Intrinsic value of Gilead Sciences, Inc. - GILD

Previous Close

$66.36

  Intrinsic Value

$109.48

stock screener

  Rating & Target

str. buy

+65%

Previous close

$66.36

 
Intrinsic value

$109.48

 
Up/down potential

+65%

 
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 84.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  22,570
  23,089
  23,682
  24,348
  25,086
  25,896
  26,778
  27,733
  28,761
  29,865
  31,046
  32,306
  33,648
  35,073
  36,586
  38,190
  39,887
  41,682
  43,578
  45,580
  47,693
  49,921
  52,270
  54,744
  57,351
  60,095
  62,983
  66,022
  69,220
  72,583
Variable operating expenses, $m
  10,351
  10,580
  10,842
  11,136
  11,461
  11,818
  12,207
  12,628
  13,081
  13,568
  13,688
  14,244
  14,835
  15,464
  16,131
  16,838
  17,586
  18,377
  19,213
  20,096
  21,028
  22,010
  23,046
  24,137
  25,286
  26,495
  27,769
  29,109
  30,519
  32,001
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
  10,351
  10,580
  10,842
  11,136
  11,461
  11,818
  12,207
  12,628
  13,081
  13,568
  13,688
  14,244
  14,835
  15,464
  16,131
  16,838
  17,586
  18,377
  19,213
  20,096
  21,028
  22,010
  23,046
  24,137
  25,286
  26,495
  27,769
  29,109
  30,519
  32,001
Operating income, $m
  12,218
  12,508
  12,840
  13,213
  13,625
  14,078
  14,571
  15,105
  15,680
  16,297
  17,358
  18,062
  18,813
  19,610
  20,456
  21,352
  22,301
  23,304
  24,365
  25,484
  26,665
  27,911
  29,224
  30,608
  32,065
  33,599
  35,214
  36,913
  38,701
  40,581
EBITDA, $m
  13,460
  13,770
  14,124
  14,521
  14,961
  15,444
  15,970
  16,539
  17,153
  17,811
  18,515
  19,267
  20,067
  20,917
  21,819
  22,776
  23,788
  24,858
  25,989
  27,183
  28,443
  29,772
  31,173
  32,649
  34,203
  35,839
  37,562
  39,374
  41,281
  43,287
Interest expense (income), $m
  885
  1,475
  1,394
  1,442
  1,496
  1,556
  1,623
  1,697
  1,777
  1,864
  1,958
  2,058
  2,166
  2,280
  2,403
  2,532
  2,670
  2,816
  2,970
  3,134
  3,306
  3,489
  3,681
  3,884
  4,097
  4,323
  4,560
  4,810
  5,072
  5,349
  5,640
Earnings before tax, $m
  10,743
  11,114
  11,399
  11,717
  12,069
  12,455
  12,874
  13,328
  13,816
  14,339
  15,300
  15,897
  16,532
  17,207
  17,923
  18,682
  19,485
  20,334
  21,231
  22,178
  23,177
  24,230
  25,341
  26,510
  27,742
  29,039
  30,404
  31,841
  33,352
  34,941
Tax expense, $m
  2,901
  3,001
  3,078
  3,164
  3,259
  3,363
  3,476
  3,598
  3,730
  3,872
  4,131
  4,292
  4,464
  4,646
  4,839
  5,044
  5,261
  5,490
  5,732
  5,988
  6,258
  6,542
  6,842
  7,158
  7,490
  7,841
  8,209
  8,597
  9,005
  9,434
Net income, $m
  7,842
  8,113
  8,321
  8,553
  8,810
  9,092
  9,398
  9,729
  10,086
  10,468
  11,169
  11,605
  12,068
  12,561
  13,084
  13,638
  14,224
  14,844
  15,499
  16,190
  16,919
  17,688
  18,499
  19,353
  20,252
  21,199
  22,195
  23,244
  24,347
  25,507

