Intrinsic value of GlaxoSmithKline ADR - GSK

Previous Close

$37.30

  Intrinsic Value

$342.90

stock screener

  Rating & Target

str. buy

+819%

Previous close

$37.30

 
Intrinsic value

$342.90

 
Up/down potential

+819%

 
Rating

str. buy

We calculate the intrinsic value of GSK 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 17.4

 

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, %
  18.50
  17.15
  15.94
  14.84
  13.86
  12.97
  12.17
  11.46
  10.81
  10.23
  9.71
  9.24
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.03
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
  5.64
Revenue, $m
  48,338
  56,628
  65,652
  75,396
  85,844
  96,979
  108,786
  121,249
  134,358
  148,103
  162,480
  177,487
  193,129
  209,412
  226,350
  243,959
  262,260
  281,278
  301,041
  321,583
  342,940
  365,153
  388,265
  412,324
  437,380
  463,488
  490,706
  519,093
  548,715
  579,640
Variable operating expenses, $m
  30,161
  34,793
  39,836
  45,281
  51,120
  57,342
  63,940
  70,905
  78,231
  85,912
  90,798
  99,184
  107,925
  117,025
  126,490
  136,331
  146,558
  157,185
  168,229
  179,709
  191,644
  204,057
  216,972
  230,417
  244,419
  259,009
  274,219
  290,082
  306,636
  323,917
Fixed operating expenses, $m
  9,741
  9,955
  10,174
  10,398
  10,627
  10,860
  11,099
  11,343
  11,593
  11,848
  12,109
  12,375
  12,647
  12,926
  13,210
  13,501
  13,798
  14,101
  14,411
  14,728
  15,052
  15,384
  15,722
  16,068
  16,421
  16,783
  17,152
  17,529
  17,915
  18,309
Total operating expenses, $m
  39,902
  44,748
  50,010
  55,679
  61,747
  68,202
  75,039
  82,248
  89,824
  97,760
  102,907
  111,559
  120,572
  129,951
  139,700
  149,832
  160,356
  171,286
  182,640
  194,437
  206,696
  219,441
  232,694
  246,485
  260,840
  275,792
  291,371
  307,611
  324,551
  342,226
Operating income, $m
  8,437
  11,880
  15,642
  19,717
  24,097
  28,776
  33,746
  39,001
  44,534
  50,343
  59,573
  65,928
  72,556
  79,462
  86,650
  94,128
  101,905
  109,992
  118,400
  127,146
  136,244
  145,713
  155,571
  165,839
  176,540
  187,697
  199,335
  211,482
  224,164
  237,414
EBITDA, $m
  18,584
  23,228
  28,297
  33,782
  39,676
  45,967
  52,646
  59,706
  67,137
  74,937
  83,100
  91,628
  100,521
  109,785
  119,426
  129,453
  139,880
  150,721
  161,991
  173,711
  185,902
  198,587
  211,792
  225,544
  239,873
  254,810
  270,389
  286,646
  303,618
  321,345
Interest expense (income), $m
  890
  1,247
  1,519
  2,272
  3,092
  3,977
  4,926
  5,937
  7,010
  8,142
  9,333
  10,582
  11,888
  13,251
  14,672
  16,151
  17,690
  19,289
  20,952
  22,679
  24,475
  26,341
  28,281
  30,299
  32,398
  34,584
  36,860
  39,232
  41,704
  44,283
  46,974
Earnings before tax, $m
  7,190
  10,361
  13,370
  16,625
  20,121
  23,850
  27,809
  31,991
  36,392
  41,010
  48,992
  54,040
  59,305
  64,790
  70,499
  76,438
  82,616
  89,040
  95,721
  102,671
  109,903
  117,432
  125,272
  133,441
  141,956
  150,837
  160,103
  169,777
  179,882
  190,440
Tax expense, $m
  1,941
  2,797
  3,610
  4,489
  5,433
  6,440
  7,508
  8,637
  9,826
  11,073
  13,228
  14,591
  16,012
  17,493
  19,035
  20,638
  22,306
  24,041
  25,845
  27,721
  29,674
  31,707
  33,823
  36,029
  38,328
  40,726
  43,228
  45,840
  48,568
  51,419
Net income, $m
  5,249
  7,564
  9,760
  12,136
  14,688
  17,411
  20,300
  23,353
  26,566
  29,937
  35,764
  39,449
  43,293
  47,297
  51,464
  55,800
  60,309
  64,999
  69,876
  74,950
  80,230
  85,725
  91,449
  97,412
  103,628
  110,111
  116,876
  123,938
  131,314
  139,021

