Intrinsic value of Shire ADR - SHPG

Previous Close

$171.25

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$171.25

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of SHPG 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 155.3

 

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, %
  33.00
  30.20
  27.68
  25.41
  23.37
  21.53
  19.88
  18.39
  17.05
  15.85
  14.76
  13.79
  12.91
  12.12
  11.41
  10.76
  10.19
  9.67
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.47
  6.32
Revenue, $m
  20,164
  26,254
  33,521
  42,039
  51,864
  63,032
  75,563
  89,461
  104,717
  121,312
  139,221
  158,415
  178,864
  200,537
  223,409
  247,459
  272,671
  299,037
  326,557
  355,236
  385,091
  416,144
  448,425
  481,975
  516,838
  553,069
  590,728
  629,883
  670,607
  712,982
Variable operating expenses, $m
  10,414
  11,962
  13,810
  15,975
  18,473
  21,312
  24,498
  28,031
  31,909
  36,128
  35,393
  40,273
  45,471
  50,981
  56,796
  62,910
  69,319
  76,022
  83,018
  90,309
  97,899
  105,793
  114,000
  122,529
  131,392
  140,603
  150,177
  160,131
  170,484
  181,257
Fixed operating expenses, $m
  3,714
  3,796
  3,879
  3,965
  4,052
  4,141
  4,232
  4,325
  4,420
  4,517
  4,617
  4,718
  4,822
  4,928
  5,037
  5,148
  5,261
  5,377
  5,495
  5,616
  5,739
  5,865
  5,995
  6,126
  6,261
  6,399
  6,540
  6,684
  6,831
  6,981
Total operating expenses, $m
  14,128
  15,758
  17,689
  19,940
  22,525
  25,453
  28,730
  32,356
  36,329
  40,645
  40,010
  44,991
  50,293
  55,909
  61,833
  68,058
  74,580
  81,399
  88,513
  95,925
  103,638
  111,658
  119,995
  128,655
  137,653
  147,002
  156,717
  166,815
  177,315
  188,238
Operating income, $m
  6,036
  10,496
  15,832
  22,099
  29,339
  37,579
  46,833
  57,105
  68,387
  80,666
  99,211
  113,424
  128,570
  144,627
  161,577
  179,402
  198,091
  217,639
  238,044
  259,311
  281,452
  304,485
  328,431
  353,319
  379,185
  406,067
  434,012
  463,068
  493,292
  524,744
EBITDA, $m
  19,208
  26,049
  34,226
  43,824
  54,906
  67,513
  81,666
  97,372
  114,619
  133,387
  153,647
  175,364
  198,506
  223,037
  248,929
  276,158
  304,705
  334,562
  365,727
  398,209
  432,023
  467,197
  503,765
  541,771
  581,268
  622,317
  664,986
  709,352
  755,500
  803,520
Interest expense (income), $m
  284
  1,055
  1,615
  2,299
  3,116
  4,072
  5,176
  6,431
  7,839
  9,400
  11,114
  12,978
  14,990
  17,146
  19,443
  21,878
  24,447
  27,149
  29,982
  32,944
  36,035
  39,257
  42,611
  46,099
  49,726
  53,495
  57,411
  61,481
  65,712
  70,110
  74,685
Earnings before tax, $m
  4,981
  8,881
  13,533
  18,984
  25,267
  32,403
  40,403
  49,266
  58,987
  69,553
  86,233
  98,434
  111,424
  125,184
  139,698
  154,954
  170,942
  187,657
  205,100
  223,276
  242,196
  261,874
  282,331
  303,593
  325,690
  348,656
  372,530
  397,356
  423,182
  450,059
Tax expense, $m
  1,345
  2,398
  3,654
  5,126
  6,822
  8,749
  10,909
  13,302
  15,927
  18,779
  23,283
  26,577
  30,084
  33,800
  37,719
  41,838
  46,154
  50,667
  55,377
  60,285
  65,393
  70,706
  76,229
  81,970
  87,936
  94,137
  100,583
  107,286
  114,259
  121,516
Net income, $m
  3,636
  6,483
  9,879
  13,858
  18,445
  23,654
  29,494
  35,964
  43,061
  50,773
  62,950
  71,857
  81,339
  91,384
  101,980
  113,116
  124,787
  136,990
  149,723
  162,992
  176,803
  191,168
  206,102
  221,623
  237,754
  254,519
  271,947
  290,070
  308,923
  328,543

