Intrinsic value of Cardinal Health - CAH

Previous Close

$58.89

  Intrinsic Value

$154.91

stock screener

  Rating & Target

str. buy

+163%

Previous close

$58.89

 
Intrinsic value

$154.91

 
Up/down potential

+163%

 
Rating

str. buy

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

We calculate the intrinsic value of CAH 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 2017), $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 18.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.94
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  129,976
  136,475
  143,299
  150,463
  157,987
  165,886
  174,180
  182,889
  192,034
  201,635
  211,717
  222,303
  233,418
  245,089
  257,344
  270,211
  283,721
  297,907
  312,803
  328,443
  344,865
  362,108
  380,214
  399,224
  419,186
  440,145
  462,152
  485,260
  509,523
  534,999
  561,749
Variable operating expenses, $m
 
  133,709
  140,359
  147,340
  154,671
  162,369
  170,451
  178,938
  187,848
  197,205
  207,029
  216,622
  227,453
  238,826
  250,767
  263,305
  276,471
  290,294
  304,809
  320,049
  336,052
  352,854
  370,497
  389,022
  408,473
  428,897
  450,342
  472,859
  496,502
  521,327
  547,393
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
  127,856
  133,709
  140,359
  147,340
  154,671
  162,369
  170,451
  178,938
  187,848
  197,205
  207,029
  216,622
  227,453
  238,826
  250,767
  263,305
  276,471
  290,294
  304,809
  320,049
  336,052
  352,854
  370,497
  389,022
  408,473
  428,897
  450,342
  472,859
  496,502
  521,327
  547,393
Operating income, $m
  2,120
  2,766
  2,940
  3,123
  3,315
  3,517
  3,729
  3,952
  4,185
  4,431
  4,688
  5,681
  5,965
  6,263
  6,577
  6,905
  7,251
  7,613
  7,994
  8,394
  8,813
  9,254
  9,717
  10,202
  10,713
  11,248
  11,811
  12,401
  13,021
  13,672
  14,356
EBITDA, $m
  2,837
  3,750
  3,938
  4,135
  4,341
  4,558
  4,786
  5,026
  5,277
  5,541
  5,818
  6,109
  6,414
  6,735
  7,071
  7,425
  7,796
  8,186
  8,595
  9,025
  9,476
  9,950
  10,448
  10,970
  11,519
  12,095
  12,699
  13,334
  14,001
  14,701
  15,436
Interest expense (income), $m
  200
  317
  297
  352
  410
  471
  534
  601
  671
  745
  822
  903
  989
  1,078
  1,172
  1,271
  1,375
  1,483
  1,598
  1,718
  1,844
  1,976
  2,115
  2,261
  2,414
  2,574
  2,743
  2,920
  3,107
  3,302
  3,507
Earnings before tax, $m
  1,924
  2,448
  2,643
  2,771
  2,905
  3,047
  3,195
  3,351
  3,514
  3,686
  3,866
  4,778
  4,976
  5,185
  5,404
  5,635
  5,876
  6,130
  6,396
  6,676
  6,970
  7,278
  7,602
  7,942
  8,299
  8,674
  9,067
  9,481
  9,915
  10,370
  10,849
Tax expense, $m
  630
  661
  714
  748
  784
  823
  863
  905
  949
  995
  1,044
  1,290
  1,344
  1,400
  1,459
  1,521
  1,587
  1,655
  1,727
  1,803
  1,882
  1,965
  2,053
  2,144
  2,241
  2,342
  2,448
  2,560
  2,677
  2,800
  2,929
Net income, $m
  1,288
  1,787
  1,929
  2,023
  2,121
  2,224
  2,332
  2,446
  2,565
  2,691
  2,822
  3,488
  3,633
  3,785
  3,945
  4,113
  4,290
  4,475
  4,669
  4,873
  5,088
  5,313
  5,549
  5,798
  6,058
  6,332
  6,619
  6,921
  7,238
  7,570
  7,920

