Intrinsic value of Perrigo - PRGO

Previous Close

$69.45

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$69.45

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of PRGO 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 9.9

 

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
  5,045
  5,161
  5,294
  5,442
  5,607
  5,789
  5,986
  6,199
  6,429
  6,676
  6,940
  7,221
  7,521
  7,840
  8,178
  8,536
  8,916
  9,317
  9,741
  10,188
  10,661
  11,159
  11,684
  12,237
  12,819
  13,433
  14,078
  14,758
  15,473
  16,224
Variable operating expenses, $m
  6,942
  7,084
  7,247
  7,429
  7,632
  7,854
  8,095
  8,357
  8,639
  8,942
  8,510
  8,855
  9,223
  9,614
  10,028
  10,468
  10,933
  11,425
  11,945
  12,493
  13,073
  13,683
  14,327
  15,005
  15,720
  16,472
  17,263
  18,096
  18,973
  19,895
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  6,942
  7,084
  7,247
  7,429
  7,632
  7,854
  8,095
  8,357
  8,639
  8,942
  8,510
  8,855
  9,223
  9,614
  10,028
  10,468
  10,933
  11,425
  11,945
  12,493
  13,073
  13,683
  14,327
  15,005
  15,720
  16,472
  17,263
  18,096
  18,973
  19,895
Operating income, $m
  -1,897
  -1,923
  -1,953
  -1,987
  -2,024
  -2,065
  -2,110
  -2,158
  -2,210
  -2,266
  -1,570
  -1,634
  -1,702
  -1,774
  -1,850
  -1,931
  -2,017
  -2,108
  -2,204
  -2,305
  -2,412
  -2,524
  -2,643
  -2,768
  -2,900
  -3,039
  -3,185
  -3,339
  -3,500
  -3,670
EBITDA, $m
  -284
  -290
  -298
  -306
  -315
  -325
  -337
  -349
  -362
  -375
  -390
  -406
  -423
  -441
  -460
  -480
  -501
  -524
  -548
  -573
  -599
  -627
  -657
  -688
  -721
  -755
  -792
  -830
  -870
  -912
Interest expense (income), $m
  0
  180
  186
  193
  201
  210
  220
  231
  242
  255
  269
  284
  299
  316
  334
  353
  373
  394
  417
  441
  466
  493
  521
  551
  582
  615
  650
  686
  725
  765
  808
Earnings before tax, $m
  -2,077
  -2,109
  -2,146
  -2,188
  -2,234
  -2,285
  -2,340
  -2,400
  -2,465
  -2,535
  -1,853
  -1,933
  -2,018
  -2,108
  -2,203
  -2,304
  -2,411
  -2,525
  -2,645
  -2,771
  -2,905
  -3,045
  -3,194
  -3,350
  -3,515
  -3,689
  -3,871
  -4,063
  -4,265
  -4,478
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -2,077
  -2,109
  -2,146
  -2,188
  -2,234
  -2,285
  -2,340
  -2,400
  -2,465
  -2,535
  -1,853
  -1,933
  -2,018
  -2,108
  -2,203
  -2,304
  -2,411
  -2,525
  -2,645
  -2,771
  -2,905
  -3,045
  -3,194
  -3,350
  -3,515
  -3,689
  -3,871
  -4,063
  -4,265
  -4,478

