Intrinsic value of AstraZeneca ADR - AZN

Previous Close

$37.96

  Intrinsic Value

$55.39

stock screener

  Rating & Target

buy

+46%

Previous close

$37.96

 
Intrinsic value

$55.39

 
Up/down potential

+46%

 
Rating

buy

We calculate the intrinsic value of AZN 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 2016), $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 48.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  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
  23,462
  24,002
  24,619
  25,311
  26,078
  26,920
  27,837
  28,830
  29,899
  31,046
  32,274
  33,584
  34,978
  36,460
  38,033
  39,700
  41,464
  43,330
  45,301
  47,383
  49,579
  51,895
  54,337
  56,909
  59,619
  62,471
  65,473
  68,633
  71,957
  75,453
Variable operating expenses, $m
  19,489
  19,847
  20,256
  20,715
  21,225
  21,783
  22,391
  23,050
  23,759
  24,520
  21,410
  22,279
  23,204
  24,187
  25,231
  26,336
  27,507
  28,745
  30,052
  31,433
  32,890
  34,427
  36,046
  37,753
  39,550
  41,443
  43,434
  45,530
  47,735
  50,055
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
  19,489
  19,847
  20,256
  20,715
  21,225
  21,783
  22,391
  23,050
  23,759
  24,520
  21,410
  22,279
  23,204
  24,187
  25,231
  26,336
  27,507
  28,745
  30,052
  31,433
  32,890
  34,427
  36,046
  37,753
  39,550
  41,443
  43,434
  45,530
  47,735
  50,055
Operating income, $m
  3,973
  4,155
  4,362
  4,596
  4,854
  5,137
  5,446
  5,780
  6,140
  6,526
  10,864
  11,305
  11,774
  12,273
  12,802
  13,363
  13,957
  14,585
  15,249
  15,950
  16,689
  17,469
  18,290
  19,156
  20,068
  21,028
  22,039
  23,103
  24,221
  25,398
EBITDA, $m
  12,332
  12,616
  12,940
  13,304
  13,707
  14,150
  14,632
  15,153
  15,715
  16,318
  16,963
  17,652
  18,385
  19,164
  19,991
  20,867
  21,794
  22,775
  23,811
  24,905
  26,059
  27,277
  28,560
  29,912
  31,336
  32,835
  34,414
  36,074
  37,821
  39,659
Interest expense (income), $m
  677
  1,462
  1,541
  1,639
  1,750
  1,875
  2,013
  2,164
  2,330
  2,508
  2,701
  2,908
  3,129
  3,365
  3,616
  3,883
  4,166
  4,467
  4,784
  5,121
  5,476
  5,851
  6,246
  6,664
  7,103
  7,567
  8,055
  8,569
  9,110
  9,679
  10,278
Earnings before tax, $m
  2,511
  2,613
  2,724
  2,846
  2,979
  3,125
  3,281
  3,450
  3,631
  3,825
  7,956
  8,176
  8,409
  8,657
  8,919
  9,197
  9,491
  9,801
  10,128
  10,474
  10,838
  11,222
  11,627
  12,053
  12,501
  12,974
  13,470
  13,993
  14,543
  15,121
Tax expense, $m
  678
  706
  735
  768
  804
  844
  886
  932
  980
  1,033
  2,148
  2,207
  2,270
  2,337
  2,408
  2,483
  2,562
  2,646
  2,735
  2,828
  2,926
  3,030
  3,139
  3,254
  3,375
  3,503
  3,637
  3,778
  3,927
  4,083
Net income, $m
  1,833
  1,908
  1,988
  2,077
  2,175
  2,281
  2,395
  2,519
  2,651
  2,792
  5,808
  5,968
  6,139
  6,320
  6,511
  6,714
  6,928
  7,155
  7,394
  7,646
  7,912
  8,192
  8,488
  8,799
  9,126
  9,471
  9,833
  10,215
  10,616
  11,038

