Intrinsic value of Express Scripts Holding - ESRX

Previous Close

$80.93

  Intrinsic Value

$136.32

stock screener

  Rating & Target

str. buy

+68%

Previous close

$80.93

 
Intrinsic value

$136.32

 
Up/down potential

+68%

 
Rating

str. buy

We calculate the intrinsic value of ESRX 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 46.9

 

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
  102,066
  104,414
  107,097
  110,110
  113,448
  117,111
  121,099
  125,417
  130,068
  135,059
  140,400
  146,098
  152,165
  158,613
  165,455
  172,706
  180,381
  188,497
  197,073
  206,128
  215,683
  225,759
  236,380
  247,571
  259,357
  271,766
  284,828
  298,572
  313,032
  328,241
Variable operating expenses, $m
  96,778
  98,908
  101,343
  104,077
  107,107
  110,431
  114,050
  117,968
  122,189
  126,719
  127,411
  132,582
  138,087
  143,939
  150,148
  156,728
  163,693
  171,059
  178,841
  187,059
  195,729
  204,873
  214,512
  224,667
  235,363
  246,624
  258,477
  270,950
  284,072
  297,874
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
  96,778
  98,908
  101,343
  104,077
  107,107
  110,431
  114,050
  117,968
  122,189
  126,719
  127,411
  132,582
  138,087
  143,939
  150,148
  156,728
  163,693
  171,059
  178,841
  187,059
  195,729
  204,873
  214,512
  224,667
  235,363
  246,624
  258,477
  270,950
  284,072
  297,874
Operating income, $m
  5,288
  5,506
  5,754
  6,033
  6,341
  6,680
  7,049
  7,449
  7,879
  8,341
  12,989
  13,516
  14,077
  14,674
  15,307
  15,978
  16,688
  17,439
  18,232
  19,070
  19,954
  20,886
  21,868
  22,904
  23,994
  25,142
  26,351
  27,622
  28,960
  30,367
EBITDA, $m
  13,586
  13,899
  14,256
  14,657
  15,102
  15,589
  16,120
  16,695
  17,314
  17,978
  18,689
  19,448
  20,255
  21,114
  22,024
  22,990
  24,011
  25,092
  26,233
  27,439
  28,710
  30,052
  31,466
  32,955
  34,524
  36,176
  37,915
  39,744
  41,669
  43,694
Interest expense (income), $m
  0
  865
  904
  950
  1,002
  1,061
  1,126
  1,197
  1,275
  1,359
  1,450
  1,548
  1,652
  1,763
  1,881
  2,007
  2,140
  2,282
  2,431
  2,590
  2,757
  2,934
  3,120
  3,316
  3,524
  3,742
  3,972
  4,214
  4,469
  4,737
  5,019
Earnings before tax, $m
  4,424
  4,602
  4,804
  5,030
  5,280
  5,554
  5,852
  6,173
  6,520
  6,891
  11,441
  11,864
  12,315
  12,793
  13,300
  13,837
  14,406
  15,007
  15,642
  16,313
  17,020
  17,766
  18,552
  19,380
  20,252
  21,170
  22,137
  23,154
  24,223
  25,348
Tax expense, $m
  1,194
  1,242
  1,297
  1,358
  1,426
  1,500
  1,580
  1,667
  1,760
  1,860
  3,089
  3,203
  3,325
  3,454
  3,591
  3,736
  3,890
  4,052
  4,223
  4,404
  4,595
  4,797
  5,009
  5,233
  5,468
  5,716
  5,977
  6,251
  6,540
  6,844
Net income, $m
  3,229
  3,359
  3,507
  3,672
  3,855
  4,055
  4,272
  4,507
  4,759
  5,030
  8,352
  8,661
  8,990
  9,339
  9,709
  10,101
  10,516
  10,955
  11,419
  11,908
  12,425
  12,969
  13,543
  14,147
  14,784
  15,454
  16,160
  16,902
  17,683
  18,504