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
  42,265
  43,237
  44,348
  45,596
  46,978
  48,495
  50,146
  51,934
  53,860
  55,927
  58,139
  60,498
  63,011
  65,681
  68,514
  71,516
  74,695
  78,056
  81,607
  85,357
  89,313
  93,486
  97,884
  102,518
  107,398
  112,537
  117,945
  123,637
  129,625
  135,923
Adjusted assets (=assets-cash), $m
  42,265
  43,237
  44,348
  45,596
  46,978
  48,495
  50,146
  51,934
  53,860
  55,927
  58,139
  60,498
  63,011
  65,681
  68,514
  71,516
  74,695
  78,056
  81,607
  85,357
  89,313
  93,486
  97,884
  102,518
  107,398
  112,537
  117,945
  123,637
  129,625
  135,923
Revenue / Adjusted assets
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
Average production assets, $m
  14,219
  14,546
  14,920
  15,339
  15,804
  16,315
  16,870
  17,472
  18,120
  18,815
  19,559
  20,353
  21,198
  22,096
  23,049
  24,060
  25,129
  26,259
  27,454
  28,716
  30,047
  31,450
  32,930
  34,489
  36,131
  37,860
  39,679
  41,594
  43,608
  45,727
Working capital, $m
  -2,144
  -2,193
  -2,250
  -2,313
  -2,383
  -2,460
  -2,544
  -2,635
  -2,732
  -2,837
  -2,949
  -3,069
  -3,197
  -3,332
  -3,476
  -3,628
  -3,789
  -3,960
  -4,140
  -4,330
  -4,531
  -4,743
  -4,966
  -5,201
  -5,448
  -5,709
  -5,983
  -6,272
  -6,576
  -6,895
Total debt, $m
  25,821
  26,695
  27,696
  28,818
  30,062
  31,427
  32,914
  34,523
  36,256
  38,117
  40,107
  42,230
  44,492
  46,895
  49,444
  52,147
  55,007
  58,032
  61,228
  64,603
  68,164
  71,919
  75,877
  80,048
  84,440
  89,065
  93,933
  99,055
  104,444
  110,112
Total liabilities, $m
  38,039
  38,913
  39,914
  41,036
  42,280
  43,645
  45,132
  46,741
  48,474
  50,335
  52,325
  54,448
  56,710
  59,113
  61,662
  64,365
  67,225
  70,250
  73,446
  76,821
  80,382
  84,137
  88,095
  92,266
  96,658
  101,283
  106,151
  111,273
  116,662
  122,330
Total equity, $m
  4,227
  4,324
  4,435
  4,560
  4,698
  4,849
  5,015
  5,193
  5,386
  5,593
  5,814
  6,050
  6,301
  6,568
  6,851
  7,152
  7,469
  7,806
  8,161
  8,536
  8,931
  9,349
  9,788
  10,252
  10,740
  11,254
  11,795
  12,364
  12,962
  13,592
Total liabilities and equity, $m
  42,266
  43,237
  44,349
  45,596
  46,978
  48,494
  50,147
  51,934
  53,860
  55,928
  58,139
  60,498
  63,011
  65,681
  68,513
  71,517
  74,694
  78,056
  81,607
  85,357
  89,313
  93,486
  97,883
  102,518
  107,398
  112,537
  117,946
  123,637
  129,624
  135,922
Debt-to-equity ratio
  6.110
  6.170
  6.240
  6.320
  6.400
  6.480
  6.560
  6.650
  6.730
  6.820
  6.900
  6.980
  7.060
  7.140
  7.220
  7.290
  7.360
  7.430
  7.500
  7.570
  7.630
  7.690
  7.750
  7.810
  7.860
  7.910
  7.960
  8.010
  8.060
  8.100
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
  7,842
  8,113
  8,321
  8,553
  8,810
  9,092
  9,398
  9,729
  10,086
  10,468
  11,169
  11,605
  12,068
  12,561
  13,084
  13,638
  14,224
  14,844
  15,499
  16,190
  16,919
  17,688
  18,499
  19,353
  20,252
  21,199
  22,195
  23,244
  24,347
  25,507
Depreciation, amort., depletion, $m
  1,242
  1,261
  1,283
  1,308
  1,336
  1,366
  1,399
  1,434
  1,473
  1,514
  1,157
  1,204
  1,254
  1,307
  1,364
  1,424
  1,487
  1,554
  1,625
  1,699
  1,778
  1,861
  1,949
  2,041
  2,138
  2,240
  2,348
  2,461
  2,580
  2,706
Funds from operations, $m
  9,084
  9,375
  9,604
  9,862
  10,146
  10,458
  10,797
  11,164
  11,558
  11,982
  12,326
  12,809
  13,323
  13,869
  14,448
  15,062
  15,711
  16,398
  17,123
  17,889
  18,697
  19,549
  20,447
  21,393
  22,390
  23,439
  24,543
  25,705
  26,927
  28,213
Change in working capital, $m
  -42
  -49
  -56
  -63
  -70
  -77
  -84
  -91
  -98
  -105
  -112
  -120
  -127
  -135
  -144
  -152
  -161
  -171
  -180
  -190
  -201
  -212
  -223
  -235
  -248
  -261
  -274
  -289
  -304
  -320
Cash from operations, $m
  9,126
  9,424
  9,661
  9,925
  10,216
  10,535
  10,881
  11,254
  11,656
  12,086
  12,438
  12,929
  13,450
  14,004
  14,592
  15,214
  15,872
  16,568
  17,303
  18,079
  18,898
  19,761
  20,670
  21,628
  22,637
  23,700
  24,818
  25,994
  27,231
  28,532
Maintenance CAPEX, $m
  -824
  -841
  -861
  -883
  -908
  -935
  -965
  -998
  -1,034
  -1,072
