Intrinsic value of Gilead Sciences - GILD

Previous Close

$69.78

  Intrinsic Value

$144.82

stock screener

  Rating & Target

str. buy

+108%

Previous close

$69.78

 
Intrinsic value

$144.82

 
Up/down potential

+108%

 
Rating

str. buy

We calculate the intrinsic value of GILD 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 90.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  26,629
  27,242
  27,942
  28,728
  29,599
  30,554
  31,595
  32,721
  33,935
  35,237
  36,630
  38,117
  39,700
  41,382
  43,167
  45,059
  47,061
  49,179
  51,417
  53,779
  56,272
  58,901
  61,672
  64,591
  67,666
  70,904
  74,312
  77,898
  81,670
  85,638
Variable operating expenses, $m
  4,777
  4,838
  4,908
  4,986
  5,073
  5,168
  5,272
  5,384
  5,505
  5,634
  3,647
  3,795
  3,953
  4,120
  4,298
  4,487
  4,686
  4,897
  5,120
  5,355
  5,603
  5,865
  6,141
  6,431
  6,738
  7,060
  7,399
  7,756
  8,132
  8,527
Fixed operating expenses, $m
  7,588
  7,755
  7,926
  8,100
  8,278
  8,461
  8,647
  8,837
  9,031
  9,230
  9,433
  9,641
  9,853
  10,070
  10,291
  10,517
  10,749
  10,985
  11,227
  11,474
  11,726
  11,984
  12,248
  12,518
  12,793
  13,074
  13,362
  13,656
  13,956
  14,263
Total operating expenses, $m
  12,365
  12,593
  12,834
  13,086
  13,351
  13,629
  13,919
  14,221
  14,536
  14,864
  13,080
  13,436
  13,806
  14,190
  14,589
  15,004
  15,435
  15,882
  16,347
  16,829
  17,329
  17,849
  18,389
  18,949
  19,531
  20,134
  20,761
  21,412
  22,088
  22,790
Operating income, $m
  14,263
  14,648
  15,108
  15,641
  16,247
  16,925
  17,676
  18,500
  19,399
  20,373
  23,550
  24,681
  25,894
  27,192
  28,578
  30,055
  31,627
  33,297
  35,070
  36,950
  38,942
  41,052
  43,283
  45,642
  48,136
  50,770
  53,550
  56,485
  59,582
  62,848
EBITDA, $m
  17,154
  17,556
  18,036
  18,591
  19,222
  19,928
  20,709
  21,565
  22,498
  23,510
  24,601
  25,775
  27,034
  28,380
  29,817
  31,348
  32,977
  34,708
  36,546
  38,494
  40,557
  42,742
  45,053
  47,496
  50,078
  52,805
  55,683
  58,721
  61,926
  65,306
Interest expense (income), $m
  885
  1,811
  1,861
  1,920
  1,988
  2,065
  2,150
  2,243
  2,344
  2,454
  2,572
  2,699
  2,834
  2,979
  3,133
  3,297
  3,471
  3,655
  3,850
  4,056
  4,274
  4,504
  4,747
  5,002
  5,272
  5,556
  5,856
  6,171
  6,503
  6,852
  7,219
Earnings before tax, $m
  12,452
  12,787
  13,187
  13,653
  14,182
  14,776
  15,433
  16,156
  16,945
  17,801
  20,851
  21,847
  22,915
  24,059
  25,281
  26,584
  27,972
  29,447
  31,014
  32,676
  34,439
  36,305
  38,281
  40,370
  42,579
  44,914
  47,379
  49,983
  52,730
  55,629
Tax expense, $m
  3,362
  3,453
  3,561
  3,686
  3,829
  3,989
  4,167
  4,362
  4,575
  4,806
  5,630
  5,899
  6,187
  6,496
  6,826
  7,178
  7,552
  7,951
  8,374
  8,823
  9,298
  9,802
  10,336
  10,900
  11,496
  12,127
  12,792
  13,495
  14,237
  15,020
Net income, $m
  9,090
  9,335
  9,627
  9,966
  10,353
  10,786
  11,266
  11,794
  12,370
  12,994
  15,221
  15,948
  16,728
  17,563
  18,455
  19,406
  20,419
  21,496
  22,640
  23,854
  25,140
  26,503
  27,945
  29,470
  31,083
  32,787
  34,587
  36,487
  38,493
  40,609