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  11,870
  12,143
  12,456
  12,806
  13,194
  13,620
  14,084
  14,586
  15,127
  15,708
  16,329
  16,991
  17,697
  18,447
  19,243
  20,086
  20,978
  21,922
  22,920
  23,973
  25,084
  26,256
  27,491
  28,793
  30,163
  31,607
  33,126
  34,724
  36,406
  38,175
Adjusted assets (=assets-cash), $m
  11,870
  12,143
  12,456
  12,806
  13,194
  13,620
  14,084
  14,586
  15,127
  15,708
  16,329
  16,991
  17,697
  18,447
  19,243
  20,086
  20,978
  21,922
  22,920
  23,973
  25,084
  26,256
  27,491
  28,793
  30,163
  31,607
  33,126
  34,724
  36,406
  38,175
Revenue / Adjusted assets
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
  0.425
Average production assets, $m
  8,576
  8,774
  8,999
  9,252
  9,533
  9,841
  10,176
  10,538
  10,929
  11,349
  11,797
  12,276
  12,786
  13,328
  13,903
  14,512
  15,157
  15,839
  16,560
  17,320
  18,123
  18,970
  19,862
  20,803
  21,793
  22,836
  23,933
  25,088
  26,303
  27,581
Working capital, $m
  363
  372
  381
  392
  404
  417
  431
  446
  463
  481
  500
  520
  542
  564
  589
  615
  642
  671
  701
  734
  768
  803
  841
  881
  923
  967
  1,014
  1,063
  1,114
  1,168
Total debt, $m
  3,451
  3,579
  3,725
  3,889
  4,071
  4,271
  4,489
  4,724
  4,978
  5,250
  5,542
  5,852
  6,183
  6,535
  6,908
  7,304
  7,722
  8,165
  8,633
  9,127
  9,648
  10,197
  10,777
  11,387
  12,030
  12,707
  13,419
  14,169
  14,958
  15,787
Total liabilities, $m
  5,567
  5,695
  5,842
  6,006
  6,188
  6,388
  6,605
  6,841
  7,095
  7,367
  7,658
  7,969
  8,300
  8,652
  9,025
  9,420
  9,839
  10,282
  10,749
  11,243
  11,764
  12,314
  12,893
  13,504
  14,147
  14,824
  15,536
  16,286
  17,074
  17,904
Total equity, $m
  6,303
  6,448
  6,614
  6,800
  7,006
  7,232
  7,479
  7,745
  8,032
  8,341
  8,670
  9,022
  9,397
  9,795
  10,218
  10,666
  11,140
  11,641
  12,170
  12,730
  13,320
  13,942
  14,598
  15,289
  16,017
  16,783
  17,590
  18,439
  19,332
  20,271
Total liabilities and equity, $m
  11,870
  12,143
  12,456
  12,806
  13,194
  13,620
  14,084
  14,586
  15,127
  15,708
  16,328
  16,991
  17,697
  18,447
  19,243
  20,086
  20,979
  21,923
  22,919
  23,973
  25,084
  26,256
  27,491
  28,793
  30,164
  31,607
  33,126
  34,725
  36,406
  38,175
Debt-to-equity ratio
  0.550
  0.550
  0.560
  0.570
  0.580
  0.590
  0.600
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  0.670
  0.680
  0.680
  0.690
  0.700
  0.710
  0.720
  0.720
  0.730
  0.740
  0.740
  0.750
  0.760
  0.760
  0.770
  0.770
  0.780
Adjusted equity ratio
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531
  0.531