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
  90,352
  105,848
  122,714
  140,927
  160,456
  181,269
  203,338
  226,634
  251,137
  276,828
  303,700
  331,752
  360,988
  391,425
  423,085
  455,999
  490,206
  525,753
  562,694
  601,090
  641,010
  682,529
  725,730
  770,699
  817,534
  866,333
  917,207
  970,267
  1,025,636
  1,083,439
Adjusted assets (=assets-cash), $m
  90,352
  105,848
  122,714
  140,927
  160,456
  181,269
  203,338
  226,634
  251,137
  276,828
  303,700
  331,752
  360,988
  391,425
  423,085
  455,999
  490,206
  525,753
  562,694
  601,090
  641,010
  682,529
  725,730
  770,699
  817,534
  866,333
  917,207
  970,267
  1,025,636
  1,083,439
Revenue / Adjusted assets
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
Average production assets, $m
  34,997
  40,999
  47,532
  54,587
  62,151
  70,213
  78,761
  87,785
  97,275
  107,227
  117,635
  128,501
  139,825
  151,615
  163,878
  176,627
  189,876
  203,645
  217,954
  232,826
  248,289
  264,371
  281,104
  298,523
  316,663
  335,566
  355,271
  375,823
  397,270
  419,659
Working capital, $m
  -18,804
  -22,028
  -25,539
  -29,329
  -33,393
  -37,725
  -42,318
  -47,166
  -52,265
  -57,612
  -63,205
  -69,042
  -75,127
  -81,461
  -88,050
  -94,900
  -102,019
  -109,417
  -117,105
  -125,096
  -133,404
  -142,045
  -151,035
  -160,394
  -170,141
  -180,297
  -190,884
  -201,927
  -213,450
  -225,480
Total debt, $m
  28,128
  42,074
  57,254
  73,645
  91,221
  109,953
  129,815
  150,782
  172,834
  195,956
  220,141
  245,387
  271,700
  299,093
  327,587
  357,210
  387,996
  419,988
  453,235
  487,792
  523,720
  561,087
  599,967
  640,440
  682,591
  726,511
  772,297
  820,051
  869,883
  921,906
Total liabilities, $m
  81,317
  95,263
  110,443
  126,834
  144,410
  163,142
  183,004
  203,971
  226,023
  249,145
  273,330
  298,576
  324,889
  352,282
  380,776
  410,399
  441,185
  473,178
  506,424
  540,981
  576,909
  614,276
  653,157
  693,629
  735,780
  779,700
  825,486
  873,241
  923,072
  975,095
Total equity, $m
  9,035
  10,585
  12,271
  14,093
  16,046
  18,127
  20,334
  22,663
  25,114
  27,683
  30,370
  33,175
  36,099
  39,142
  42,308
  45,600
  49,021
  52,575
  56,269
  60,109
  64,101
  68,253
  72,573
  77,070
  81,753
  86,633
  91,721
  97,027
  102,564
  108,344
Total liabilities and equity, $m
  90,352
  105,848
  122,714
  140,927
  160,456
  181,269
  203,338
  226,634
  251,137
  276,828
  303,700
  331,751
  360,988
  391,424
  423,084
  455,999
  490,206
  525,753
  562,693
  601,090
  641,010
  682,529
  725,730
  770,699
  817,533
  866,333
  917,207
  970,268
  1,025,636
  1,083,439
Debt-to-equity ratio
  3.110
  3.970
  4.670
  5.230
  5.690
  6.070
  6.380
  6.650
  6.880
  7.080
  7.250
  7.400
  7.530
  7.640
  7.740
  7.830
  7.910
  7.990
  8.050
  8.120
  8.170
  8.220
  8.270
  8.310
  8.350
  8.390
  8.420
  8.450
  8.480
  8.510
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
  5,249
  7,564
  9,760
  12,136
  14,688
  17,411
  20,300
  23,353
  26,566
  29,937
  35,764
  39,449
  43,293
  47,297
  51,464
  55,800
  60,309
  64,999
  69,876
  74,950
  80,230
  85,725
  91,449
  97,412
  103,628
  110,111
  116,876
  123,938
  131,314
  139,021
Depreciation, amort., depletion, $m
  10,148
  11,348
  12,655
  14,065
  15,578
  17,191
  18,900
  20,705
  22,603
  24,593
  23,527
  25,700
  27,965
  30,323
  32,776
  35,325
  37,975
  40,729
  43,591
  46,565
  49,658
  52,874
  56,221
  59,705
  63,333
  67,113
  71,054
  75,165
  79,454
  83,932
Funds from operations, $m
  15,396
  18,911
  22,415
  26,202
  30,266
  34,601
  39,201
  44,058
  49,169
  54,531
  59,291
  65,149
  71,258
  77,620
  84,240
  91,125
  98,285
  105,728
  113,467
  121,515
  129,887
  138,599
  147,669
  157,116
  166,961
  177,224
  187,930
  199,102
  210,768
  222,953
