Intrinsic value of Endo International - ENDP

Previous Close

$16.10

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$16.10

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of ENDP 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 3.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  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
  3,538
  3,620
  3,713
  3,817
  3,933
  4,060
  4,198
  4,348
  4,509
  4,682
  4,867
  5,065
  5,275
  5,499
  5,736
  5,987
  6,253
  6,535
  6,832
  7,146
  7,477
  7,827
  8,195
  8,583
  8,991
  9,421
  9,874
  10,351
  10,852
  11,379
Variable operating expenses, $m
  6,582
  6,713
  6,863
  7,031
  7,218
  7,422
  7,645
  7,887
  8,147
  8,426
  7,847
  8,166
  8,505
  8,865
  9,248
  9,653
  10,082
  10,536
  11,015
  11,521
  12,055
  12,618
  13,212
  13,837
  14,496
  15,190
  15,920
  16,688
  17,496
  18,346
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
  6,582
  6,713
  6,863
  7,031
  7,218
  7,422
  7,645
  7,887
  8,147
  8,426
  7,847
  8,166
  8,505
  8,865
  9,248
  9,653
  10,082
  10,536
  11,015
  11,521
  12,055
  12,618
  13,212
  13,837
  14,496
  15,190
  15,920
  16,688
  17,496
  18,346
Operating income, $m
  -3,043
  -3,093
  -3,150
  -3,214
  -3,285
  -3,362
  -3,447
  -3,539
  -3,637
  -3,743
  -2,980
  -3,101
  -3,230
  -3,367
  -3,512
  -3,666
  -3,829
  -4,001
  -4,183
  -4,375
  -4,578
  -4,792
  -5,017
  -5,255
  -5,505
  -5,768
  -6,045
  -6,337
  -6,644
  -6,967
EBITDA, $m
  -1,118
  -1,144
  -1,173
  -1,206
  -1,243
  -1,283
  -1,327
  -1,374
  -1,425
  -1,480
  -1,538
  -1,601
  -1,667
  -1,738
  -1,813
  -1,892
  -1,976
  -2,065
  -2,159
  -2,258
  -2,363
  -2,474
  -2,590
  -2,713
  -2,842
  -2,978
  -3,121
  -3,271
  -3,430
  -3,596
Interest expense (income), $m
  0
  488
  461
  475
  492
  511
  531
  554
  578
  605
  634
  665
  698
  733
  770
  810
  852
  897
  945
  995
  1,048
  1,104
  1,163
  1,225
  1,291
  1,360
  1,433
  1,509
  1,590
  1,675
  1,764
Earnings before tax, $m
  -3,531
  -3,554
  -3,625
  -3,706
  -3,795
  -3,894
  -4,001
  -4,117
  -4,243
  -4,377
  -3,645
  -3,799
  -3,963
  -4,137
  -4,322
  -4,518
  -4,726
  -4,946
  -5,178
  -5,423
  -5,682
  -5,955
  -6,242
  -6,545
  -6,865
  -7,201
  -7,555
  -7,927
  -8,319
  -8,731
Tax expense, $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
Net income, $m
  -3,531
  -3,554
  -3,625
  -3,706
  -3,795
  -3,894
  -4,001
  -4,117
  -4,243
  -4,377
  -3,645
  -3,799
  -3,963
  -4,137
  -4,322
  -4,518
  -4,726
  -4,946
  -5,178
  -5,423
  -5,682
  -5,955
  -6,242
  -6,545
  -6,865
  -7,201
  -7,555
  -7,927
  -8,319
  -8,731