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2,077
  -2,109
  -2,146
  -2,188
  -2,234
  -2,285
  -2,340
  -2,400
  -2,465
  -2,535
  -1,853
  -1,933
  -2,018
  -2,108
  -2,203
  -2,304
  -2,411
  -2,525
  -2,645
  -2,771
  -2,905
  -3,045
  -3,194
  -3,350
  -3,515
  -3,689
  -3,871
  -4,063
  -4,265
  -4,478
Depreciation, amort., depletion, $m
  1,613
  1,633
  1,656
  1,681
  1,709
  1,740
  1,773
  1,809
  1,849
  1,890
  1,180
  1,228
  1,279
  1,333
  1,390
  1,451
  1,516
  1,584
  1,656
  1,732
  1,812
  1,897
  1,986
  2,080
  2,179
  2,284
  2,393
  2,509
  2,630
  2,758
Funds from operations, $m
  -464
  -477
  -491
  -507
  -525
  -545
  -567
  -591
  -617
  -644
  -674
  -705
  -739
  -775
  -813
  -853
  -896
  -941
  -989
  -1,039
  -1,092
  -1,148
  -1,208
  -1,270
  -1,336
  -1,405
  -1,478
  -1,554
  -1,635
  -1,720
Change in working capital, $m
  7
  8
  10
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
  51
  54
Cash from operations, $m
  -471
  -485
  -500
  -518
  -537
  -558
  -581
  -606
  -633
  -662
  -693
  -726
  -761
  -798
  -837
  -879
  -923
  -970
  -1,019
  -1,071
  -1,126
  -1,184
  -1,245
  -1,310
  -1,378
  -1,449
  -1,524
  -1,603
  -1,687
  -1,774
Maintenance CAPEX, $m
  -841
  -858
  -877
  -900
  -925
  -953
  -984
  -1,018
  -1,054
  -1,093
  -1,135
  -1,180
  -1,228
  -1,279
  -1,333
  -1,390
  -1,451
  -1,516
  -1,584
  -1,656
  -1,732
  -1,812
  -1,897
  -1,986
  -2,080
  -2,179
  -2,284
  -2,393
  -2,509
  -2,630
New CAPEX, $m
  -166
  -197
  -225
  -253
  -281
  -308
  -335
  -363
  -391
  -419
  -449
  -479
  -510
  -542
  -575
  -609
  -645
  -682
  -721
  -761
  -803
  -847
  -892
  -940
  -990
  -1,043
  -1,098
  -1,155
  -1,215
  -1,278
Cash from investing activities, $m
  -1,007
  -1,055
  -1,102
  -1,153
  -1,206
  -1,261
  -1,319
  -1,381
  -1,445
  -1,512
  -1,584
  -1,659
  -1,738
  -1,821
  -1,908
  -1,999
  -2,096
  -2,198
  -2,305
  -2,417
  -2,535
  -2,659
  -2,789
  -2,926
  -3,070
  -3,222
  -3,382
  -3,548
  -3,724
  -3,908
Free cash flow, $m
  -1,479
  -1,540
  -1,603
  -1,671
  -1,743
  -1,819
  -1,901
  -1,987
  -2,078
  -2,174
  -2,276
  -2,384
  -2,498
  -2,618
  -2,745
  -2,878
  -3,019
  -3,167
  -3,324
  -3,488
  -3,661
  -3,843
  -4,035
  -4,236
  -4,448
  -4,671
  -4,905
  -5,152
  -5,410
  -5,682
Issuance/(repayment) of debt, $m
  109
  128
  146
  164
  182
  200
  218
  235
  254
  272
  291
  311
  331
  352
  373
  395
  419
  443
  468
  494
  521
  550
  579
  610
  643
  677
  712
  750
  789
  830
Issuance/(repurchase) of shares, $m
  2,210
  2,254
  2,312
  2,374
  2,440
  2,511
  2,587
  2,667
  2,752
  2,843
  2,183
  2,285
  2,392
  2,506
  2,626
  2,752
  2,885
  3,026
  3,174
  3,330
  3,495
  3,668
  3,850
  4,041
  4,243
  4,455
  4,678
  4,912
  5,158
  5,417
Cash from financing (excl. dividends), $m  
  2,319
  2,382
  2,458
  2,538
  2,622
  2,711
  2,805
  2,902
  3,006
  3,115
  2,474
  2,596
  2,723
  2,858
  2,999
  3,147
  3,304
  3,469
  3,642
  3,824
  4,016
  4,218
  4,429
  4,651
  4,886
  5,132
  5,390
  5,662
  5,947
  6,247
Total cash flow (excl. dividends), $m
  840
  843
  855
  867
  880
  892
  904
  916
  928
  941
  198
  212
  225
  239
  254
  269
  285
  301
  318
  336
  355
  374
  394
  415
  437
  461
  485
  510
  537
  565
Retained Cash Flow (-), $m
  -2,210
  -2,254
  -2,312
  -2,374
  -2,440
  -2,511
  -2,587
  -2,667
  -2,752
  -2,843
  -2,183
  -2,285
  -2,392
  -2,506
  -2,626
  -2,752
  -2,885
  -3,026
  -3,174
  -3,330
  -3,495
  -3,668
  -3,850
  -4,041
  -4,243
  -4,455
  -4,678
  -4,912
  -5,158
  -5,417
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
  45
  45
  46
  48
  49
  50
  52
  54
  56
  58
  60
  62
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  100
  105
  110
  115
  121
  127
  133
  139
Cash available for distribution, $m
  -1,369
  -1,412
  -1,457
  -1,507
  -1,561
  -1,620
  -1,683
  -1,751
  -1,824
  -1,902
  -1,985
  -2,073
  -2,167
  -2,266
  -2,372
  -2,483
  -2,601
  -2,725
  -2,856
  -2,994
  -3,140
  -3,294
  -3,456
  -3,626
  -3,805
  -3,994
  -4,193
  -4,402
  -4,622
  -4,853
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  -1,294
  -1,254
  -1,210
  -1,162
  -1,110
  -1,055
  -997
  -935
  -870
  -804
  -735
  -666
  -598
  -530
  -464
  -402
  -343
  -288
  -239
  -194
  -155
  -122
  -94
  -71
  -52
  -38
  -27
  -18
  -12
  -8
Current shareholders' claim on cash, %
  81.7
  66.8
  54.5
  44.5
  36.4
  29.7
  24.3
  19.8
  16.2
  13.3
  11.4
  9.8
  8.4
  7.2
  6.2
  5.3
  4.5
  3.9
  3.3
  2.8
  2.4
  2.0
  1.7
  1.5
  1.3
  1.1
  0.9
  0.8
  0.7
  0.6

