Intrinsic value of Bristol-Myers Squibb - BMY

Previous Close

$53.08

  Intrinsic Value

$69.57

stock screener

  Rating & Target

buy

+31%

Previous close

$53.08

 
Intrinsic value

$69.57

 
Up/down potential

+31%

 
Rating

buy

We calculate the intrinsic value of BMY 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 86.6

 

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, %
  10.90
  10.31
  9.78
  9.30
  8.87
  8.48
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
Revenue, $m
  23,041
  25,416
  27,902
  30,497
  33,202
  36,019
  38,949
  41,996
  45,162
  48,453
  51,872
  55,426
  59,121
  62,963
  66,961
  71,123
  75,457
  79,972
  84,679
  89,588
  94,710
  100,056
  105,641
  111,475
  117,573
  123,950
  130,620
  137,599
  144,904
  152,552
Variable operating expenses, $m
  15,948
  17,509
  19,143
  20,848
  22,626
  24,477
  26,402
  28,404
  30,485
  32,648
  34,087
  36,423
  38,851
  41,376
  44,003
  46,738
  49,586
  52,553
  55,646
  58,872
  62,238
  65,751
  69,421
  73,255
  77,263
  81,453
  85,836
  90,422
  95,223
  100,248
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
  15,948
  17,509
  19,143
  20,848
  22,626
  24,477
  26,402
  28,404
  30,485
  32,648
  34,087
  36,423
  38,851
  41,376
  44,003
  46,738
  49,586
  52,553
  55,646
  58,872
  62,238
  65,751
  69,421
  73,255
  77,263
  81,453
  85,836
  90,422
  95,223
  100,248
Operating income, $m
  7,092
  7,907
  8,759
  9,649
  10,576
  11,542
  12,547
  13,591
  14,677
  15,805
  17,785
  19,003
  20,270
  21,587
  22,958
  24,385
  25,871
  27,419
  29,033
  30,716
  32,472
  34,305
  36,220
  38,220
  40,311
  42,497
  44,784
  47,177
  49,681
  52,304
EBITDA, $m
  8,503
  9,379
  10,296
  11,254
  12,252
  13,292
  14,373
  15,497
  16,666
  17,880
  19,142
  20,454
  21,817
  23,235
  24,710
  26,246
  27,845
  29,512
  31,249
  33,060
  34,950
  36,923
  38,984
  41,137
  43,388
  45,741
  48,202
  50,778
  53,473
  56,296
Interest expense (income), $m
  191
  430
  559
  693
  834
  982
  1,135
  1,295
  1,461
  1,634
  1,813
  2,000
  2,194
  2,395
  2,605
  2,823
  3,049
  3,285
  3,531
  3,787
  4,054
  4,332
  4,623
  4,926
  5,242
  5,573
  5,919
  6,281
  6,659
  7,055
  7,469
Earnings before tax, $m
  6,662
  7,348
  8,066
  8,814
  9,595
  10,407
  11,252
  12,130
  13,043
  13,992
  15,785
  16,810
  17,875
  18,983
  20,136
  21,336
  22,586
  23,888
  25,246
  26,662
  28,140
  29,682
  31,294
  32,978
  34,738
  36,578
  38,503
  40,518
  42,627
  44,835
Tax expense, $m
  1,799
  1,984
  2,178
  2,380
  2,591
  2,810
  3,038
  3,275
  3,522
  3,778
  4,262
  4,539
  4,826
  5,125
  5,437
  5,761
  6,098
  6,450
  6,816
  7,199
  7,598
  8,014
  8,449
  8,904
  9,379
  9,876
  10,396
  10,940
  11,509
  12,105
Net income, $m
  4,864
  5,364
  5,888
  6,434
  7,004
  7,597
  8,214
  8,855
  9,522
  10,214
  11,523
  12,271
  13,049
  13,857
  14,699
  15,575
  16,488
  17,438
  18,429
  19,463
  20,542
  21,668
  22,844
  24,074
  25,358
  26,702
  28,107
  29,578
  31,118
  32,729