Change in working capital, $m
  -2,936
  -3,225
  -3,510
  -3,790
  -4,064
  -4,332
  -4,593
  -4,848
  -5,099
  -5,347
  -5,592
  -5,838
  -6,085
  -6,334
  -6,589
  -6,850
  -7,119
  -7,398
  -7,688
  -7,991
  -8,308
  -8,641
  -8,991
  -9,359
  -9,747
  -10,156
  -10,587
  -11,043
  -11,523
  -12,030
Cash from operations, $m
  18,332
  22,136
  25,925
  29,992
  34,331
  38,933
  43,793
  48,907
  54,269
  59,878
  64,883
  70,987
  77,342
  83,954
  90,829
  97,975
  105,404
  113,126
  121,155
  129,506
  138,195
  147,240
  156,660
  166,475
  176,708
  187,380
  198,517
  210,145
  222,291
  234,983
Maintenance CAPEX, $m
  -5,903
  -6,999
  -8,200
  -9,506
  -10,917
  -12,430
  -14,043
  -15,752
  -17,557
  -19,455
  -21,445
  -23,527
  -25,700
  -27,965
  -30,323
  -32,776
  -35,325
  -37,975
  -40,729
  -43,591
  -46,565
  -49,658
  -52,874
  -56,221
  -59,705
  -63,333
  -67,113
  -71,054
  -75,165
  -79,454
New CAPEX, $m
  -5,481
  -6,002
  -6,533
  -7,054
  -7,564
  -8,062
  -8,548
  -9,024
  -9,491
  -9,951
  -10,409
  -10,865
  -11,325
  -11,789
  -12,263
  -12,749
  -13,250
  -13,769
  -14,309
  -14,872
  -15,463
  -16,082
  -16,733
  -17,419
  -18,141
  -18,902
  -19,705
  -20,552
  -21,446
  -22,390
Cash from investing activities, $m
  -11,384
  -13,001
  -14,733
  -16,560
  -18,481
  -20,492
  -22,591
  -24,776
  -27,048
  -29,406
  -31,854
  -34,392
  -37,025
  -39,754
  -42,586
  -45,525
  -48,575
  -51,744
  -55,038
  -58,463
  -62,028
  -65,740
  -69,607
  -73,640
  -77,846
  -82,235
  -86,818
  -91,606
  -96,611
  -101,844
Free cash flow, $m
  6,947
  9,135
  11,192
  13,431
  15,849
  18,441
  21,203
  24,131
  27,221
  30,471
  33,029
  36,595
  40,318
  44,200
  48,243
  52,451
  56,829
  61,382
  66,117
  71,043
  76,167
  81,500
  87,053
  92,836
  98,862
  105,145
  111,699
  118,538
  125,679
  133,139
Issuance/(repayment) of debt, $m
  5,034
  13,946
  15,180
  16,391
  17,576
  18,732
  19,862
  20,967
  22,052
  23,123
  24,185
  25,246
  26,313
  27,393
  28,494
  29,623
  30,786
  31,992
  33,247
  34,557
  35,928
  37,367
  38,880
  40,473
  42,151
  43,920
  45,786
  47,755
  49,832
  52,023
Issuance/(repurchase) of shares, $m
  3,879
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  8,913
  13,946
  15,180
  16,391
  17,576
  18,732
  19,862
  20,967
  22,052
  23,123
  24,185
  25,246
  26,313
  27,393
  28,494
  29,623
  30,786
  31,992
  33,247
  34,557
  35,928
  37,367
  38,880
  40,473
  42,151
  43,920
  45,786
  47,755
  49,832
  52,023
Total cash flow (excl. dividends), $m
  15,860
  23,081
  26,372
  29,823
  33,425
  37,173
  41,065
  45,097
  49,273
  53,594
  57,214
  61,841
  66,631
  71,593
  76,737
  82,073
  87,615
  93,374
  99,364
  105,600
  112,095
  118,868
  125,933
  133,309
  141,013
  149,065
  157,485
  166,293
  175,511
  185,162
Retained Cash Flow (-), $m
  -9,127
  -1,550
  -1,687
  -1,821
  -1,953
  -2,081
  -2,207
  -2,330
  -2,450
  -2,569
  -2,687
  -2,805
  -2,924
  -3,044
  -3,166
  -3,291
  -3,421
  -3,555
  -3,694
  -3,840
  -3,992
  -4,152
  -4,320
  -4,497
  -4,683
  -4,880
  -5,087
  -5,306
  -5,537
  -5,780
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
  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
  6,733
  21,531
  24,685
  28,001
  31,472
  35,092
  38,858
  42,768
  46,823
  51,025
  54,527
  59,036
  63,707
  68,549
  73,571
  78,782
  84,194
  89,819
  95,670
  101,760
  108,103
  114,716
  121,613
  128,812
  136,330
  144,185
  152,397
  160,987
  169,974
  179,382
Discount rate, %
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
  6,322
  18,868
  20,057
  20,948
  21,518
  21,754
  21,656
  21,235
  20,513
  19,523
  18,023
  16,662
  15,166
  13,584
  11,969
  10,368
  8,825
  7,375
  6,047
  4,860
  3,826
  2,947
  2,219
  1,632
  1,170
  818
  556
  367
  235
  146
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