  -1,113
  -1,157
  -1,204
  -1,254
  -1,307
  -1,364
  -1,424
  -1,487
  -1,554
  -1,625
  -1,699
  -1,778
  -1,861
  -1,949
  -2,041
  -2,138
  -2,240
  -2,348
  -2,461
  -2,580
New CAPEX, $m
  -290
  -327
  -374
  -420
  -465
  -510
  -556
  -601
  -648
  -695
  -744
  -794
  -845
  -898
  -953
  -1,010
  -1,069
  -1,131
  -1,195
  -1,261
  -1,331
  -1,404
  -1,480
  -1,559
  -1,642
  -1,729
  -1,820
  -1,915
  -2,014
  -2,119
Cash from investing activities, $m
  -1,114
  -1,168
  -1,235
  -1,303
  -1,373
  -1,445
  -1,521
  -1,599
  -1,682
  -1,767
  -1,857
  -1,951
  -2,049
  -2,152
  -2,260
  -2,374
  -2,493
  -2,618
  -2,749
  -2,886
  -3,030
  -3,182
  -3,341
  -3,508
  -3,683
  -3,867
  -4,060
  -4,263
  -4,475
  -4,699
Free cash flow, $m
  8,012
  8,255
  8,426
  8,622
  8,844
  9,089
  9,360
  9,655
  9,974
  10,319
  10,581
  10,977
  11,401
  11,852
  12,331
  12,840
  13,379
  13,951
  14,555
  15,193
  15,868
  16,579
  17,330
  18,121
  18,955
  19,833
  20,758
  21,731
  22,756
  23,833
Issuance/(repayment) of debt, $m
  -1,501
  875
  1,000
  1,123
  1,244
  1,365
  1,486
  1,609
  1,733
  1,860
  1,990
  2,124
  2,261
  2,403
  2,550
  2,702
  2,860
  3,025
  3,196
  3,375
  3,561
  3,755
  3,958
  4,171
  4,392
  4,625
  4,868
  5,122
  5,389
  5,668
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  
  -1,501
  875
  1,000
  1,123
  1,244
  1,365
  1,486
  1,609
  1,733
  1,860
  1,990
  2,124
  2,261
  2,403
  2,550
  2,702
  2,860
  3,025
  3,196
  3,375
  3,561
  3,755
  3,958
  4,171
  4,392
  4,625
  4,868
  5,122
  5,389
  5,668
Total cash flow (excl. dividends), $m
  6,511
  9,130
  9,426
  9,745
  10,088
  10,454
  10,846
  11,264
  11,708
  12,179
  12,571
  13,101
  13,662
  14,255
  14,881
  15,542
  16,240
  16,975
  17,751
  18,568
  19,428
  20,334
  21,288
  22,292
  23,347
  24,458
  25,626
  26,854
  28,144
  29,502
Retained Cash Flow (-), $m
  -2,324
  -97
  -111
  -125
  -138
  -152
  -165
  -179
  -193
  -207
  -221
  -236
  -251
  -267
  -283
  -300
  -318
  -336
  -355
  -375
  -396
  -417
  -440
  -463
  -488
  -514
  -541
  -569
  -599
  -630
Prev. year cash balance distribution, $m
  19,484
  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
  23,671
  9,033
  9,315
  9,620
  9,950
  10,303
  10,681
  11,085
  11,515
  11,973
  12,350
  12,865
  13,411
  13,988
  14,598
  15,242
  15,922
  16,639
  17,396
  18,193
  19,033
  19,917
  20,848
  21,828
  22,859
  23,944
  25,085
  26,284
  27,546
  28,872
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
  22,695
  8,270
  8,107
  7,921
  7,712
  7,477
  7,216
  6,928
  6,615
  6,277
  5,865
  5,490
  5,099
  4,696
  4,286
  3,873
  3,464
  3,064
  2,678
  2,312
  1,969
  1,653
  1,366
  1,112
  889
  699
  538
  407
  301
  217
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, Inc. (GILD)

Valuation Ratios
P/E Ratio 6.4
Price to Sales 2.9
Price to Book 4.6
Price to Tangible Book
Price to Cash Flow 5.2
Price to Free Cash Flow 5.4
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 $22127 million for the last fiscal year's total revenue generated by Gilead Sciences, Inc.. The default revenue input number comes from 0001 income statement of Gilead Sciences, Inc.. 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, Inc., 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, Inc..
    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 45.9%.

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 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, Inc..

Corporate tax rate of 27% is the nominal tax rate for Gilead Sciences, Inc.. 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 63%.

Life of production assets of 16.9 years is the average useful life of capital assets used in Gilead Sciences, Inc. 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 -9.5%. 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 - $21387 million for Gilead Sciences, Inc. - 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 1275.484 million for Gilead Sciences, Inc. 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, Inc. at the current share price and the inputted number of shares is $84.6 billion.

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