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
  55,350
  56,624
  58,079
  59,713
  61,523
  63,509
  65,672
  68,013
  70,536
  73,243
  76,139
  79,229
  82,519
  86,016
  89,726
  93,658
  97,820
  102,222
  106,873
  111,783
  116,965
  122,429
  128,189
  134,257
  140,649
  147,379
  154,462
  161,915
  169,757
  178,005
Adjusted assets (=assets-cash), $m
  55,350
  56,624
  58,079
  59,713
  61,523
  63,509
  65,672
  68,013
  70,536
  73,243
  76,139
  79,229
  82,519
  86,016
  89,726
  93,658
  97,820
  102,222
  106,873
  111,783
  116,965
  122,429
  128,189
  134,257
  140,649
  147,379
  154,462
  161,915
  169,757
  178,005
Revenue / Adjusted assets
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
  1.844
Average production assets, $m
  41,439
  42,392
  43,481
  44,705
  46,060
  47,547
  49,166
  50,919
  52,808
  54,834
  57,002
  59,316
  61,779
  64,397
  67,175
  70,118
  73,235
  76,530
  80,012
  83,688
  87,567
  91,658
  95,970
  100,514
  105,299
  110,337
  115,640
  121,220
  127,091
  133,266
Working capital, $m
  -12,044
  -12,321
  -12,637
  -12,993
  -13,387
  -13,819
  -14,290
  -14,799
  -15,348
  -15,937
  -16,567
  -17,240
  -17,955
  -18,716
  -19,524
  -20,379
  -21,285
  -22,243
  -23,255
  -24,323
  -25,451
  -26,640
  -27,893
  -29,213
  -30,604
  -32,068
  -33,610
  -35,232
  -36,938
  -38,732
Total debt, $m
  16,742
  17,590
  18,559
  19,647
  20,853
  22,176
  23,616
  25,175
  26,855
  28,658
  30,587
  32,645
  34,836
  37,165
  39,636
  42,255
  45,027
  47,958
  51,056
  54,326
  57,777
  61,416
  65,252
  69,294
  73,551
  78,033
  82,750
  87,714
  92,937
  98,430
Total liabilities, $m
  36,863
  37,711
  38,680
  39,769
  40,974
  42,297
  43,738
  45,297
  46,977
  48,780
  50,708
  52,766
  54,958
  57,286
  59,758
  62,376
  65,148
  68,080
  71,177
  74,448
  77,899
  81,538
  85,374
  89,415
  93,672
  98,154
  102,872
  107,836
  113,058
  118,551
Total equity, $m
  18,487
  18,912
  19,398
  19,944
  20,549
  21,212
  21,934
  22,716
  23,559
  24,463
  25,430
  26,462
  27,561
  28,729
  29,968
  31,282
  32,672
  34,142
  35,696
  37,336
  39,066
  40,891
  42,815
  44,842
  46,977
  49,224
  51,590
  54,080
  56,699
  59,454
Total liabilities and equity, $m
  55,350
  56,623
  58,078
  59,713
  61,523
  63,509
  65,672
  68,013
  70,536
  73,243
  76,138
  79,228
  82,519
  86,015
  89,726
  93,658
  97,820
  102,222
  106,873
  111,784
  116,965
  122,429
  128,189
  134,257
  140,649
  147,378
  154,462
  161,916
  169,757
  178,005
Debt-to-equity ratio
  0.910
  0.930
  0.960
  0.990
  1.010
  1.050
  1.080
  1.110
  1.140
  1.170
  1.200
  1.230
  1.260
  1.290
  1.320
  1.350
  1.380
  1.400
  1.430
  1.460
  1.480
  1.500
  1.520
  1.550
  1.570
  1.590
  1.600
  1.620
  1.640
  1.660
Adjusted equity ratio
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,229
  3,359
  3,507
  3,672
  3,855
  4,055
  4,272
  4,507
  4,759
  5,030
  8,352
  8,661
  8,990
  9,339
  9,709
  10,101
  10,516
  10,955
  11,419
  11,908
  12,425
  12,969
  13,543
  14,147
  14,784
  15,454
  16,160
  16,902
  17,683
  18,504
Depreciation, amort., depletion, $m
  8,298
  8,393
  8,502
  8,625
  8,760
  8,909
  9,071
  9,246
  9,435
  9,638
  5,700
  5,932
  6,178
  6,440
  6,717
  7,012
  7,323
  7,653
  8,001
  8,369
  8,757
  9,166
  9,597
  10,051
  10,530
  11,034
  11,564
  12,122
  12,709
  13,327
Funds from operations, $m
  11,527
  11,752
  12,009
  12,297
  12,615
  12,963
  13,343
  13,753
  14,194
  14,668
  14,052
  14,593
  15,168
  15,778
  16,426
  17,113
  17,840
  18,608
  19,420
  20,277
  21,181
  22,135
  23,140
  24,199
  25,314
  26,488
  27,724
  29,024
  30,392
  31,831
Change in working capital, $m
  -236
  -277
  -317
  -355
  -394
  -432
  -471
  -509
  -549
  -589
  -630
  -672
  -716
  -761
  -807
  -856
  -906
  -958
  -1,012
  -1,068
  -1,127
  -1,189
  -1,253
  -1,320
  -1,391
  -1,464
  -1,541
  -1,622
  -1,706
  -1,795
Cash from operations, $m
  11,763
  12,029
  12,326
  12,652
  13,009
  13,396
  13,813
  14,262
  14,743
  15,257
  14,683
  15,265
  15,883
  16,539
  17,234
  17,969
  18,746
  19,566
  20,432
  21,346
  22,309
  23,324
  24,393
  25,519
  26,705
  27,952
  29,265
  30,646
  32,098
  33,626
Maintenance CAPEX, $m
  -4,066
  -4,144
  -4,239
  -4,348
  -4,470
  -4,606
  -4,755
  -4,917
  -5,092
  -5,281
  -5,483
  -5,700
  -5,932
  -6,178
  -6,440
  -6,717
  -7,012
  -7,323
  -7,653
  -8,001
  -8,369
  -8,757
  -9,166
  -9,597
  -10,051
  -10,530
  -11,034
  -11,564
  -12,122
  -12,709
New CAPEX, $m
  -776
  -953
  -1,089
  -1,223
  -1,355
  -1,487
  -1,619
  -1,753
  -1,888
  -2,027
  -2,168
  -2,313
  -2,463
  -2,618
  -2,778
  -2,944
  -3,116
  -3,295
  -3,482
  -3,676
  -3,879
  -4,091
  -4,312
  -4,543
  -4,785
  -5,038
  -5,303
  -5,580
  -5,871
  -6,175
Cash from investing activities, $m
  -4,842
  -5,097
  -5,328
  -5,571
  -5,825
  -6,093
  -6,374
  -6,670
  -6,980
  -7,308
  -7,651
  -8,013
  -8,395
  -8,796
  -9,218
  -9,661
  -10,128
  -10,618
  -11,135
  -11,677
  -12,248
  -12,848
  -13,478
  -14,140
  -14,836
  -15,568
  -16,337
  -17,144
  -17,993
  -18,884
Free cash flow, $m
  6,921
  6,932
  6,997
  7,081
  7,183
  7,303
  7,439
  7,593
  7,763
  7,949
  7,031
  7,251
  7,489
  7,743
  8,016
  8,307
  8,618
  8,947
  9,297
  9,668
  10,061
  10,476
  10,915
  11,379
  11,868
  12,384
  12,928
  13,502
  14,106
  14,742
Issuance/(repayment) of debt, $m
  728
  848
  969
  1,088
  1,206
  1,323
  1,441
  1,559
  1,680
  1,803
  1,929
  2,058
  2,191
  2,329
  2,471
  2,619
  2,772
  2,931
  3,097
  3,270
  3,451
  3,639
  3,836
  4,042
  4,257
  4,482
  4,717
  4,964
  5,222
  5,493
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  
  728
  848
  969
  1,088
  1,206
  1,323
  1,441
  1,559
  1,680
  1,803
  1,929
  2,058
  2,191
  2,329
  2,471
  2,619
  2,772
  2,931
  3,097
  3,270
  3,451
  3,639
  3,836
  4,042
  4,257
  4,482
  4,717
  4,964
  5,222
  5,493
Total cash flow (excl. dividends), $m
  7,649
  7,780
  7,966
  8,169
  8,389
  8,625
  8,880
  9,152
  9,443
  9,752
  8,960
  9,309
  9,680
  10,072
  10,487
  10,926
  11,390
  11,879
  12,395
  12,939
  13,512
  14,116
  14,751
  15,421
  16,125
  16,866
  17,646
  18,466
  19,328
  20,235
Retained Cash Flow (-), $m
  -367
  -425
  -486
  -546
  -605
  -663
  -722
  -782
  -842
  -904
  -967
  -1,032
  -1,099
  -1,168
  -1,239
  -1,313
  -1,390
  -1,470
  -1,553
  -1,640
  -1,731
  -1,825
  -1,924
  -2,027
  -2,135
  -2,248
  -2,366
  -2,490
  -2,619
  -2,755
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
  100
  102
  104
  107
  110
  113
  117
  121
  125
  130
  135
  140
  146
  152
  159
  165
  173
  180
  188
  197
  206
  216
  226
  236
  248
  259
  272
  285
  299
  313
Cash available for distribution, $m
  7,282
  7,355
  7,480
  7,623
  7,784
  7,962
  8,157
  8,370
  8,600
  8,848
  7,993
  8,277
  8,581
  8,904
  9,248
  9,613
  9,999
  10,409
  10,841
  11,298
  11,781
  12,290
  12,828
  13,394
  13,990
  14,619
  15,280
  15,976
  16,709
  17,480
Discount rate, %
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
  6,922
  6,613
  6,328
  6,034
  5,729
  5,415
  5,090
  4,757
  4,418
  4,073
  3,268
  2,977
  2,688
  2,404
  2,127
  1,860
  1,608
  1,371
  1,154
  956
  781
  627
  494
  382
  290
  215
  157
  111
  77
  52
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