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
  54,680
  55,938
  57,375
  58,989
  60,778
  62,740
  64,876
  67,189
  69,681
  72,355
  75,216
  78,269
  81,519
  84,974
  88,639
  92,524
  96,635
  100,984
  105,578
  110,429
  115,548
  120,946
  126,636
  132,631
  138,945
  145,593
  152,591
  159,954
  167,701
  175,849
Adjusted assets (=assets-cash), $m
  54,680
  55,938
  57,375
  58,989
  60,778
  62,740
  64,876
  67,189
  69,681
  72,355
  75,216
  78,269
  81,519
  84,974
  88,639
  92,524
  96,635
  100,984
  105,578
  110,429
  115,548
  120,946
  126,636
  132,631
  138,945
  145,593
  152,591
  159,954
  167,701
  175,849
Revenue / Adjusted assets
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
Average production assets, $m
  11,158
  11,414
  11,708
  12,037
  12,402
  12,802
  13,238
  13,710
  14,219
  14,764
  15,348
  15,971
  16,634
  17,339
  18,087
  18,880
  19,719
  20,606
  21,544
  22,533
  23,578
  24,679
  25,840
  27,064
  28,352
  29,709
  31,137
  32,639
  34,220
  35,882
Working capital, $m
  -2,636
  -2,697
  -2,766
  -2,844
  -2,930
  -3,025
  -3,128
  -3,239
  -3,360
  -3,488
  -3,626
  -3,774
  -3,930
  -4,097
  -4,274
  -4,461
  -4,659
  -4,869
  -5,090
  -5,324
  -5,571
  -5,831
  -6,105
  -6,395
  -6,699
  -7,019
  -7,357
  -7,712
  -8,085
  -8,478
Total debt, $m
  34,457
  35,561
  36,823
  38,240
  39,811
  41,534
  43,410
  45,440
  47,628
  49,976
  52,488
  55,168
  58,022
  61,055
  64,273
  67,684
  71,294
  75,112
  79,146
  83,405
  87,899
  92,639
  97,634
  102,898
  108,442
  114,279
  120,423
  126,888
  133,689
  140,843
Total liabilities, $m
  48,009
  49,113
  50,375
  51,792
  53,363
  55,086
  56,962
  58,992
  61,180
  63,528
  66,040
  68,720
  71,574
  74,607
  77,825
  81,236
  84,846
  88,664
  92,698
  96,957
  101,451
  106,191
  111,186
  116,450
  121,994
  127,831
  133,975
  140,440
  147,241
  154,395
Total equity, $m
  6,671
  6,824
  7,000
  7,197
  7,415
  7,654
  7,915
  8,197
  8,501
  8,827
  9,176
  9,549
  9,945
  10,367
  10,814
  11,288
  11,790
  12,320
  12,881
  13,472
  14,097
  14,755
  15,450
  16,181
  16,951
  17,762
  18,616
  19,514
  20,459
  21,454
Total liabilities and equity, $m
  54,680
  55,937
  57,375
  58,989
  60,778
  62,740
  64,877
  67,189
  69,681
  72,355
  75,216
  78,269
  81,519
  84,974
  88,639
  92,524
  96,636
  100,984
  105,579
  110,429
  115,548
  120,946
  126,636
  132,631
  138,945
  145,593
  152,591
  159,954
  167,700
  175,849
Debt-to-equity ratio
  5.170
  5.210
  5.260
  5.310
  5.370
  5.430
  5.480
  5.540
  5.600
  5.660
  5.720
  5.780
  5.830
  5.890
  5.940
  6.000
  6.050
  6.100
  6.140
  6.190
  6.240
  6.280
  6.320
  6.360
  6.400
  6.430
  6.470
  6.500
  6.530
  6.570
Adjusted equity ratio
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9,090
  9,335
  9,627
  9,966
  10,353
  10,786
  11,266
  11,794
  12,370
  12,994
  15,221
  15,948
  16,728
  17,563
  18,455
  19,406
  20,419
  21,496
  22,640
  23,854
  25,140
  26,503
  27,945
  29,470
  31,083
  32,787
  34,587
  36,487
  38,493
  40,609
Depreciation, amort., depletion, $m
  2,890
  2,908
  2,928
  2,950
  2,975
  3,003
  3,033
  3,065
  3,100
  3,137
  1,051
  1,094
  1,139
  1,188
  1,239
  1,293
  1,351
  1,411
  1,476
  1,543
  1,615
  1,690
  1,770
  1,854
  1,942
  2,035
  2,133
  2,236
  2,344
  2,458
Funds from operations, $m
  11,980
  12,242
  12,555
  12,917
  13,328
  13,789
  14,299
  14,859
  15,469
  16,132
  16,273
  17,042
  17,867
  18,751
  19,694
  20,700
  21,770
  22,908
