Intrinsic value of Bausch Health Companies Inc. - BHC

Previous Close

$21.47

  Intrinsic Value

$10.38

stock screener

  Rating & Target

str. sell

-52%

Previous close

$21.47

 
Intrinsic value

$10.38

 
Up/down potential

-52%

 
Rating

str. sell

We calculate the intrinsic value of BHC 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 7.5

 

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, %
  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
  8,548
  8,744
  8,969
  9,221
  9,501
  9,808
  10,142
  10,503
  10,893
  11,311
  11,758
  12,235
  12,743
  13,283
  13,856
  14,463
  15,106
  15,786
  16,504
  17,262
  18,063
  18,906
  19,796
  20,733
  21,720
  22,759
  23,853
  25,004
  26,215
  27,489
Variable operating expenses, $m
  8,395
  8,530
  8,685
  8,858
  9,050
  9,262
  9,491
  9,740
  10,008
  10,296
  8,089
  8,417
  8,767
  9,138
  9,533
  9,950
  10,392
  10,860
  11,354
  11,876
  12,426
  13,007
  13,619
  14,264
  14,943
  15,658
  16,410
  17,202
  18,035
  18,911
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
  8,395
  8,530
  8,685
  8,858
  9,050
  9,262
  9,491
  9,740
  10,008
  10,296
  8,089
  8,417
  8,767
  9,138
  9,533
  9,950
  10,392
  10,860
  11,354
  11,876
  12,426
  13,007
  13,619
  14,264
  14,943
  15,658
  16,410
  17,202
  18,035
  18,911
Operating income, $m
  153
  214
  284
  363
  450
  546
  650
  763
  885
  1,015
  3,669
  3,818
  3,976
  4,145
  4,324
  4,513
  4,714
  4,926
  5,150
  5,386
  5,636
  5,899
  6,177
  6,469
  6,777
  7,102
  7,443
  7,802
  8,180
  8,577
EBITDA, $m
  4,174
  4,271
  4,380
  4,503
  4,640
  4,790
  4,953
  5,130
  5,320
  5,524
  5,742
  5,975
  6,224
  6,487
  6,767
  7,064
  7,378
  7,710
  8,060
  8,431
  8,821
  9,234
  9,668
  10,126
  10,608
  11,115
  11,649
  12,212
  12,803
  13,425
Interest expense (income), $m
  0
  1,653
  1,657
  1,703
  1,757
  1,816
  1,883
  1,956
  2,035
  2,121
  2,213
  2,312
  2,418
  2,531
  2,652
  2,780
  2,916
  3,060
  3,212
  3,374
  3,544
  3,724
  3,914
  4,114
  4,325
  4,547
  4,781
  5,028
  5,287
  5,560
  5,848
Earnings before tax, $m
  -1,500
  -1,442
  -1,419
  -1,394
  -1,366
  -1,337
  -1,305
  -1,272
  -1,236
  -1,198
  1,357
  1,400
  1,445
  1,493
  1,544
  1,597
  1,654
  1,713
  1,776
  1,842
  1,912
  1,986
  2,063
  2,145
  2,230
  2,320
  2,415
  2,515
  2,620
  2,730
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  366
  378
  390
  403
  417
  431
  446
  463
  480
  497
  516
  536
  557
  579
  602
  627
  652
  679
  707
  737
Net income, $m
  -1,500
  -1,442
  -1,419
  -1,394
  -1,366
  -1,337
  -1,305
  -1,272
  -1,236
  -1,198
  990
  1,022
  1,055
  1,090
  1,127
  1,166
  1,207
  1,251
  1,297
  1,345
  1,396
  1,450
  1,506
  1,566
  1,628
  1,694
  1,763
  1,836
  1,912
  1,993