Express Scripts Holding Company operates as a pharmacy benefit management (PBM) company in the United States, Canada, and Europe. It operates in two segments, PBM and Other Business Operations. The PBM segment offers clinical solutions, specialized pharmacy care, home delivery and specialty pharmacy, retail network pharmacy administration, benefit design consultation, drug utilization review, drug formulary management, administration of a group purchasing organization, and consumer health and drug information services. This segment also provides Medicare, Medicaid, and health insurance marketplace products; and Express Scripts SafeGuardRxSM, a suite of solutions targeting the medication classes that pose a budgetary threat to its clients. The Other Business Operations segment distributes pharmaceuticals and medical supplies, including injectable and infusible pharmaceuticals and medications to treat specialty and rare/orphan diseases. This segment also provides consulting services, such as design, implementation, and project management for pharmaceutical and biotechnology manufacturers to collect scientific evidence to guide the use of medicines. The company serves care organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers’ compensation plans, government health programs, providers, clinics, hospitals, and others. As of December 31, 2016, it operated four automated dispensing home delivery pharmacies; one non-automated dispensing home delivery pharmacy; and one non-dispensing home delivery pharmacy, as well as various non-dispensing order processing and patient contact centers, specialty drug pharmacies, and fertility pharmacies. The company was formerly known as Aristotle Holding, Inc. and changed its name to Express Scripts Holding Company in April 2012. Express Scripts Holding Company was founded in 1986 and is headquartered in Saint Louis, Missouri.