GlaxoSmithKline plc is a global healthcare company. The Company operates through three segments: Pharmaceuticals, Vaccines and Consumer Healthcare. The Company focuses on its research across six areas: Respiratory diseases, human immunodeficiency virus (HIV)/infectious diseases, Vaccines, Immuno-inflammation, Oncology and Rare diseases. The Company makes a range of prescription medicines, vaccines and consumer healthcare products. The Pharmaceuticals business discovers, develops and commercializes medicines to treat a range of acute and chronic diseases. The Vaccines business provides vaccines for people of all ages from babies and adolescents to adults and older people. The Consumer Healthcare business develops and markets products in Wellness, Oral health, Nutrition and Skin health categories. Its product portfolio includes Adartrel, Bexsero, Daraprim and Quinvaxem. Its brands include Panadol, abreva, polident and physiogel.

FINANCIAL RATIOS  of  GlaxoSmithKline ADR (GSK)

Valuation Ratios
P/E Ratio 165.1
Price to Sales 5.4
Price to Book 134.1
Price to Tangible Book
Price to Cash Flow 23.2
Price to Free Cash Flow 36.3
Growth Rates
Sales Growth Rate 16.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 23.7%
Cap. Spend. - 3 Yr. Gr. Rate 6.7%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 1304.8%
Total Debt to Equity 1672.3%
Interest Coverage 4
Management Effectiveness
Return On Assets 2.3%
Ret/ On Assets - 3 Yr. Avg. 9.9%
Return On Total Capital 4.4%
Ret/ On T. Cap. - 3 Yr. Avg. 17.8%
Return On Equity 29.2%
Return On Equity - 3 Yr. Avg. 85.9%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 68.1%
Gross Margin - 3 Yr. Avg. 68%
EBITDA Margin 15.9%
EBITDA Margin - 3 Yr. Avg. 30.8%
Operating Margin 9.3%
Oper. Margin - 3 Yr. Avg. 23.9%
Pre-Tax Margin 7%
Pre-Tax Margin - 3 Yr. Avg. 21.3%
Net Profit Margin 3.3%
Net Profit Margin - 3 Yr. Avg. 16.8%
Effective Tax Rate 45.2%
Eff/ Tax Rate - 3 Yr. Avg. 23.4%
Payout Ratio 531.7%