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
  63,756
  65,222
  66,898
  68,780
  70,865
  73,153
  75,644
  78,341
  81,247
  84,365
  87,700
  91,260
  95,050
  99,077
  103,351
  107,880
  112,675
  117,745
  123,102
  128,758
  134,726
  141,020
  147,655
  154,645
  162,007
  169,758
  177,917
  186,503
  195,535
  205,035
Adjusted assets (=assets-cash), $m
  63,756
  65,222
  66,898
  68,780
  70,865
  73,153
  75,644
  78,341
  81,247
  84,365
  87,700
  91,260
  95,050
  99,077
  103,351
  107,880
  112,675
  117,745
  123,102
  128,758
  134,726
  141,020
  147,655
  154,645
  162,007
  169,758
  177,917
  186,503
  195,535
  205,035
Revenue / Adjusted assets
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
  0.368
Average production assets, $m
  44,343
  45,363
  46,529
  47,838
  49,288
  50,879
  52,612
  54,488
  56,509
  58,677
  60,997
  63,473
  66,109
  68,910
  71,883
  75,033
  78,367
  81,894
  85,620
  89,554
  93,705
  98,082
  102,697
  107,558
  112,679
  118,070
  123,745
  129,716
  135,998
  142,606
Working capital, $m
  -17,995
  -18,409
  -18,882
  -19,414
  -20,002
  -20,648
  -21,351
  -22,112
  -22,932
  -23,812
  -24,754
  -25,759
  -26,828
  -27,965
  -29,171
  -30,450
  -31,803
  -33,234
  -34,746
  -36,343
  -38,027
  -39,804
  -41,676
  -43,649
  -45,727
  -47,915
  -50,218
  -52,641
  -55,191
  -57,872
Total debt, $m
  17,718
  18,835
  20,112
  21,546
  23,135
  24,879
  26,777
  28,832
  31,046
  33,422
  35,964
  38,676
  41,564
  44,633
  47,890
  51,341
  54,994
  58,857
  62,939
  67,249
  71,797
  76,593
  81,649
  86,975
  92,585
  98,492
  104,709
  111,251
  118,134
  125,373
Total liabilities, $m
  48,582
  49,699
  50,976
  52,410
  53,999
  55,743
  57,641
  59,696
  61,910
  64,286
  66,828
  69,540
  72,428
  75,497
  78,754
  82,205
  85,858
  89,721
  93,803
  98,113
  102,661
  107,457
  112,513
  117,839
  123,449
  129,356
  135,573
  142,115
  148,998
  156,237
Total equity, $m
  15,174
  15,523
  15,922
  16,370
  16,866
  17,410
  18,003
  18,645
  19,337
  20,079
  20,873
  21,720
  22,622
  23,580
  24,598
  25,675
  26,817
  28,023
  29,298
  30,644
  32,065
  33,563
  35,142
  36,805
  38,558
  40,402
  42,344
  44,388
  46,537
  48,798
Total liabilities and equity, $m
  63,756
  65,222
  66,898
  68,780
  70,865
  73,153
  75,644
  78,341
  81,247
  84,365
  87,701
  91,260
  95,050
  99,077
  103,352
  107,880
  112,675
  117,744
  123,101
  128,757
  134,726
  141,020
  147,655
  154,644
  162,007
  169,758
  177,917
  186,503
  195,535
  205,035
Debt-to-equity ratio
  1.170
  1.210
  1.260
  1.320
  1.370
  1.430
  1.490
  1.550
  1.610
  1.660
  1.720
  1.780
  1.840
  1.890
  1.950
  2.000
  2.050
  2.100
  2.150
  2.190
  2.240
  2.280
  2.320
  2.360
  2.400
  2.440
  2.470
  2.510
  2.540
  2.570
Adjusted equity ratio
  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