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
  37,222
  41,060
  45,075
  49,268
  53,638
  58,189
  62,923
  67,844
  72,960
  78,275
  83,800
  89,541
  95,510
  101,718
  108,177
  114,900
  121,901
  129,195
  136,799
  144,730
  153,004
  161,642
  170,663
  180,089
  189,941
  200,243
  211,018
  222,293
  234,094
  246,449
Adjusted assets (=assets-cash), $m
  37,222
  41,060
  45,075
  49,268
  53,638
  58,189
  62,923
  67,844
  72,960
  78,275
  83,800
  89,541
  95,510
  101,718
  108,177
  114,900
  121,901
  129,195
  136,799
  144,730
  153,004
  161,642
  170,663
  180,089
  189,941
  200,243
  211,018
  222,293
  234,094
  246,449
Revenue / Adjusted assets
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
  0.619
Average production assets, $m
  10,069
  11,107
  12,193
  13,327
  14,509
  15,740
  17,021
  18,352
  19,736
  21,174
  22,668
  24,221
  25,836
  27,515
  29,262
  31,081
  32,975
  34,948
  37,005
  39,150
  41,388
  43,725
  46,165
  48,715
  51,380
  54,166
  57,081
  60,131
  63,323
  66,665
Working capital, $m
  -599
  -661
  -725
  -793
  -863
  -936
  -1,013
  -1,092
  -1,174
  -1,260
  -1,349
  -1,441
  -1,537
  -1,637
  -1,741
  -1,849
  -1,962
  -2,079
  -2,202
  -2,329
  -2,462
  -2,601
  -2,747
  -2,898
  -3,057
  -3,223
  -3,396
  -3,578
  -3,768
  -3,966
Total debt, $m
  10,346
  12,841
  15,451
  18,176
  21,017
  23,975
  27,052
  30,251
  33,576
  37,031
  40,622
  44,354
  48,234
  52,269
  56,467
  60,837
  65,388
  70,129
  75,072
  80,226
  85,605
  91,219
  97,083
  103,210
  109,614
  116,310
  123,314
  130,642
  138,313
  146,344
Total liabilities, $m
  24,194
  26,689
  29,299
  32,024
  34,865
  37,823
  40,900
  44,099
  47,424
  50,879
  54,470
  58,202
  62,082
  66,117
  70,315
  74,685
  79,236
  83,977
  88,920
  94,074
  99,453
  105,067
  110,931
  117,058
  123,462
  130,158
  137,162
  144,490
  152,161
  160,192
Total equity, $m
  13,028
  14,371
  15,776
  17,244
  18,773
  20,366
  22,023
  23,746
  25,536
  27,396
  29,330
  31,339
  33,429
  35,601
  37,862
  40,215
  42,665
  45,218
  47,880
  50,655
  53,551
  56,575
  59,732
  63,031
  66,479
  70,085
  73,856
  77,803
  81,933
  86,257
Total liabilities and equity, $m
  37,222
  41,060
  45,075
  49,268
  53,638
  58,189
  62,923
  67,845
  72,960
  78,275
  83,800
  89,541
  95,511
  101,718
  108,177
  114,900
  121,901
  129,195
  136,800
  144,729
  153,004
  161,642
  170,663
  180,089
  189,941
  200,243
  211,018
  222,293
  234,094
  246,449
Debt-to-equity ratio
  0.790
  0.890
  0.980
  1.050
  1.120
  1.180
  1.230
  1.270
  1.310
  1.350
  1.380
  1.420
  1.440
  1.470
  1.490
  1.510
  1.530
  1.550
  1.570
  1.580
  1.600
  1.610
  1.630
  1.640
  1.650
  1.660
  1.670
  1.680
  1.690
  1.700
Adjusted equity ratio
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350
  0.350