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
  90,018
  117,204
  149,646
  187,674
  231,535
  281,393
  337,335
  399,379
  467,485
  541,571
  621,523
  707,211
  798,498
  895,254
  997,362
  1,104,728
  1,217,282
  1,334,989
  1,457,843
  1,585,876
  1,719,156
  1,857,784
  2,001,899
  2,151,673
  2,307,314
  2,469,059
  2,637,180
  2,811,977
  2,993,782
  3,182,954
Adjusted assets (=assets-cash), $m
  90,018
  117,204
  149,646
  187,674
  231,535
  281,393
  337,335
  399,379
  467,485
  541,571
  621,523
  707,211
  798,498
  895,254
  997,362
  1,104,728
  1,217,282
  1,334,989
  1,457,843
  1,585,876
  1,719,156
  1,857,784
  2,001,899
  2,151,673
  2,307,314
  2,469,059
  2,637,180
  2,811,977
  2,993,782
  3,182,954
Revenue / Adjusted assets
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
  0.224
Average production assets, $m
  78,842
  102,652
  131,066
  164,373
  202,788
  246,455
  295,452
  349,792
  409,442
  474,330
  544,355
  619,404
  699,356
  784,099
  873,530
  967,565
  1,066,144
  1,169,236
  1,276,837
  1,388,974
  1,505,705
  1,627,121
  1,753,343
  1,884,522
  2,020,838
  2,162,501
  2,309,748
  2,462,842
  2,622,074
  2,787,759
Working capital, $m
  -1,190
  -1,549
  -1,978
  -2,480
  -3,060
  -3,719
  -4,458
  -5,278
  -6,178
  -7,157
  -8,214
  -9,347
  -10,553
  -11,832
  -13,181
  -14,600
  -16,088
  -17,643
  -19,267
  -20,959
  -22,720
  -24,552
  -26,457
  -28,437
  -30,493
  -32,631
  -34,853
  -37,163
  -39,566
  -42,066
Total debt, $m
  29,909
  42,577
  57,695
  75,416
  95,856
  119,089
  145,158
  174,071
  205,808
  240,332
  277,590
  317,521
  360,060
  405,148
  452,731
  502,763
  555,214
  610,065
  667,315
  726,979
  789,087
  853,687
  920,845
  990,640
  1,063,168
  1,138,542
  1,216,886
  1,298,342
  1,383,063
  1,471,217
Total liabilities, $m
  41,949
  54,617
  69,735
  87,456
  107,895
  131,129
  157,198
  186,111
  217,848
  252,372
  289,630
  329,560
  372,100
  417,188
  464,771
  514,803
  567,253
  622,105
  679,355
  739,018
  801,127
  865,727
  932,885
  1,002,680
  1,075,208
  1,150,582
  1,228,926
  1,310,381
  1,395,102
  1,483,257
Total equity, $m
  48,070
  62,587
  79,911
  100,218
  123,640
  150,264
  180,137
  213,268
  249,637
  289,199
  331,894
  377,651
  426,398
  478,066
  532,591
  589,924
  650,029
  712,884
  778,488
  846,858
  918,029
  992,057
  1,069,014
  1,148,994
  1,232,106
  1,318,478
  1,408,254
  1,501,596
  1,598,680
  1,699,698
Total liabilities and equity, $m
  90,019
  117,204
  149,646
  187,674
  231,535
  281,393
  337,335
  399,379
  467,485
  541,571
  621,524
  707,211
  798,498
  895,254
  997,362
  1,104,727
  1,217,282
  1,334,989
  1,457,843
  1,585,876
  1,719,156
  1,857,784
  2,001,899
  2,151,674
  2,307,314
  2,469,060
  2,637,180
  2,811,977
  2,993,782
  3,182,955
Debt-to-equity ratio
  0.620
  0.680
  0.720
  0.750
  0.780
  0.790
  0.810
  0.820
  0.820
  0.830
  0.840
  0.840
  0.840
  0.850
  0.850
  0.850
  0.850
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.870
  0.870
Adjusted equity ratio
  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