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
  33,130
  33,892
  34,763
  35,741
  36,825
  38,014
  39,308
  40,710
  42,219
  43,840
  45,573
  47,423
  49,392
  51,485
  53,706
  56,059
  58,551
  61,185
  63,969
  66,908
  70,010
  73,280
  76,728
  80,360
  84,186
  88,214
  92,454
  96,915
  101,609
  106,546
Adjusted assets (=assets-cash), $m
  33,130
  33,892
  34,763
  35,741
  36,825
  38,014
  39,308
  40,710
  42,219
  43,840
  45,573
  47,423
  49,392
  51,485
  53,706
  56,059
  58,551
  61,185
  63,969
  66,908
  70,010
  73,280
  76,728
  80,360
  84,186
  88,214
  92,454
  96,915
  101,609
  106,546
Revenue / Adjusted assets
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
  0.258
Average production assets, $m
  15,676
  16,037
  16,449
  16,912
  17,424
  17,987
  18,600
  19,263
  19,977
  20,744
  21,564
  22,439
  23,371
  24,361
  25,412
  26,526
  27,705
  28,951
  30,268
  31,659
  33,127
  34,674
  36,305
  38,024
  39,834
  41,740
  43,746
  45,858
  48,078
  50,414
Working capital, $m
  -120
  -122
  -126
  -129
  -133
  -137
  -142
  -147
  -152
  -158
  -165
  -171
  -178
  -186
  -194
  -202
  -211
  -221
  -231
  -242
  -253
  -265
  -277
  -290
  -304
  -319
  -334
  -350
  -367
  -385
Total debt, $m
  24,363
  25,049
  25,833
  26,713
  27,688
  28,758
  29,923
  31,185
  32,543
  34,002
  35,562
  37,226
  38,999
  40,882
  42,881
  44,999
  47,242
  49,613
  52,118
  54,763
  57,555
  60,498
  63,601
  66,870
  70,313
  73,939
  77,754
  81,770
  85,994
  90,437
Total liabilities, $m
  29,817
  30,503
  31,287
  32,167
  33,142
  34,212
  35,377
  36,639
  37,997
  39,456
  41,016
  42,680
  44,453
  46,336
  48,335
  50,453
  52,696
  55,067
  57,572
  60,217
  63,009
  65,952
  69,055
  72,324
  75,767
  79,393
  83,208
  87,224
  91,448
  95,891
Total equity, $m
  3,313
  3,389
  3,476
  3,574
  3,682
  3,801
  3,931
  4,071
  4,222
  4,384
  4,557
  4,742
  4,939
  5,148
  5,371
  5,606
  5,855
  6,119
  6,397
  6,691
  7,001
  7,328
  7,673
  8,036
  8,419
  8,821
  9,245
  9,692
  10,161
  10,655
Total liabilities and equity, $m
  33,130
  33,892
  34,763
  35,741
  36,824
  38,013
  39,308
  40,710
  42,219
  43,840
  45,573
  47,422
  49,392
  51,484
  53,706
  56,059
  58,551
  61,186
  63,969
  66,908
  70,010
  73,280
  76,728
  80,360
  84,186
  88,214
  92,453
  96,916
  101,609
  106,546
Debt-to-equity ratio
  7.350
  7.390
  7.430
  7.470
  7.520
  7.570
  7.610
  7.660
  7.710
  7.760
  7.800
  7.850
  7.900
  7.940
  7.980
  8.030
  8.070
  8.110
  8.150
  8.180
  8.220
  8.260
  8.290
  8.320
  8.350
  8.380
  8.410
  8.440
  8.460
  8.490
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
  -1,500
  -1,442
  -1,419
  -1,394
  -1,366
  -1,337
  -1,305
  -1,272
  -1,236
  -1,198
  990
  1,022
  1,055
  1,090
  1,127
  1,166
  1,207
  1,251
  1,297
  1,345
  1,396
  1,450
  1,506
  1,566
  1,628
  1,694
  1,763
  1,836
  1,912
  1,993
Depreciation, amort., depletion, $m
  4,022
  4,056
  4,096
  4,140
  4,190
  4,244
  4,303
  4,366
  4,435
  4,509
  2,073
  2,158
  2,247
  2,342
  2,443
  2,551
  2,664
  2,784
  2,910
  3,044
  3,185
  3,334
  3,491
  3,656
  3,830
  4,013
  4,206
  4,409
  4,623
  4,848
Funds from operations, $m
  2,522
  2,614
  2,677
  2,747
  2,824
  2,907
  2,997
  3,095
  3,199
  3,311
  3,064
  3,179
  3,302
  3,432
  3,570
  3,716
  3,871
  4,034
  4,207
  4,389
  4,581
  4,784
  4,997
  5,222
  5,458
  5,707
  5,969
  6,245
  6,535
  6,840
Change in working capital, $m
  -2
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
Cash from operations, $m
  2,524
  2,617
  2,680
  2,750
  2,827
  2,911
  3,002
  3,100
  3,205
  3,317
  3,070
  3,186
  3,309
  3,440
  3,578
  3,725
  3,880
  4,044
  4,217
  4,400
  4,592
  4,795
  5,009
  5,235
  5,472
  5,722
  5,985
  6,261
  6,552
  6,858
Maintenance CAPEX, $m
  -1,477
  -1,507
  -1,542
  -1,582
  -1,626
  -1,675
  -1,730
  -1,788
  -1,852
  -1,921
  -1,995
  -2,073
  -2,158
  -2,247
  -2,342
  -2,443
  -2,551
  -2,664
  -2,784
  -2,910
  -3,044
  -3,185
  -3,334
  -3,491
  -3,656
  -3,830
  -4,013
  -4,206
  -4,409
  -4,623
New CAPEX, $m
  -312
  -361
  -412
  -463
  -513
  -563
  -613
  -663
  -714
  -767
  -820
  -875
  -932
  -990
  -1,051
  -1,114
  -1,179
  -1,247
  -1,317
  -1,391
  -1,467
  -1,548
  -1,631
  -1,719
  -1,810
  -1,906
  -2,006
  -2,111
  -2,221