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,833
  1,908
  1,988
  2,077
  2,175
  2,281
  2,395
  2,519
  2,651
  2,792
  5,808
  5,968
  6,139
  6,320
  6,511
  6,714
  6,928
  7,155
  7,394
  7,646
  7,912
  8,192
  8,488
  8,799
  9,126
  9,471
  9,833
  10,215
  10,616
  11,038
Depreciation, amort., depletion, $m
  8,359
  8,461
  8,577
  8,708
  8,853
  9,012
  9,186
  9,373
  9,575
  9,792
  6,100
  6,347
  6,611
  6,891
  7,188
  7,503
  7,837
  8,189
  8,562
  8,955
  9,370
  9,808
  10,270
  10,756
  11,268
  11,807
  12,374
  12,972
  13,600
  14,261
Funds from operations, $m
  10,192
  10,368
  10,566
  10,786
  11,028
  11,293
  11,581
  11,892
  12,226
  12,584
  11,908
  12,316
  12,750
  13,211
  13,699
  14,217
  14,765
  15,344
  15,956
  16,601
  17,282
  18,000
  18,757
  19,554
  20,394
  21,278
  22,208
  23,186
  24,216
  25,299
Change in working capital, $m
  -353
  -414
  -473
  -531
  -589
  -646
  -703
  -761
  -820
  -880
  -942
  -1,005
  -1,070
  -1,137
  -1,206
  -1,278
  -1,353
  -1,431
  -1,512
  -1,596
  -1,685
  -1,777
  -1,873
  -1,973
  -2,078
  -2,188
  -2,303
  -2,423
  -2,549
  -2,682
Cash from operations, $m
  10,545
  10,782
  11,039
  11,317
  11,617
  11,939
  12,284
  12,653
  13,046
  13,465
  12,849
  13,320
  13,819
  14,347
  14,906
  15,496
  16,118
  16,775
  17,468
  18,198
  18,967
  19,777
  20,630
  21,527
  22,472
  23,466
  24,511
  25,610
  26,765
  27,980
Maintenance CAPEX, $m
  -4,348
  -4,434
  -4,536
  -4,653
  -4,784
  -4,929
  -5,088
  -5,261
  -5,449
  -5,651
  -5,868
  -6,100
  -6,347
  -6,611
  -6,891
  -7,188
  -7,503
  -7,837
  -8,189
  -8,562
  -8,955
  -9,370
  -9,808
  -10,270
  -10,756
  -11,268
  -11,807
  -12,374
  -12,972
  -13,600
New CAPEX, $m
  -868
  -1,020
  -1,166
  -1,309
  -1,450
  -1,591
  -1,733
  -1,876
  -2,021
  -2,169
  -2,320
  -2,476
  -2,636
  -2,801
  -2,973
  -3,150
  -3,335
  -3,526
  -3,726
  -3,934
  -4,151
  -4,378
  -4,614
  -4,862
  -5,121
  -5,391
  -5,675
  -5,971
  -6,282
  -6,608
Cash from investing activities, $m
  -5,216
  -5,454
  -5,702
  -5,962
  -6,234
  -6,520
  -6,821
  -7,137
  -7,470
  -7,820
  -8,188
  -8,576
  -8,983
  -9,412
  -9,864
  -10,338
  -10,838
  -11,363
  -11,915
  -12,496
  -13,106
  -13,748
  -14,422
  -15,132
  -15,877
  -16,659
  -17,482
  -18,345
  -19,254
  -20,208
Free cash flow, $m
  5,329
  5,328
  5,337
  5,355
  5,383
  5,419
  5,464
  5,516
  5,577
  5,645
  4,661
  4,745
  4,836
  4,935
  5,042
  5,157
  5,280
  5,412
  5,552
  5,702
  5,861
  6,029
  6,207
  6,396
  6,596
  6,806
  7,029
  7,264
  7,512
  7,773
Issuance/(repayment) of debt, $m
  910
  1,117
  1,277
  1,434
  1,589
  1,743
  1,898
  2,055
  2,214
  2,376
  2,542
  2,712
  2,888
  3,069
  3,257
  3,451
  3,653
  3,863
  4,082
  4,310
  4,548
  4,796
  5,055
  5,326
  5,610
  5,907
  6,217
  6,542
  6,883
  7,239
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  
  910
  1,117
  1,277
  1,434
  1,589
  1,743
  1,898
  2,055
  2,214
  2,376
  2,542
  2,712
  2,888
  3,069
  3,257
  3,451
  3,653
  3,863
  4,082
  4,310
  4,548
  4,796
  5,055
  5,326
  5,610
  5,907
  6,217
  6,542
  6,883
  7,239
Total cash flow (excl. dividends), $m
  6,239
  6,446
  6,614
  6,789
  6,972
  7,162
  7,362
  7,571
  7,791
  8,021
  7,203
  7,457
  7,724
  8,004
  8,299
  8,608
  8,934
  9,275
  9,634
  10,012
  10,408
  10,825
  11,263
  11,722
  12,206
  12,713
  13,246
  13,806
  14,394
  15,012
Retained Cash Flow (-), $m
  -320
  -349
  -399
  -448
  -496
  -545
  -593
  -642
  -691
  -742
  -794
  -847
  -902
  -959
  -1,017
  -1,078
  -1,141
  -1,207
  -1,275
  -1,346
  -1,420
  -1,498
  -1,579
  -1,664
  -1,752
  -1,845
  -1,942
  -2,043
  -2,150
  -2,261
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
  5,919
  6,097
  6,215
  6,341
  6,475
  6,618
  6,769
  6,929
  7,099
  7,279
  6,409
  6,610
  6,822
  7,046
  7,282
  7,530
  7,793
  8,069
  8,360
  8,666
  8,988
  9,327
  9,684
  10,059
  10,453
  10,868
  11,304
  11,763
  12,245
  12,751
Discount rate, %
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
  5,659
  5,548
  5,358
  5,153
  4,933
  4,700
  4,453
  4,196
  3,928
  3,653
  2,895
  2,664
  2,431
  2,199
  1,970
  1,747
  1,532
  1,328
  1,137
  961
  801
  657
  531
  422
  329
  252
  189
  139
  100
  70
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