  24,116
  25,397
  26,755
  28,193
  29,715
  31,324
  33,025
  34,822
  36,720
  38,723
  40,837
  43,067
Change in working capital, $m
  -52
  -61
  -69
  -78
  -86
  -95
  -103
  -112
  -120
  -129
  -138
  -147
  -157
  -167
  -177
  -187
  -198
  -210
  -222
  -234
  -247
  -260
  -274
  -289
  -304
  -321
  -337
  -355
  -373
  -393
Cash from operations, $m
  12,032
  12,303
  12,624
  12,995
  13,415
  13,884
  14,402
  14,970
  15,590
  16,261
  16,411
  17,189
  18,024
  18,917
  19,871
  20,887
  21,968
  23,117
  24,337
  25,631
  27,002
  28,453
  29,989
  31,613
  33,329
  35,142
  37,057
  39,078
  41,210
  43,459
Maintenance CAPEX, $m
  -749
  -764
  -782
  -802
  -824
  -849
  -877
  -907
  -939
  -974
  -1,011
  -1,051
  -1,094
  -1,139
  -1,188
  -1,239
  -1,293
  -1,351
  -1,411
  -1,476
  -1,543
  -1,615
  -1,690
  -1,770
  -1,854
  -1,942
  -2,035
  -2,133
  -2,236
  -2,344
New CAPEX, $m
  -227
  -257
  -293
  -329
  -365
  -400
  -436
  -472
  -508
  -546
  -584
  -623
  -663
  -705
  -748
  -793
  -839
  -887
  -938
  -990
  -1,044
  -1,101
  -1,161
  -1,223
  -1,288
  -1,357
  -1,428
  -1,503
  -1,581
  -1,663
Cash from investing activities, $m
  -976
  -1,021
  -1,075
  -1,131
  -1,189
  -1,249
  -1,313
  -1,379
  -1,447
  -1,520
  -1,595
  -1,674
  -1,757
  -1,844
  -1,936
  -2,032
  -2,132
  -2,238
  -2,349
  -2,466
  -2,587
  -2,716
  -2,851
  -2,993
  -3,142
  -3,299
  -3,463
  -3,636
  -3,817
  -4,007
Free cash flow, $m
  11,056
  11,282
  11,549
  11,863
  12,225
  12,634
  13,089
  13,592
  14,142
  14,741
  14,816
  15,515
  16,267
  17,073
  17,935
  18,855
  19,836
  20,880
  21,988
  23,166
  24,414
  25,737
  27,138
  28,620
  30,187
  31,844
  33,594
  35,443
  37,394
  39,453
Issuance/(repayment) of debt, $m
  915
  1,104
  1,262
  1,417
  1,570
  1,723
  1,876
  2,031
  2,188
  2,348
  2,512
  2,680
  2,854
  3,033
  3,218
  3,411
  3,610
  3,818
  4,034
  4,259
  4,494
  4,740
  4,996
  5,264
  5,544
  5,837
  6,144
  6,465
  6,801
  7,154
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  
  915
  1,104
  1,262
  1,417
  1,570
  1,723
  1,876
  2,031
  2,188
  2,348
  2,512
  2,680
  2,854
  3,033
  3,218
  3,411
  3,610
  3,818
  4,034
  4,259
  4,494
  4,740
  4,996
  5,264
  5,544
  5,837
  6,144
  6,465
  6,801
  7,154
Total cash flow (excl. dividends), $m
  11,971
  12,386
  12,811
  13,280
  13,795
  14,357
  14,965
  15,623
  16,330
  17,089
  17,327
  18,195
  19,121
  20,106
  21,153
  22,266
  23,446
  24,697
  26,022
  27,425
  28,908
  30,476
  32,133
  33,883
  35,731
  37,681
  39,738
  41,908
  44,195
  46,607
Retained Cash Flow (-), $m
  -104
  -153
  -175
  -197
  -218
  -239
  -261
  -282
  -304
  -326
  -349
  -372
  -397
  -421
  -447
  -474
  -502
  -530
  -561
  -592
  -624
  -659
  -694
  -731
  -770
  -811
  -854
  -898
  -945
  -994
Prev. year cash balance distribution, $m
  13,875
  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
  25,742
  12,233
  12,636
  13,084
  13,577
  14,117
  14,705
  15,340
  16,026
  16,763
  16,978
  17,823
  18,724
  19,685
  20,706
  21,792
  22,945
  24,167
  25,462
  26,833
  28,284
  29,818
  31,439
  33,152
  34,961
  36,870
  38,884
  41,009
  43,250
  45,613
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
  24,681
  11,199
  10,996
  10,773
  10,524
  10,245
  9,934
  9,588
  9,206
  8,788
  8,063
  7,606
  7,119
  6,608
  6,079
  5,538
  4,992
  4,451
  3,920
  3,410
  2,925
  2,474
  2,061
  1,688
  1,360
  1,076
  835
  634
  472
  343
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

Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops and commercializes medicines in areas of unmet medical need. The Company's portfolio of products and pipeline of investigational drugs includes treatments for Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS), liver diseases, cancer, inflammatory and respiratory diseases and cardiovascular conditions. Its products for HIV/AIDS patients include Descovy, Odefsey, Genvoya, Stribild, Complera/Eviplera, Truvada, Emtriva, Tybost and Vitekta. Its products for patients with liver diseases include Vemlidy, Epclusa, Harvoni, Sovaldi, Viread and Hepsera. It offers Zydelig to patients with hematology/oncology diseases. Its products for patients with various cardiovascular diseases include Letairis, Ranexa and Lexiscan. Its products for various inflammation/respiratory diseases include Cayston and Tamiflu. It had operations in more than 30 countries, as of December 31, 2016.

FINANCIAL RATIOS  of  Gilead Sciences (GILD)

Valuation Ratios
P/E Ratio 6.8
Price to Sales 3
Price to Book 4.8
Price to Tangible Book
Price to Cash Flow 5.5
Price to Free Cash Flow 5.7
Growth Rates
Sales Growth Rate -6.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0.1%
Cap. Spend. - 3 Yr. Gr. Rate 31.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 139.5%
Total Debt to Equity 139.5%
Interest Coverage 20
Management Effectiveness
Return On Assets 26.1%
Ret/ On Assets - 3 Yr. Avg. 37.4%
Return On Total Capital 31.5%
Ret/ On T. Cap. - 3 Yr. Avg. 45.7%
Return On Equity 72.2%
Return On Equity - 3 Yr. Avg. 89.7%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 86%
Gross Margin - 3 Yr. Avg. 86.2%
EBITDA Margin 63%
EBITDA Margin - 3 Yr. Avg. 66.5%
Operating Margin 58%
Oper. Margin - 3 Yr. Avg. 62.4%
Pre-Tax Margin 56.3%
Pre-Tax Margin - 3 Yr. Avg. 60.8%
Net Profit Margin 44.4%
Net Profit Margin - 3 Yr. Avg. 49.5%
Effective Tax Rate 21.1%
Eff/ Tax Rate - 3 Yr. Avg. 18.8%
Payout Ratio 18.2%

GILD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GILD stock intrinsic value calculation we used $26107 million for the last fiscal year's total revenue generated by Gilead Sciences. The default revenue input number comes from 0001 income statement of Gilead Sciences. 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 GILD 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 4.3%, whose default value for GILD is calculated based on our internal credit rating of Gilead Sciences, 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 Gilead Sciences.
    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 GILD stock the variable cost ratio is equal to 18.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7425 million in the base year in the intrinsic value calculation for GILD 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 Gilead Sciences.

Corporate tax rate of 27% is the nominal tax rate for Gilead Sciences. 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 GILD 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 GILD are equal to 41.9%.

Life of production assets of 14.6 years is the average useful life of capital assets used in Gilead Sciences 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 GILD is equal to -9.9%. 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 - $20442 million for Gilead Sciences - 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 1300.26 million for Gilead Sciences 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 Gilead Sciences at the current share price and the inputted number of shares is $90.7 billion.

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