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,864
  5,364
  5,888
  6,434
  7,004
  7,597
  8,214
  8,855
  9,522
  10,214
  11,523
  12,271
  13,049
  13,857
  14,699
  15,575
  16,488
  17,438
  18,429
  19,463
  20,542
  21,668
  22,844
  24,074
  25,358
  26,702
  28,107
  29,578
  31,118
  32,729
Depreciation, amort., depletion, $m
  1,410
  1,472
  1,537
  1,605
  1,676
  1,750
  1,827
  1,906
  1,989
  2,075
  1,357
  1,450
  1,547
  1,648
  1,752
  1,861
  1,975
  2,093
  2,216
  2,344
  2,478
  2,618
  2,764
  2,917
  3,077
  3,243
  3,418
  3,601
  3,792
  3,992
Funds from operations, $m
  6,274
  6,836
  7,425
  8,040
  8,680
  9,347
  10,041
  10,761
  11,511
  12,289
  12,880
  13,721
  14,596
  15,505
  16,451
  17,436
  18,462
  19,531
  20,645
  21,807
  23,020
  24,286
  25,609
  26,991
  28,435
  29,945
  31,525
  33,179
  34,909
  36,721
Change in working capital, $m
  -59
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -82
  -86
  -89
  -92
  -96
  -100
  -104
  -108
  -113
  -117
  -122
  -128
  -133
  -139
  -145
  -152
  -159
  -166
  -173
  -181
  -190
  -199
Cash from operations, $m
  6,333
  6,898
  7,490
  8,107
  8,751
  9,420
  10,117
  10,841
  11,593
  12,375
  12,969
  13,814
  14,692
  15,605
  16,555
  17,544
  18,575
  19,648
  20,768
  21,935
  23,153
  24,425
  25,754
  27,142
  28,594
  30,111
  31,699
  33,360
  35,099
  36,920
Maintenance CAPEX, $m
  -543
  -603
  -665
  -730
  -798
  -869
  -943
  -1,019
  -1,099
  -1,182
  -1,268
  -1,357
  -1,450
  -1,547
  -1,648
  -1,752
  -1,861
  -1,975
  -2,093
  -2,216
  -2,344
  -2,478
  -2,618
  -2,764
  -2,917
  -3,077
  -3,243
  -3,418
  -3,601
  -3,792
New CAPEX, $m
  -995
  -1,038
  -1,086
  -1,134
  -1,182
  -1,231
  -1,281
  -1,331
  -1,384
  -1,438
  -1,494
  -1,553
  -1,615
  -1,679
  -1,747
  -1,819
  -1,894
  -1,973
  -2,057
  -2,145
  -2,238
  -2,337
  -2,440
  -2,550
  -2,665
  -2,787
  -2,915
  -3,050
  -3,192
  -3,342
Cash from investing activities, $m
  -1,538
  -1,641
  -1,751
  -1,864
  -1,980
  -2,100
  -2,224
  -2,350
  -2,483
  -2,620
  -2,762
  -2,910
  -3,065
  -3,226
  -3,395
  -3,571
  -3,755
  -3,948
  -4,150
  -4,361
  -4,582
  -4,815
  -5,058
  -5,314
  -5,582
  -5,864
  -6,158
  -6,468
  -6,793
  -7,134
Free cash flow, $m
  4,794
  5,257
  5,739
  6,243
  6,770
  7,320
  7,894
  8,490
  9,110
  9,755
  10,207
  10,903
  11,627
  12,379
  13,161
  13,974
  14,820
  15,701
  16,618
  17,574
  18,571
  19,611
  20,696
  21,828
  23,012
  24,248
  25,541
  26,892
  28,306
  29,786
Issuance/(repayment) of debt, $m
  2,384
  2,494
  2,610
  2,725
  2,841
  2,958
  3,077
  3,199
  3,325
  3,455
  3,591
  3,732
  3,880
  4,035
  4,198
  4,370
  4,551
  4,741
  4,943
  5,155
  5,379
  5,615
  5,864
  6,127
  6,404
  6,696
  7,004
  7,329
  7,671
  8,031
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  
  2,384
  2,494
  2,610
  2,725
  2,841
  2,958
  3,077
  3,199
  3,325
  3,455
  3,591
  3,732
  3,880
  4,035
  4,198
  4,370
  4,551
  4,741
  4,943
  5,155
  5,379
  5,615
  5,864
  6,127
  6,404
  6,696
  7,004
  7,329
  7,671
  8,031
Total cash flow (excl. dividends), $m
  7,179
  7,752
  8,349
  8,968
  9,611
  10,278
  10,971
  11,689
  12,435
  13,210
  13,798
  14,635
  15,507
  16,414
  17,359
  18,344
  19,371
  20,442
  21,561
  22,729
  23,949
  25,225
  26,559
  27,955
  29,415
  30,944
  32,545
  34,221
  35,977
  37,817
Retained Cash Flow (-), $m
  -1,287
  -1,343
  -1,405
  -1,467
  -1,530
  -1,593
  -1,657
  -1,723
  -1,790
  -1,860
  -1,933
  -2,010
  -2,089
  -2,173
  -2,261
  -2,353
  -2,450
  -2,553
  -2,661
  -2,776
  -2,896
  -3,023
  -3,157
  -3,299
  -3,448
  -3,606
  -3,771
  -3,946
  -4,130
  -4,324
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
  5,892
  6,409
  6,943
  7,501
  8,082
  8,686
  9,314
  9,967
  10,645
  11,350
  11,864
  12,626
  13,417
  14,241
  15,098
  15,991
  16,920
  17,889
  18,899
  19,953
  21,053
  22,202
  23,402
  24,656
  25,967
  27,339
  28,773
  30,275
  31,847
  33,493
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
  5,649
  5,867
  6,042
  6,176
  6,264
  6,304
  6,292
  6,229
  6,115
  5,950
  5,634
  5,388
  5,102
  4,781
  4,433
  4,064
  3,682
  3,294
  2,910
  2,535
  2,178
  1,842
  1,534
  1,256
  1,010
  798
  618
  468
  348
  252
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

