33,506
  36,064
  38,780
  41,663
  44,720
  47,961
  51,396
  55,033
  58,883
  62,958
Retained Cash Flow (-), $m
  -902
  -963
  -1,046
  -1,131
  -1,216
  -1,304
  -1,394
  -1,486
  -1,581
  -1,680
  -1,781
  -1,887
  -1,997
  -2,111
  -2,230
  -2,354
  -2,483
  -2,618
  -2,760
  -2,907
  -3,062
  -3,223
  -3,392
  -3,569
  -3,755
  -3,949
  -4,153
  -4,366
  -4,590
  -4,825
Prev. year cash balance distribution, $m
  175
  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
  6,565
  6,892
  7,398
  7,975
  8,625
  9,350
  10,151
  11,031
  11,992
  13,037
  13,373
  14,597
  15,916
  17,334
  18,856
  20,485
  22,228
  24,089
  26,075
  28,191
  30,444
  32,841
  35,388
  38,093
  40,965
  44,012
  47,243
  50,667
  54,293
  58,133
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
  6,294
  6,310
  6,438
  6,567
  6,686
  6,785
  6,858
  6,894
  6,889
  6,835
  6,351
  6,229
  6,052
  5,819
  5,536
  5,206
  4,836
  4,436
  4,015
  3,582
  3,149
  2,725
  2,319
  1,940
  1,594
  1,284
  1,014
  784
  593
  438
Current shareholders' claim on cash, %
  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

Anthem, Inc. is a health benefits company. The Company operates through three segments: Commercial and Specialty Business, Government Business and Other. It offers a spectrum of network-based managed care plans to large and small employer, individual, Medicaid and Medicare markets. Its managed care plans include preferred provider organizations; health maintenance organizations; point-of-service plans; indemnity plans and other hybrid plans, including consumer-driven health plans; and hospital only and limited benefit products. It also provides an array of managed care services to self-funded customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services. It provides an array of specialty and other insurance products and services, such as dental, vision, life and disability insurance benefits and radiology benefit management.

FINANCIAL RATIOS  of  Anthem, Inc. (ANTM)

Valuation Ratios
P/E Ratio 30.7
Price to Sales 0.9
Price to Book 3
Price to Tangible Book
Price to Cash Flow 23.6
Price to Free Cash Flow 28.9
Growth Rates
Sales Growth Rate 7.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -8.5%
Cap. Spend. - 3 Yr. Gr. Rate -2%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 57.2%
Total Debt to Equity 62.7%
Interest Coverage 9
Management Effectiveness
Return On Assets 4.4%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 6.2%
Ret/ On T. Cap. - 3 Yr. Avg. 6.4%
Return On Equity 10.3%
Return On Equity - 3 Yr. Avg. 10.5%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 7.1%
EBITDA Margin - 3 Yr. Avg. 7.6%
Operating Margin 6.2%
Oper. Margin - 3 Yr. Avg. 6.5%
Pre-Tax Margin 5.4%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 3.2%
Effective Tax Rate 45.8%
Eff/ Tax Rate - 3 Yr. Avg. 44%
Payout Ratio 27.7%

ANTM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ANTM stock intrinsic value calculation we used $92105 million for the last fiscal year's total revenue generated by Anthem, Inc.. The default revenue input number comes from 0001 income statement of Anthem, Inc.. 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 ANTM stock valuation model: a) initial revenue growth rate of 3.1% 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 ANTM is calculated based on our internal credit rating of Anthem, Inc., 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 Anthem, Inc..
    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 ANTM stock the variable cost ratio is equal to 59%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $32650 million in the base year in the intrinsic value calculation for ANTM 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 Anthem, Inc..

Corporate tax rate of 27% is the nominal tax rate for Anthem, Inc.. 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 ANTM 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 ANTM are equal to 18.2%.

Life of production assets of 27.4 years is the average useful life of capital assets used in Anthem, Inc. 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 ANTM is equal to -8.5%. 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 - $28541 million for Anthem, Inc. - 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 256.997 million for Anthem, Inc. 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 Anthem, Inc. at the current share price and the inputted number of shares is $73.8 billion.

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