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6,879
  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
  40,112
  34,895
  36,640
  38,472
  40,395
  42,415
  44,536
  46,763
  49,101
  51,556
  54,134
  56,840
  59,682
  62,667
  65,800
  69,090
  72,544
  76,172
  79,980
  83,979
  88,178
  92,587
  97,216
  102,077
  107,181
  112,540
  118,167
  124,076
  130,279
  136,793
  143,633
Adjusted assets (=assets-cash), $m
  33,233
  34,895
  36,640
  38,472
  40,395
  42,415
  44,536
  46,763
  49,101
  51,556
  54,134
  56,840
  59,682
  62,667
  65,800
  69,090
  72,544
  76,172
  79,980
  83,979
  88,178
  92,587
  97,216
  102,077
  107,181
  112,540
  118,167
  124,076
  130,279
  136,793
  143,633
Revenue / Adjusted assets
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
  3.911
Average production assets, $m
  3,960
  4,094
  4,299
  4,514
  4,740
  4,977
  5,225
  5,487
  5,761
  6,049
  6,352
  6,669
  7,003
  7,353
  7,720
  8,106
  8,512
  8,937
  9,384
  9,853
  10,346
  10,863
  11,406
  11,977
  12,576
  13,204
  13,865
  14,558
  15,286
  16,050
  16,852
Working capital, $m
  7,124
  1,638
  1,720
  1,806
  1,896
  1,991
  2,090
  2,195
  2,304
  2,420
  2,541
  2,668
  2,801
  2,941
  3,088
  3,243
  3,405
  3,575
  3,754
  3,941
  4,138
  4,345
  4,563
  4,791
  5,030
  5,282
  5,546
  5,823
  6,114
  6,420
  6,741
Total debt, $m
  10,395
  8,497
  10,067
  11,716
  13,447
  15,265
  17,173
  19,178
  21,282
  23,491
  25,811
  28,247
  30,805
  33,491
  36,311
  39,272
  42,381
  45,645
  49,073
  52,672
  56,451
  60,419
  64,586
  68,961
  73,554
  78,377
  83,442
  88,759
  94,342
  100,205
  106,361
Total liabilities, $m
  33,304
  31,406
  32,976
  34,625
  36,356
  38,174
  40,082
  42,087
  44,191
  46,400
  48,720
  51,156
  53,714
  56,400
  59,220
  62,181
  65,290
  68,554
  71,982
  75,581
  79,360
  83,328
  87,495
  91,870
  96,463
  101,286
  106,351
  111,668
  117,251
  123,114
  129,270
Total equity, $m
  6,808
  3,490
  3,664
  3,847
  4,040
  4,242
  4,454
  4,676
  4,910
  5,156
  5,413
  5,684
  5,968
  6,267
  6,580
  6,909
  7,254
  7,617
  7,998
  8,398
  8,818
  9,259
  9,722
  10,208
  10,718
  11,254
  11,817
  12,408
  13,028
  13,679
  14,363
Total liabilities and equity, $m
  40,112
  34,896
  36,640
  38,472
  40,396
  42,416
  44,536
  46,763
  49,101
  51,556
  54,133
  56,840
  59,682
  62,667
  65,800
  69,090
  72,544
  76,171
  79,980
  83,979
  88,178
  92,587
  97,217
  102,078
  107,181
  112,540
  118,168
  124,076
  130,279
  136,793
  143,633
Debt-to-equity ratio
  1.527
  2.430
  2.750
  3.050
  3.330
  3.600
  3.860
  4.100
  4.330
  4.560
  4.770
  4.970
  5.160
  5.340
  5.520
  5.680
  5.840
  5.990
  6.140
  6.270
  6.400
  6.530
  6.640
  6.760
  6.860
  6.960
  7.060
  7.150
  7.240
  7.330
  7.410
Adjusted equity ratio
  -0.002
  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
  1,288
  1,787
  1,929
  2,023
  2,121
  2,224
  2,332
  2,446
  2,565
  2,691
  2,822
  3,488
  3,633
  3,785
  3,945
  4,113
  4,290
  4,475
  4,669
  4,873
  5,088
  5,313
  5,549
  5,798
  6,058
  6,332
  6,619
  6,921
  7,238
  7,570
  7,920
Depreciation, amort., depletion, $m