AstraZeneca PLC (AstraZeneca) is a biopharmaceutical company. The Company focuses on discovery and development of products, which are then manufactured, marketed and sold. The Company focuses on three main therapy areas: Oncology, Cardiovascular & Metabolic Disease (CVMD) and Respiratory, while selectively pursuing therapies in Autoimmunity, Infection and Neuroscience. In CVMD, it is expanding its portfolio into the cardiovascular-renal area with late-stage assets, such as ZS-9 and roxadustat, as well as investing to explore the benefits of its SGLT2 and GLP-1 franchises in chronic kidney disease (CKD) and heart failure (HF). The Company has approximately 40 projects in Phase I, including 29 new molecular entities (NMEs), and 11 oncology combination projects. It has approximately 40 projects in Phase II, including 25 NMEs; four significant additional indications for projects that have reached phase II, and seven oncology combination projects.

FINANCIAL RATIOS  of  AstraZeneca ADR (AZN)

Valuation Ratios
P/E Ratio 13.7
Price to Sales 2.1
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 11.6
Price to Free Cash Flow 26.2
Growth Rates
Sales Growth Rate -6.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 97.6%
Total Debt to Equity 113.2%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.8%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 10.7%
Ret/ On T. Cap. - 3 Yr. Avg. 7.8%
Return On Equity 21%
Return On Equity - 3 Yr. Avg. 13.9%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 82.6%
Gross Margin - 3 Yr. Avg. 81.1%
EBITDA Margin 28.6%
EBITDA Margin - 3 Yr. Avg. 26.1%
Operating Margin 21.3%
Oper. Margin - 3 Yr. Avg. 15.3%
Pre-Tax Margin 15.4%
Pre-Tax Margin - 3 Yr. Avg. 10.9%
Net Profit Margin 15.2%
Net Profit Margin - 3 Yr. Avg. 10.4%
Effective Tax Rate 4.1%
Eff/ Tax Rate - 3 Yr. Avg. 4.3%
Payout Ratio 101.8%

AZN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AZN stock intrinsic value calculation we used $23002 million for the last fiscal year's total revenue generated by AstraZeneca ADR. The default revenue input number comes from 2016 income statement of AstraZeneca 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 AZN 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 4.6%, whose default value for AZN is calculated based on our internal credit rating of AstraZeneca 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 AstraZeneca 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 AZN stock the variable cost ratio is equal to 83.4%.

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 AZN 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 8.7% for AstraZeneca ADR.

Corporate tax rate of 27% is the nominal tax rate for AstraZeneca 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 AZN 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 AZN are equal to 189%.

Life of production assets of 10 years is the average useful life of capital assets used in AstraZeneca 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 AZN is equal to -76.7%. 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 - $14854 million for AstraZeneca 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 1265 million for AstraZeneca 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 AstraZeneca ADR at the current share price and the inputted number of shares is $48.0 billion.

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COMPANY NEWS

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▶ Astrazeneca: 2Q Earnings Snapshot   [05:03AM  Associated Press]
▶ A Preview Of AstraZeneca's Q2 Earnings   [Jul-25-18 02:45PM  Benzinga]
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▶ AstraZeneca, Lilly Join Others On Failed Alzheimer's Drug Heap   [04:17PM  Investor's Business Daily]
▶ PRESS DIGEST- British Business - June 4   [Jun-03-18 07:39PM  Reuters]
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▶ How Does AstraZeneca PLC (LON:AZN) Fare As A Dividend Stock?   [Jun-01-18 11:22AM  Simply Wall St.]
▶ Why Big Pharma is finally discovering the Bay Area   [May-23-18 05:56PM  American City Business Journals]
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