GSK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GSK stock intrinsic value calculation we used $40791.8918919 million for the last fiscal year's total revenue generated by GlaxoSmithKline ADR. The default revenue input number comes from 0001 income statement of GlaxoSmithKline ADR. 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 GSK stock valuation model: a) initial revenue growth rate of 18.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.5%, whose default value for GSK is calculated based on our internal credit rating of GlaxoSmithKline ADR, 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 GlaxoSmithKline ADR.
    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 GSK stock the variable cost ratio is equal to 63.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9531 million in the base year in the intrinsic value calculation for GSK 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 GlaxoSmithKline ADR.

Corporate tax rate of 27% is the nominal tax rate for GlaxoSmithKline ADR. 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 GSK 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 GSK are equal to 72.4%.

Life of production assets of 0 years is the average useful life of capital assets used in GlaxoSmithKline ADR 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 GSK is equal to -38.9%. 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 - $-91.8918918919 million for GlaxoSmithKline ADR - 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 465.718 million for GlaxoSmithKline ADR 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 GlaxoSmithKline ADR at the current share price and the inputted number of shares is $17.4 billion.

RELATED COMPANIES Price Int.Val. Rating
JNJ Johnson&Johnso 145.43 176.79  buy
AZN AstraZeneca AD 38.18 162.71  str.buy
PFE Pfizer 43.92 34.10  hold
MRK Merck&Co 76.72 33.05  str.sell

COMPANY NEWS

▶ Company News For Dec 4, 2018   [09:30AM  Zacks]
▶ [$$] Glaxo Reignites Biotechs Bull Run   [07:23PM  The Wall Street Journal]
▶ [$$] GlaxoSmithKline to Acquire Tesaro for $4.16 Billion   [07:23PM  The Wall Street Journal]
▶ GSK buys Tesaro for $5.1 bln   [02:44PM  Reuters Videos]
▶ Stock Market Rallies On China Trade News; Tesla Nears Breakout   [01:33PM  Investor's Business Daily]
▶ GlaxoSmithKline says it will keep Tesaro's Waltham HQ and staff   [01:33PM  American City Business Journals]
▶ [$$] GlaxoSmithKline to Acquire Tesaro for $4.16 Billion   [12:14PM  The Wall Street Journal]
▶ [$$] Glaxo Reignites Biotech's Bull Run   [10:58AM  The Wall Street Journal]
▶ Waltham's Tesaro to be acquired by GlaxoSmithKline for $5.1B   [09:54AM  American City Business Journals]
▶ $5.1B deal: GSK to buy Boston-area cancer drug developer   [09:35AM  American City Business Journals]
▶ Glaxo to buy Tesaro for $75 per share   [06:59AM  CNBC Videos]
▶ Unilever agrees to buy GSK business in India   [05:56AM  Associated Press]
▶ [$$] Unilever to Buy GSK's Horlicks Unit   [04:23AM  The Wall Street Journal]
▶ 3 Beaten-Down Biotech Stocks to Buy Before the End of 2018   [Nov-30-18 03:26PM  InvestorPlace]
▶ Horlicks May Not Be Such a Sweet Deal   [02:14AM  Bloomberg]
▶ [$$] FirstFT: Todays top stories   [12:40AM  Financial Times]
▶ [$$] Unilever/Horlicks: premium malt   [12:27AM  Financial Times]
▶ [$$] Unilever Looks to Acquire GlaxoSmithKlines Nutrition Business   [Nov-27-18 08:05PM  The Wall Street Journal]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.