  717
  985
  998
  1,011
  1,026
  1,041
  1,057
  1,074
  1,091
  1,110
  1,129
  428
  449
  471
  495
  520
  546
  573
  602
  632
  663
  696
  731
  768
  806
  846
  889
  933
  980
  1,029
  1,080
Funds from operations, $m
  -110
  2,772
  2,927
  3,034
  3,147
  3,265
  3,389
  3,520
  3,657
  3,801
  3,952
  3,915
  4,082
  4,257
  4,440
  4,633
  4,835
  5,048
  5,271
  5,505
  5,751
  6,009
  6,281
  6,565
  6,864
  7,178
  7,508
  7,854
  8,218
  8,599
  9,000
Change in working capital, $m
  -1,294
  78
  82
  86
  90
  95
  100
  105
  110
  115
  121
  127
  133
  140
  147
  154
  162
  170
  179
  188
  197
  207
  217
  228
  240
  252
  264
  277
  291
  306
  321
Cash from operations, $m
  1,184
  2,694
  2,845
  2,948
  3,057
  3,170
  3,290
  3,415
  3,547
  3,685
  3,831
  3,788
  3,948
  4,116
  4,293
  4,478
  4,673
  4,877
  5,092
  5,317
  5,554
  5,802
  6,063
  6,337
  6,625
  6,927
  7,244
  7,577
  7,926
  8,293
  8,679
Maintenance CAPEX, $m
  0
  -254
  -262
  -276
  -289
  -304
  -319
  -335
  -352
  -369
  -388
  -407
  -428
  -449
  -471
  -495
  -520
  -546
  -573
  -602
  -632
  -663
  -696
  -731
  -768
  -806
  -846
  -889
  -933
  -980
  -1,029
New CAPEX, $m
  -387
  -134
  -205
  -215
  -226
  -237
  -249
  -261
  -274
  -288
  -302
  -318
  -333
  -350
  -368
  -386
  -405
  -426
  -447
  -469
  -493
  -517
  -543
  -570
  -599
  -629
  -660
  -693
  -728
  -764
  -802
Cash from investing activities, $m
  -405
  -388
  -467
  -491
  -515
  -541
  -568
  -596
  -626
  -657
  -690
  -725
  -761
  -799
  -839
  -881
  -925
  -972
  -1,020
  -1,071
  -1,125
  -1,180
  -1,239
  -1,301
  -1,367
  -1,435
  -1,506
  -1,582
  -1,661
  -1,744
  -1,831
Free cash flow, $m
  779
  2,306
  2,378
  2,458
  2,541
  2,630
  2,722
  2,819
  2,921
  3,028
  3,140
  3,063
  3,187
  3,317
  3,454
  3,598
  3,748
  3,906
  4,072
  4,247
  4,430
  4,622
  4,824
  5,036
  5,258
  5,492
  5,737
  5,995
  6,265
  6,549
  6,847
Issuance/(repayment) of debt, $m
  4,861
  -571
  1,570
  1,649
  1,731
  1,818
  1,909
  2,004
  2,104
  2,210
  2,320
  2,436
  2,558
  2,686
  2,820
  2,961
  3,109
  3,264
  3,428
  3,599
  3,779
  3,968
  4,166
  4,375
  4,593
  4,823
  5,064
  5,318
  5,583
  5,863
  6,156
Issuance/(repurchase) of shares, $m
  -600
  446
  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  
  4,323
  -125
  1,570
  1,649
  1,731
  1,818
  1,909
  2,004
  2,104
  2,210
  2,320
  2,436
  2,558
  2,686
  2,820
  2,961
  3,109
  3,264
  3,428
  3,599
  3,779
  3,968
  4,166
  4,375
  4,593
  4,823
  5,064
  5,318
  5,583
  5,863
  6,156
Total cash flow (excl. dividends), $m
  5,100
  2,181
  3,948
  4,106
  4,273
  4,447
  4,631
  4,823
  5,025
  5,238
  5,460
  5,499
  5,745
  6,003
  6,274
  6,559
  6,857
  7,171
  7,500
  7,846
  8,209
  8,590
  8,990
  9,410
  9,852
  10,315
  10,802
  11,312
  11,849
  12,412
  13,003
Retained Cash Flow (-), $m
  -254
  -2,234
  -174
  -183
  -192
  -202
  -212
  -223
  -234
  -246
  -258
  -271
  -284
  -298
  -313
  -329
  -345
  -363
  -381
  -400
  -420
  -441
  -463
  -486
  -510
  -536
  -563
  -591
  -620
  -651
  -684
Prev. year cash balance distribution, $m
 