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
  11,874
  12,147
  12,459
  12,810
  13,198
  13,624
  14,088
  14,590
  15,131
  15,712
  16,333
  16,996
  17,702
  18,452
  19,248
  20,091
  20,984
  21,929
  22,926
  23,980
  25,091
  26,263
  27,499
  28,801
  30,172
  31,616
  33,135
  34,734
  36,416
  38,186
Adjusted assets (=assets-cash), $m
  11,874
  12,147
  12,459
  12,810
  13,198
  13,624
  14,088
  14,590
  15,131
  15,712
  16,333
  16,996
  17,702
  18,452
  19,248
  20,091
  20,984
  21,929
  22,926
  23,980
  25,091
  26,263
  27,499
  28,801
  30,172
  31,616
  33,135
  34,734
  36,416
  38,186
Revenue / Adjusted assets
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
  0.298
Average production assets, $m
  10,481
  10,722
  10,997
  11,307
  11,649
  12,026
  12,435
  12,878
  13,356
  13,869
  14,417
  15,002
  15,625
  16,287
  16,990
  17,734
  18,522
  19,356
  20,236
  21,166
  22,147
  23,182
  24,273
  25,422
  26,632
  27,906
  29,248
  30,659
  32,144
  33,705
Working capital, $m
  -718
  -735
  -754
  -775
  -798
  -824
  -852
  -883
  -915
  -950
  -988
  -1,028
  -1,071
  -1,116
  -1,164
  -1,215
  -1,269
  -1,327
  -1,387
  -1,451
  -1,518
  -1,589
  -1,664
  -1,742
  -1,825
  -1,913
  -2,004
  -2,101
  -2,203
  -2,310
Total debt, $m
  7,812
  8,058
  8,339
  8,654
  9,004
  9,387
  9,805
  10,257
  10,744
  11,266
  11,826
  12,422
  13,057
  13,732
  14,449
  15,208
  16,012
  16,861
  17,759
  18,707
  19,708
  20,763
  21,875
  23,046
  24,280
  25,580
  26,947
  28,386
  29,900
  31,493
Total liabilities, $m
  10,686
  10,932
  11,213
  11,529
  11,878
  12,262
  12,679
  13,131
  13,618
  14,141
  14,700
  15,297
  15,932
  16,607
  17,323
  18,082
  18,886
  19,736
  20,634
  21,582
  22,582
  23,637
  24,749
  25,921
  27,155
  28,454
  29,822
  31,261
  32,775
  34,367
Total equity, $m
  1,187
  1,215
  1,246
  1,281
  1,320
  1,362
  1,409
  1,459
  1,513
  1,571
  1,633
  1,700
  1,770
  1,845
  1,925
  2,009
  2,098
  2,193
  2,293
  2,398
  2,509
  2,626
  2,750
  2,880
  3,017
  3,162
  3,314
  3,473
  3,642
  3,819
Total liabilities and equity, $m
  11,873
  12,147
  12,459
  12,810
  13,198
  13,624
  14,088
  14,590
  15,131
  15,712
  16,333
  16,997
  17,702
  18,452
  19,248
  20,091
  20,984
  21,929
  22,927
  23,980
  25,091
  26,263
  27,499
  28,801
  30,172
  31,616
  33,136
  34,734
  36,417
  38,186
Debt-to-equity ratio
  6.580
  6.630
  6.690
  6.760
  6.820
  6.890
  6.960
  7.030
  7.100
  7.170
  7.240
  7.310
  7.380
  7.440
  7.510
  7.570
  7.630
  7.690
  7.750
  7.800
  7.850
  7.910
  7.950
  8.000
  8.050
  8.090
  8.130
  8.170
  8.210
  8.250
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
  -3,531
  -3,554
  -3,625
  -3,706
  -3,795
  -3,894
  -4,001
  -4,117
  -4,243
  -4,377
  -3,645
  -3,799
  -3,963
  -4,137
  -4,322
  -4,518
  -4,726
  -4,946
  -5,178
  -5,423
  -5,682
  -5,955
  -6,242
  -6,545
  -6,865
  -7,201
  -7,555
  -7,927
  -8,319
  -8,731
Depreciation, amort., depletion, $m
  1,925
  1,949
  1,977
  2,007
  2,042
  2,079
  2,120
  2,165
  2,212
  2,264
  1,442
  1,500
  1,563
  1,629
  1,699
  1,773
  1,852
  1,936
  2,024
  2,117
  2,215
  2,318
  2,427