FINANCIAL RATIOS  of  Express Scripts Holding (ESRX)

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%

ESRX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ESRX stock intrinsic value calculation we used $100065 million for the last fiscal year's total revenue generated by Express Scripts Holding. The default revenue input number comes from 2017 income statement of Express Scripts Holding. 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 ESRX 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 5.2%, whose default value for ESRX is calculated based on our internal credit rating of Express Scripts Holding, 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 Express Scripts Holding.
    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 ESRX stock the variable cost ratio is equal to 94.9%.

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 ESRX 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 Express Scripts Holding.

Corporate tax rate of 27% is the nominal tax rate for Express Scripts Holding. 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 ESRX stock is equal to 0.1%.

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 ESRX are equal to 40.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Express Scripts Holding 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 ESRX is equal to -11.8%. 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 - $18120 million for Express Scripts Holding - 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 580 million for Express Scripts Holding 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 Express Scripts Holding at the current share price and the inputted number of shares is $46.9 billion.

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COMPANY NEWS

▶ Trump's Drug-Price Push Butts Into Two Megadeals   [Jul-19-18 02:04PM  Bloomberg]
▶ Express Scripts subsidiary to add service center in St. Louis   [11:58AM  American City Business Journals]
▶ Analyst: Express Scripts will grow alongside Amazon, even after purchase of PillPack   [Jul-10-18 12:53PM  American City Business Journals]
▶ OP company files antitrust suit against pharmacy giant   [Jul-05-18 03:52PM  American City Business Journals]
▶ Amazon PillPack   [Jul-03-18 02:07PM  Yahoo Finance Video]
▶ Pharmacy network accuses Express Scripts of anti-competitive practices   [Jun-26-18 02:51PM  American City Business Journals]
▶ New Strong Sell Stocks for June 22nd   [Jun-22-18 09:10AM  Zacks]
▶ New Strong Sell Stocks for June 20th   [Jun-20-18 06:28AM  Zacks]
▶ 8 Stocks Seen Surging On New Merger Wave   [Jun-14-18 01:00PM  Investopedia]
▶ Express Scripts partners with company behind self-service pharmacy kiosks   [Jun-07-18 12:24PM  American City Business Journals]
▶ Cigna Corporation Stock Is Trading at a Steep Discount   [May-29-18 02:08PM  InvestorPlace]
▶ Express Scripts to remain in St. Louis County, filing says   [May-16-18 05:31PM  American City Business Journals]
▶ ValueAct Dumps Microsoft, Express Scripts   [11:19AM  Barrons.com]
▶ [$$] Reckoning for Drug Middlemen Is Postponed, Not Canceled   [May-11-18 11:18PM  The Wall Street Journal]
▶ How Tampa Bays startup community compares to the rest of the world   [07:39AM  American City Business Journals]
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