Bristol-Myers Squibb Company is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of biopharmaceutical products. The Company's pharmaceutical products include chemically synthesized drugs, or small molecules, and products produced from biological processes called biologics. Small molecule drugs are administered orally in the form of a pill or tablet. Biologics are administered to patients through injections or by infusion. The Company's products include Empliciti, Opdivo, Sprycel, Yervoy, Eliquis, Orencia, Baraclude, Hepatitis C Franchise, Reyataz Franchise and Sustiva Franchise. It offers products for a range of therapeutic classes, which include virology, including human immunodeficiency virus (HIV) infection; oncology; immunoscience, and cardiovascular. Its products are sold to wholesalers, retail pharmacies, hospitals, government entities and the medical profession across the world.

FINANCIAL RATIOS  of  Bristol-Myers Squibb (BMY)

Valuation Ratios
P/E Ratio 19.8
Price to Sales 4.5
Price to Book 5.5
Price to Tangible Book
Price to Cash Flow 31
Price to Free Cash Flow 54
Growth Rates
Sales Growth Rate 17.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 48.2%
Cap. Spend. - 3 Yr. Gr. Rate 17.7%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 35.3%
Total Debt to Equity 41.5%
Interest Coverage 32
Management Effectiveness
Return On Assets 14.1%
Ret/ On Assets - 3 Yr. Avg. 8.5%
Return On Total Capital 20.3%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 29.3%
Return On Equity - 3 Yr. Avg. 17.8%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 74.6%
Gross Margin - 3 Yr. Avg. 75.9%
EBITDA Margin 33.4%
EBITDA Margin - 3 Yr. Avg. 23%
Operating Margin 30.6%
Oper. Margin - 3 Yr. Avg. 18.1%
Pre-Tax Margin 30.4%
Pre-Tax Margin - 3 Yr. Avg. 19.3%
Net Profit Margin 22.9%
Net Profit Margin - 3 Yr. Avg. 15%
Effective Tax Rate 23.8%
Eff/ Tax Rate - 3 Yr. Avg. 20%
Payout Ratio 57.1%

BMY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BMY stock intrinsic value calculation we used $20776 million for the last fiscal year's total revenue generated by Bristol-Myers Squibb. The default revenue input number comes from 0001 income statement of Bristol-Myers Squibb. 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 BMY stock valuation model: a) initial revenue growth rate of 10.9% 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 BMY is calculated based on our internal credit rating of Bristol-Myers Squibb, 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 Bristol-Myers Squibb.
    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 BMY stock the variable cost ratio is equal to 69.6%.

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 BMY 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 Bristol-Myers Squibb.

Corporate tax rate of 27% is the nominal tax rate for Bristol-Myers Squibb. 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 BMY 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 BMY are equal to 43.7%.

Life of production assets of 16.7 years is the average useful life of capital assets used in Bristol-Myers Squibb 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 BMY is equal to -2.6%. 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 - $11741 million for Bristol-Myers Squibb - 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 1632 million for Bristol-Myers Squibb 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 Bristol-Myers Squibb at the current share price and the inputted number of shares is $86.6 billion.

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COMPANY NEWS

▶ CEO of Chapel Hill firm talks 2 new partnerships with big pharma   [04:42PM  American City Business Journals]
▶ Bristol-Myers Squibb Announces Dividend Increase   [Dec-06-18 04:15PM  Business Wire]
▶ Company News For Nov 28, 2018   [09:30AM  Zacks]
▶ What Happened in the Stock Market Today   [Nov-27-18 04:56PM  Motley Fool]
▶ [$$] Stocks to Watch: Apple, GM, United Technologies   [09:25AM  The Wall Street Journal]
▶ Better Buy: Pfizer vs. Bristol-Myers Squibb   [Nov-25-18 11:30AM  Motley Fool]
▶ How to invest in the wake of the stock market rout   [Nov-21-18 12:32PM  Yahoo Finance]
▶ Bright spots emerge despite stock volatility   [10:47AM  Yahoo Finance Video]
▶ [$$] Why the Corporate Earnings Boom Has Failed to Lift Investors' Spirits   [Nov-18-18 09:17AM  The Wall Street Journal]
▶ Bristol-Myers Squibb lays off employees in Tampa office   [12:19PM  American City Business Journals]
▶ Nektar Bounds Higher On 'Promising Contender' In Cancer Immunotherapy   [Nov-12-18 04:23PM  Investor's Business Daily]

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