  2,542
  2,663
  2,791
  2,925
  3,066
  3,214
  3,371
Funds from operations, $m
  -1,607
  -1,605
  -1,649
  -1,698
  -1,754
  -1,814
  -1,881
  -1,953
  -2,030
  -2,114
  -2,203
  -2,298
  -2,400
  -2,508
  -2,623
  -2,745
  -2,874
  -3,010
  -3,154
  -3,306
  -3,467
  -3,636
  -3,815
  -4,003
  -4,201
  -4,410
  -4,630
  -4,861
  -5,105
  -5,361
Change in working capital, $m
  -14
  -17
  -19
  -21
  -23
  -26
  -28
  -30
  -33
  -35
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -83
  -87
  -92
  -97
  -102
  -107
Cash from operations, $m
  -1,593
  -1,588
  -1,630
  -1,677
  -1,730
  -1,789
  -1,853
  -1,922
  -1,998
  -2,079
  -2,165
  -2,258
  -2,357
  -2,463
  -2,575
  -2,694
  -2,820
  -2,953
  -3,094
  -3,243
  -3,400
  -3,565
  -3,740
  -3,924
  -4,118
  -4,323
  -4,538
  -4,764
  -5,003
  -5,253
Maintenance CAPEX, $m
  -1,028
  -1,048
  -1,072
  -1,100
  -1,131
  -1,165
  -1,203
  -1,244
  -1,288
  -1,336
  -1,387
  -1,442
  -1,500
  -1,563
  -1,629
  -1,699
  -1,773
  -1,852
  -1,936
  -2,024
  -2,117
  -2,215
  -2,318
  -2,427
  -2,542
  -2,663
  -2,791
  -2,925
  -3,066
  -3,214
New CAPEX, $m
  -206
  -241
  -276
  -309
  -343
  -376
  -410
  -443
  -478
  -513
  -548
  -585
  -623
  -662
  -703
  -745
  -788
  -833
  -881
  -930
  -981
  -1,035
  -1,091
  -1,149
  -1,210
  -1,274
  -1,341
  -1,411
  -1,485
  -1,562
Cash from investing activities, $m
  -1,234
  -1,289
  -1,348
  -1,409
  -1,474
  -1,541
  -1,613
  -1,687
  -1,766
  -1,849
  -1,935
  -2,027
  -2,123
  -2,225
  -2,332
  -2,444
  -2,561
  -2,685
  -2,817
  -2,954
  -3,098
  -3,250
  -3,409
  -3,576
  -3,752
  -3,937
  -4,132
  -4,336
  -4,551
  -4,776
Free cash flow, $m
  -2,826
  -2,878
  -2,978
  -3,086
  -3,204
  -3,330
  -3,465
  -3,609
  -3,763
  -3,927
  -4,101
  -4,285
  -4,481
  -4,687
  -4,906
  -5,137
  -5,381
  -5,639
  -5,910
  -6,196
  -6,497
  -6,815
  -7,149
  -7,501
  -7,871
  -8,260
  -8,670
  -9,101
  -9,553
  -10,030
Issuance/(repayment) of debt, $m
  -464
  246
  281
  315
  350
  383
  418
  452
  487
  523
  559
  597
  635
  675
  716
  759
  804
  850
  898
  948
  1,000
  1,055
  1,112
  1,172
  1,234
  1,299
  1,368
  1,439
  1,514
  1,592
Issuance/(repurchase) of shares, $m
  4,234
  3,581
  3,657
  3,741
  3,834
  3,936
  4,047
  4,167
  4,297
  4,435
  3,707
  3,865
  4,033
  4,212
  4,402
  4,603
  4,815
  5,040
  5,277
  5,528
  5,793
  6,072
  6,366
  6,675
  7,002
  7,345
  7,707
  8,087
  8,487
  8,908
Cash from financing (excl. dividends), $m  
  3,770
  3,827
  3,938
  4,056
  4,184
  4,319
  4,465
  4,619
  4,784
  4,958
  4,266
  4,462
  4,668
  4,887
  5,118
  5,362
  5,619
  5,890
  6,175
  6,476
  6,793
  7,127
  7,478
  7,847
  8,236
  8,644
  9,075
  9,526
  10,001
  10,500
Total cash flow (excl. dividends), $m
  944
  949
  960
  970
  980
  990
  1,000
  1,010
  1,021
  1,031
  165
  176
  188
  200
  212
  224
  238
  251
  265
  280
  296
  312
  329
  346
  365
  384
  404
  425
  448
  471
Retained Cash Flow (-), $m
  -4,234
  -3,581
  -3,657
  -3,741
  -3,834
  -3,936
  -4,047
  -4,167
  -4,297
  -4,435
  -3,707
  -3,865
  -4,033
  -4,212
  -4,402
  -4,603
  -4,815
  -5,040
  -5,277
  -5,528
  -5,793
  -6,072
  -6,366
  -6,675