Perrigo Company plc, together with its subsidiaries, develops, manufactures, markets, and distributes over-the-counter (OTC) consumer goods and pharmaceutical products worldwide. The company operates through Consumer Healthcare (CHC), Branded Consumer Healthcare (BCH), Prescription Pharmaceuticals (Rx), Specialty Sciences, and Other segments. The CHC segment offers OTC products in various categories, including analgesics, cough/cold/allergy/sinus, gastrointestinal, infant nutritional, smoking cessation, animal health, feminine hygiene, diabetes and dermatological care, diagnostic, scar management, and other healthcare products, as well as vitamins, minerals, and dietary supplements (VMS); and contract manufacturing services. It serves retail drug, supermarket, mass merchandise chains, and wholesalers through sales force and industry brokers. The BCH segment provides branded OTC products in the natural health and VMS; cough, cold, flu, and allergy; personal care and derma-therapeutics; lifestyle; pain relief, nasal decongestants, and cold sore management; and anti-parasite areas, as well as offers generic pharmaceutical products. It serves pharmacies, drug, and grocery stores through pharmacy sales force, as well as a network of pharmacists. The Rx segment offers generic and specialty pharmaceutical prescription drugs in various dosage forms, such as creams, ointments, lotions, gels, shampoos, foams, suppositories, sprays, liquids, suspensions, solutions, powders, controlled substances, injectables, hormones, women's health products, oral solid dosage forms, and oral liquid formulations; and ORx products. It serves wholesalers; retail drug, supermarket, and mass merchandise chains; hospitals; and pharmacies. The Specialty Sciences segment offers Tysabri to treat multiple sclerosis. The Other segment offers active pharmaceutical ingredients used by generic and branded pharmaceutical companies. The company was founded in 1887 and is headquartered in Dublin, Ireland.

FINANCIAL RATIOS  of  Perrigo (PRGO)

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%

PRGO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PRGO stock intrinsic value calculation we used $4946 million for the last fiscal year's total revenue generated by Perrigo. The default revenue input number comes from 2017 income statement of Perrigo. 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 PRGO 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 5.8%, whose default value for PRGO is calculated based on our internal credit rating of Perrigo, 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 Perrigo.
    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 PRGO stock the variable cost ratio is equal to 137.9%.

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 PRGO 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 Perrigo.

Corporate tax rate of 27% is the nominal tax rate for Perrigo. 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 PRGO stock is equal to 0.9%.

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 PRGO are equal to 170%.

Life of production assets of 10 years is the average useful life of capital assets used in Perrigo 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 PRGO is equal to 7.2%. 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 - $6171 million for Perrigo - 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 142 million for Perrigo 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 Perrigo at the current share price and the inputted number of shares is $9.9 billion.

COMPANY NEWS

▶ [$$] Perrigo to Separate Its Prescription Pharmaceutical Business   [Aug-09-18 07:46PM  The Wall Street Journal]
▶ Mylan, Perrigo Earnings: Look Out Below!   [02:46PM  Barrons.com]
▶ Perrigo Co. Plc to Host Earnings Call   [06:30AM  ACCESSWIRE]
▶ Perrigo: 2Q Earnings Snapshot   [05:02AM  Associated Press]
▶ Perrigo's Q2 Earnings Preview   [Aug-08-18 03:05PM  Benzinga]
▶ Perrigo Announces Quarterly Dividend   [Aug-01-18 08:44AM  PR Newswire]
▶ Drug Makers Can't Cure Investor Impatience   [Jul-12-18 03:21PM  Barrons.com]
▶ Valeant & Perrigo: Buy One, Skip the Other   [Jun-06-18 11:41AM  Barrons.com]
▶ Perrigo Stock Is Just Bearish, Any Way You Look At It   [Jun-01-18 02:23PM  TheStreet.com]
▶ Starboard Value Buys $30.2 Million More in Perrigo Stock   [May-21-18 01:42PM  Barrons.com]
▶ Teva Pharma Spiked To Perrigo's Detriment On Asthma Inhaler Delay   [May-14-18 04:55PM  Investor's Business Daily]
▶ [$$] FDA Rejects Perrigo's ProAir Generic, Drug Maker Says   [05:02PM  The Wall Street Journal]
▶ Perrigo Announces Quarterly Dividend   [May-03-18 09:41AM  PR Newswire]
▶ Perrigo shares rise more than 4%, snapping losing streak   [Mar-02-18 04:16PM  MarketWatch]
▶ Perrigo Co. Plc to Host Earnings Call   [Feb-26-18 07:45AM  ACCESSWIRE]
▶ Trial Tests FTCs Power to Referee Drug Makers Fight Against Generics   [Feb-20-18 11:33PM  The Wall Street Journal]
▶ Perrigo Announces Quarterly Dividend   [Feb-15-18 09:17AM  PR Newswire]
▶ NYSE trader: UnitedHealth and other oligopolies just got Amazon'd   [Jan-30-18 02:01PM  Yahoo Finance Video]
▶ Pfizer: Revenue Growth Is Expected in 4Q17   [11:10AM  Market Realist]
▶ Is Valeant Pharmaceuticals Intl Inc a Buy? 3 Pros, 3 Cons   [Jan-11-18 12:58PM  InvestorPlace]
▶ Recent Developments for Mylan   [10:32AM  Market Realist]
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