  -2,336
Cash from investing activities, $m
  -1,789
  -1,868
  -1,954
  -2,045
  -2,139
  -2,238
  -2,343
  -2,451
  -2,566
  -2,688
  -2,815
  -2,948
  -3,090
  -3,237
  -3,393
  -3,557
  -3,730
  -3,911
  -4,101
  -4,301
  -4,511
  -4,733
  -4,965
  -5,210
  -5,466
  -5,736
  -6,019
  -6,317
  -6,630
  -6,959
Free cash flow, $m
  735
  749
  726
  706
  689
  673
  660
  648
  638
  629
  255
  237
  220
  202
  185
  168
  151
  133
  116
  99
  81
  63
  44
  25
  6
  -14
  -35
  -56
  -78
  -101
Issuance/(repayment) of debt, $m
  58
  686
  784
  880
  975
  1,070
  1,165
  1,261
  1,359
  1,458
  1,560
  1,665
  1,772
  1,884
  1,999
  2,118
  2,242
  2,371
  2,505
  2,645
  2,791
  2,944
  3,103
  3,269
  3,443
  3,625
  3,816
  4,015
  4,224
  4,443
Issuance/(repurchase) of shares, $m
  2,080
  1,519
  1,506
  1,491
  1,475
  1,456
  1,435
  1,412
  1,387
  1,360
  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  
  2,138
  2,205
  2,290
  2,371
  2,450
  2,526
  2,600
  2,673
  2,746
  2,818
  1,560
  1,665
  1,772
  1,884
  1,999
  2,118
  2,242
  2,371
  2,505
  2,645
  2,791
  2,944
  3,103
  3,269
  3,443
  3,625
  3,816
  4,015
  4,224
  4,443
Total cash flow (excl. dividends), $m
  2,873
  2,953
  3,016
  3,078
  3,138
  3,199
  3,260
  3,321
  3,384
  3,447
  1,815
  1,902
  1,992
  2,086
  2,184
  2,286
  2,393
  2,505
  2,622
  2,744
  2,872
  3,006
  3,147
  3,294
  3,449
  3,611
  3,781
  3,959
  4,146
  4,342
Retained Cash Flow (-), $m
  -2,080
  -1,519
  -1,506
  -1,491
  -1,475
  -1,456
  -1,435
  -1,412
  -1,387
  -1,360
  -173
  -185
  -197
  -209
  -222
  -235
  -249
  -263
  -278
  -294
  -310
  -327
  -345
  -363
  -383
  -403
  -424
  -446
  -469
  -494
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
  793
  1,434
  1,510
  1,586
  1,664
  1,743
  1,825
  1,910
  1,997
  2,088
  1,642
  1,717
  1,795
  1,877
  1,962
  2,051
  2,144
  2,241
  2,343
  2,450
  2,562
  2,679
  2,802
  2,931
  3,066
  3,208
  3,357
  3,513
  3,677
  3,849
Discount rate, %
  13.10
  13.76
  14.44
  15.16
  15.92
  16.72
  17.56
  18.43
  19.35
  20.32
  21.34
  22.41
  23.53
  24.70
  25.94
  27.23
  28.60
  30.03
  31.53
  33.10
  34.76
  36.50
  38.32
  40.24
  42.25
  44.36
  46.58
  48.91
  51.35
  53.92
PV of cash for distribution, $m
  701
  1,109
  1,007
  902
  795
  689
  588
  493
  406
  328
  196
  152
  115
  85
  62
  43
  30
  20
  13
  8
  5
  3
  2
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  78.3
  67.1
  57.8
  50.0
  43.5
  38.0
  33.4
  29.5
  26.3
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5
  23.5

FINANCIAL RATIOS  of  Bausch Health Companies Inc. (BHC)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BHC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BHC stock intrinsic value calculation we used $8380 million for the last fiscal year's total revenue generated by Bausch Health Companies Inc.. The default revenue input number comes from 0001 income statement of Bausch Health Companies 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 BHC 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 13.1%, whose default value for BHC is calculated based on our internal credit rating of Bausch Health Companies 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 Bausch Health Companies 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 BHC stock the variable cost ratio is equal to 98.8%.

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 BHC 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 6.8% for Bausch Health Companies Inc..

Corporate tax rate of 27% is the nominal tax rate for Bausch Health Companies 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 BHC 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 BHC are equal to 183.4%.

Life of production assets of 10.4 years is the average useful life of capital assets used in Bausch Health Companies 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 BHC is equal to -1.4%. 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 - $2733 million for Bausch Health Companies 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 349.875 million for Bausch Health Companies 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 Bausch Health Companies Inc. at the current share price and the inputted number of shares is $7.5 billion.

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