  -7,002
  -7,345
  -7,707
  -8,087
  -8,487
  -8,908
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
  49
  50
  51
  52
  53
  55
  57
  59
  61
  63
  66
  68
  71
  74
  77
  80
  84
  88
  91
  96
  100
  105
  110
  115
  120
  126
  132
  138
  145
  152
Cash available for distribution, $m
  -3,290
  -2,632
  -2,697
  -2,771
  -2,854
  -2,946
  -3,047
  -3,157
  -3,276
  -3,404
  -3,542
  -3,689
  -3,845
  -4,012
  -4,190
  -4,378
  -4,578
  -4,789
  -5,012
  -5,248
  -5,497
  -5,760
  -6,037
  -6,329
  -6,637
  -6,961
  -7,302
  -7,662
  -8,040
  -8,437
Discount rate, %
  12.30
  12.92
  13.56
  14.24
  14.95
  15.70
  16.48
  17.31
  18.17
  19.08
  20.04
  21.04
  22.09
  23.19
  24.35
  25.57
  26.85
  28.19
  29.60
  31.08
  32.64
  34.27
  35.98
  37.78
  39.67
  41.65
  43.73
  45.92
  48.22
  50.63
PV of cash for distribution, $m
  -2,930
  -2,064
  -1,841
  -1,627
  -1,422
  -1,228
  -1,047
  -880
  -729
  -594
  -475
  -373
  -287
  -216
  -159
  -115
  -80
  -55
  -36
  -23
  -15
  -9
  -5
  -3
  -2
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  45.9
  32.6
  23.2
  16.5
  11.7
  8.4
  6.0
  4.3
  3.1
  2.2
  1.7
  1.3
  1.0
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Endo International plc develops, manufactures, and distributes pharmaceutical products and devices worldwide. Its U.S. Branded Pharmaceuticals segment offers chronic pain management products, such as BELBUCA, OPANA ER, and Percocet; Lidoderm for opioid analgesics; and Voltaren gel for osteoarthritis pain, as well as XIAFLEX for treating Peyronie’s and Dupuytren’s contracture diseases. This segment also provides Supprelin LA for central precocious puberty treatment; testosterone replacement therapies, such as Aveed and TESTOPEL, as well as Fortesta and Testim gels; Frova and Sumavel DosePro for migraine headaches; Valstar, a sterile solution for intravesical instillation of valrubicin; and Vantas for the palliative treatment of prostate cancer. The company’s U.S. Generic Pharmaceuticals segment provides tablets, capsules, powders, injectables, liquids, nasal sprays, ophthalmics, and transdermal patches for pain management, urology, central nervous system disorders, immunosuppression, oncology, women’s health, and cardiovascular disease markets. Its International Pharmaceuticals segment offers specialty pharmaceutical products in various therapeutic areas, including attention deficit hyperactivity disorder, pain, women’s health, and oncology; generic, branded generic, and over-the-counter products in the areas of dermatology and anti-infectives; injectables for the treatment of pain, anti-infectives, cardiovascular, and other therapeutics areas; and healthcare services, products, and solutions to hospitals, pharmacies, and practitioners, as well as for government healthcare programs. The company also provides Monarc subfascial hammock to treat female stress urinary incontinence; and Elevate transvaginal pelvic floor repair system for the treatment of pelvic organ prolapse. It sells its branded pharmaceuticals and generics directly, as well as through wholesale drug distributors. Endo International plc was founded in 1920 and is headquartered in Dublin, Ireland.