  5,552
  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
 
  5,499
  3,774
  3,923
  4,080
  4,245
  4,419
  4,601
  4,792
  4,992
  5,203
  5,229
  5,461
  5,705
  5,961
  6,230
  6,512
  6,808
  7,119
  7,446
  7,789
  8,149
  8,527
  8,924
  9,341
  9,779
  10,239
  10,721
  11,228
  11,760
  12,319
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
 
  5,272
  3,455
  3,414
  3,360
  3,291
  3,207
  3,108
  2,995
  2,868
  2,728
  2,483
  2,330
  2,169
  2,001
  1,829
  1,655
  1,481
  1,311
  1,146
  990
  843
  708
  585
  476
  380
  299
  230
  174
  128
  93
Current shareholders' claim on cash, %
  100
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5
  88.5

Cardinal Health, Inc. is a healthcare services and products company. The Company operates through two segments: Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare and consumer products. This segment also operates nuclear pharmacies and cyclotron facilities; provides pharmacy management services to hospitals, as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers, and provides services to healthcare companies. The Medical segment distributes a range of medical, surgical and laboratory products, and provides services to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers. This segment also manufactures, sources and develops its own Cardinal Health brand medical and surgical products. It provides post-acute care management and transition services, and software to hospitals.

FINANCIAL RATIOS  of  Cardinal Health (CAH)

Valuation Ratios
P/E Ratio 14.4
Price to Sales 0.1
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 15.7
Price to Free Cash Flow 23.3
Growth Rates
Sales Growth Rate 6.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -16.8%
Cap. Spend. - 3 Yr. Gr. Rate 9.2%
Financial Strength
Quick Ratio 5
Current Ratio 0
LT Debt to Equity 133.2%
Total Debt to Equity 152.7%
Interest Coverage 11
Management Effectiveness
Return On Assets 3.8%
Ret/ On Assets - 3 Yr. Avg. 4.4%
Return On Total Capital 8.8%
Ret/ On T. Cap. - 3 Yr. Avg. 10.6%
Return On Equity 19.3%
Return On Equity - 3 Yr. Avg. 20.3%
Asset Turnover 3.5
Profitability Ratios
Gross Margin 5%
Gross Margin - 3 Yr. Avg. 5.3%
EBITDA Margin 2.2%
EBITDA Margin - 3 Yr. Avg. 2.4%
Operating Margin 1.6%
Oper. Margin - 3 Yr. Avg. 1.9%
Pre-Tax Margin 1.5%
Pre-Tax Margin - 3 Yr. Avg. 1.8%
Net Profit Margin 1%
Net Profit Margin - 3 Yr. Avg. 1.1%
Effective Tax Rate 32.7%
Eff/ Tax Rate - 3 Yr. Avg. 36.1%
Payout Ratio 44.8%

CAH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CAH stock intrinsic value calculation we used $129976 million for the last fiscal year's total revenue generated by Cardinal Health. The default revenue input number comes from 2017 income statement of Cardinal Health. 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 CAH stock valuation model: a) initial revenue growth rate of 5% 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 CAH is calculated based on our internal credit rating of Cardinal Health, 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 Cardinal Health.
    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 CAH stock the variable cost ratio is equal to 98%.

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 CAH 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 3.5% for Cardinal Health.

Corporate tax rate of 27% is the nominal tax rate for Cardinal Health. 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 CAH 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 CAH are equal to 3%.

Life of production assets of 15.6 years is the average useful life of capital assets used in Cardinal Health 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 CAH is equal to 1.2%. 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 - $6808 million for Cardinal Health - 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 315.245 million for Cardinal Health 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 Cardinal Health at the current share price and the inputted number of shares is $18.6 billion.

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COMPANY NEWS

▶ APNewsBreak: Doctor: Lack of drugs led to new execution plan   [Nov-29-17 06:53PM  Associated Press]
▶ Merck, Cardinal Health Drop into Mondays 52-Week Low Club   [Nov-20-17 04:04PM  24/7 Wall St.]
▶ Cardinal Health sells China business for $1.2B   [11:55AM  American City Business Journals]
▶ [$$] Cardinal Health Pulls Back From China   [02:29AM  The Wall Street Journal]
▶ 2 Dividend Aristocrats To Buy, And 2 To Sell Now   [Nov-11-17 08:11AM  Forbes]
▶ The Quiet Dividend Aristocrats: 2 Winners, 2 Losers   [Nov-10-17 03:56AM  Harvest Exchange]
▶ Cardinal Health shareholders grill CEO George Barrett on opioids   [Nov-08-17 09:10PM  American City Business Journals]
▶ [$$] Cardinal Health Chief Executive George Barrett Stepping Down   [Nov-07-17 12:30AM  The Wall Street Journal]
▶ [$$] Cardinal Health Names New CEO   [08:30AM  The Wall Street Journal]
▶ November Top Dividend Stock   [08:03AM  Simply Wall St.]
▶ Cardinal beats 1Q profit forecasts   [06:55AM  Associated Press]
▶ Missouri attorney general demands opioid distributor records   [Oct-31-17 07:45PM  Associated Press]
▶ New Mexico sues pharma companies & drug distributors   [Oct-26-17 03:30PM  CNBC Videos]
▶ Trump to scrap a crucial part of Obamacare   [Oct-13-17 10:38AM  Yahoo Finance Video]
▶ Cramer's lightning round: Let Nike walk these losses off   [Oct-10-17 07:04PM  CNBC Videos]
▶ How Shanghai Pharma Can Get High   [Oct-09-17 05:00PM  Bloomberg]
▶ Cardinal's China Exit Pits PE Against State Firm   [Oct-08-17 10:13PM  Bloomberg]
▶ Cardinal Health: Stable Net Profit Margins in Fiscal 2018?   [Oct-05-17 05:36PM  Market Realist]
▶ States expand investigation of opioid makers, distributors   [Sep-19-17 02:55PM  Associated Press]
▶ How Safe Is Cardinal Health's Dividend?   [Sep-15-17 07:18AM  Motley Fool]
▶ New Strong Sell Stocks for September 14th   [Sep-14-17 09:30AM  Zacks]
Financial statements of CAH
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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