FINANCIAL RATIOS  of  Endo International (ENDP)

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%

ENDP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENDP stock intrinsic value calculation we used $3469 million for the last fiscal year's total revenue generated by Endo International. The default revenue input number comes from 2017 income statement of Endo International. 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 ENDP 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 12.3%, whose default value for ENDP is calculated based on our internal credit rating of Endo International, 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 Endo International.
    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 ENDP stock the variable cost ratio is equal to 186.5%.

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 ENDP 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 5.9% for Endo International.

Corporate tax rate of 27% is the nominal tax rate for Endo International. 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 ENDP stock is equal to 1.4%.

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 ENDP are equal to 296.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Endo International 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 ENDP is equal to -20.3%. 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 - $485 million for Endo International - 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 223 million for Endo International 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 Endo International at the current share price and the inputted number of shares is $3.6 billion.

COMPANY NEWS

▶ 3 Biotech Stocks That Soared This Week: Are They Buys?   [Aug-11-18 07:03AM  Motley Fool]
▶ Endo teaming up with pro golfer for hand disorder awareness campaign   [Aug-10-18 12:03PM  American City Business Journals]
▶ Company News For Aug 9, 2018   [Aug-09-18 10:28AM  Zacks]
▶ Endo: 2Q Earnings Snapshot   [07:57AM  Associated Press]
▶ Earnings Preview: Endo International   [Aug-07-18 02:52PM  Benzinga]
▶ Endo to Announce Second-Quarter 2018 Financial Results   [Jul-20-18 07:30AM  PR Newswire]
▶ Why Endo International plc Rocketed Higher Today   [Jun-06-18 04:47PM  Motley Fool]
▶ Valeant, Endo Both Buys in Specialty Pharma   [Jun-01-18 11:45AM  Barrons.com]
▶ Add Bucks County to list of those suing opioid manufacturers, distributors   [May-30-18 08:10AM  American City Business Journals]
▶ Nektar Therapeutics Stock Is Risky But Offers Big Reward   [May-15-18 02:28PM  InvestorPlace]
▶ Valeant Upside, Shire Buyout Don't Rally Pharma Stocks   [May-08-18 10:43AM  Barrons.com]
▶ Lannett acquires 23 generic drug products from Endo subsidiary   [May-07-18 01:47PM  American City Business Journals]
▶ $190M deal: Endo buying North Jersey specialty pharma company   [Apr-26-18 09:34AM  American City Business Journals]
▶ Endo Receives Paragraph IV Notification on Vasostrict®   [Apr-17-18 04:31PM  PR Newswire]
▶ Endo Agrees to Extend Temporary Stay of FDA Litigation   [Apr-02-18 07:30AM  PR Newswire]
▶ 3 Sell-Rated Drug Stocks Investors Should Avoid for Now   [Mar-27-18 01:05PM  InvestorPlace]
▶ At $5.86, Is Endo International plc (NASDAQ:ENDP) A Buy?   [Mar-26-18 11:48AM  Simply Wall St.]
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