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,636
  6,483
  9,879
  13,858
  18,445
  23,654
  29,494
  35,964
  43,061
  50,773
  62,950
  71,857
  81,339
  91,384
  101,980
  113,116
  124,787
  136,990
  149,723
  162,992
  176,803
  191,168
  206,102
  221,623
  237,754
  254,519
  271,947
  290,070
  308,923
  328,543
Depreciation, amort., depletion, $m
  13,172
  15,553
  18,394
  21,725
  25,567
  29,933
  34,833
  40,267
  46,232
  52,721
  54,436
  61,940
  69,936
  78,410
  87,353
  96,756
  106,614
  116,924
  127,684
  138,897
  150,571
  162,712
  175,334
  188,452
  202,084
  216,250
  230,975
  246,284
  262,207
  278,776
Funds from operations, $m
  16,808
  22,036
  28,273
  35,583
  44,011
  53,588
  64,327
  76,231
  89,293
  103,494
  117,386
  133,797
  151,275
  169,794
  189,333
  209,873
  231,402
  253,913
  277,407
  301,889
  327,373
  353,880
  381,436
  410,075
  439,838
  470,769
  502,922
  536,354
  571,130
  607,319
Change in working capital, $m
  -295
  -359
  -429
  -503
  -580
  -659
  -739
  -820
  -900
  -979
  -1,057
  -1,132
  -1,206
  -1,279
  -1,349
  -1,419
  -1,488
  -1,556
  -1,624
  -1,692
  -1,761
  -1,832
  -1,905
  -1,979
  -2,057
  -2,138
  -2,222
  -2,310
  -2,403
  -2,500
Cash from operations, $m
  17,103
  22,395
  28,702
  36,086
  44,591
  54,246
  65,066
  77,051
  90,193
  104,473
  118,442
  134,930
  152,482
  171,073
  190,682
  211,292
  232,889
  255,469
  279,030
  303,581
  329,135
  355,712
  383,341
  412,055
  441,894
  472,907
  505,144
  538,665
  573,533
  609,819
Maintenance CAPEX, $m
  -5,928
  -7,884
  -10,265
  -13,107
  -16,437
  -20,279
  -24,646
  -29,545
  -34,979
  -40,944
  -47,433
  -54,436
  -61,940
  -69,936
  -78,410
  -87,353
  -96,756
  -106,614
  -116,924
  -127,684
  -138,897
  -150,571
  -162,712
  -175,334
  -188,452
  -202,084
  -216,250
  -230,975
  -246,284
  -262,207
New CAPEX, $m
  -19,557
  -23,810
  -28,414
  -33,306
  -38,415
  -43,668
  -48,996
  -54,340
  -59,650
  -64,887
  -70,025
  -75,049
  -79,953
  -84,743
  -89,430
  -94,035
  -98,580
  -103,092
  -107,601
  -112,137
  -116,731
  -121,416
  -126,222
  -131,179
  -136,316
  -141,663
  -147,247
  -153,095
  -159,232
  -165,685
Cash from investing activities, $m
  -25,485
  -31,694
  -38,679
  -46,413
  -54,852
  -63,947
  -73,642
  -83,885
  -94,629
  -105,831
  -117,458
  -129,485
  -141,893
  -154,679
  -167,840
  -181,388
  -195,336
  -209,706
  -224,525
  -239,821
  -255,628
  -271,987
  -288,934
  -306,513
  -324,768
  -343,747
  -363,497
  -384,070
  -405,516
  -427,892
Free cash flow, $m
  -8,383
  -9,299
  -9,977
  -10,327
  -10,261
  -9,700
  -8,576
  -6,834
  -4,437
  -1,358
  984
  5,446
  10,588
  16,395
  22,842
  29,904
  37,553
  45,762
  54,506
  63,761
  73,506
  83,726
  94,407
  105,542
  117,126
  129,160
  141,647
  154,595
  168,017
  181,927
Issuance/(repayment) of debt, $m
  10,368
  12,668
  15,118
  17,721
  20,439
  23,234
  26,069
  28,912
  31,738
  34,524
  37,258
  39,930
  42,540
  45,088
  47,582
  50,032
  52,450
  54,851
  57,250
  59,664
  62,108
  64,601
  67,158
  69,795
  72,528
  75,373
  78,344
  81,456
  84,721
  88,154
Issuance/(repurchase) of shares, $m
  8,258
  8,034
  7,445
  6,449
  4,977
  2,970
  379
  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  
  18,626
  20,702
  22,563
  24,170
  25,416
  26,204
  26,448
  28,912
  31,738
  34,524
  37,258
  39,930
  42,540
  45,088
  47,582
  50,032
  52,450
  54,851
  57,250
  59,664
  62,108
  64,601
  67,158
  69,795
  72,528
  75,373
  78,344
  81,456
  84,721
  88,154
Total cash flow (excl. dividends), $m
  10,243
  11,403
  12,586
  13,843
  15,155
  16,504
  17,873
  22,078
  27,301
  33,166
  38,242
  45,376
  53,128
  61,483
  70,424
  79,936
  90,004
  100,614
  111,756
  123,424
  135,614
  148,326
  161,565
  175,337
  189,655
  204,533
  219,991
  236,051
  252,738
  270,081
Retained Cash Flow (-), $m
  -11,894
  -14,517
  -17,324
  -20,307
  -23,422
  -26,624
  -29,873
  -33,131
  -36,369
  -39,562
  -42,694
  -45,757
  -48,747
  -51,668
  -54,526
  -57,333
  -60,104
  -62,855
  -65,604
  -68,370
  -71,171
  -74,027
  -76,957
  -79,980
  -83,112
  -86,372
  -89,776
  -93,342
  -97,084
  -101,018
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
  182
  242
  315
  402
  504
  622
  756
  907
  1,074
  1,257
  1,456
  1,671
  1,901
  2,146
  2,406
  2,681
  2,970
  3,272
  3,588
  3,919
  4,263
  4,621
  4,994
  5,381
  5,784
  6,202
  6,637
  7,089
  7,559
  8,047
Cash available for distribution, $m
  -1,651
  -3,114
  -4,738
  -6,464
  -8,267
  -10,120
  -12,000
  -11,053
  -9,068
  -6,396
  -4,453
  -381
  4,381
  9,815
  15,899
  22,603
  29,899
  37,758
  46,152
  55,054
  64,443
  74,299
  84,607
  95,357
  106,543
  118,161
  130,215
  142,709
  155,654
  169,063
Discount rate, %
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
  -1,553
  -2,739
  -3,874
  -4,878
  -5,716
  -6,363
  -6,805
  -5,603
  -4,070
  -2,517
  -1,520
  -112
  1,087
  2,039
  2,726
  3,155
  3,345
  3,331
  3,157
  2,868
  2,509
  2,118
  1,729
  1,366
  1,045
  774
  555
  385
  258
  167
Current shareholders' claim on cash, %
  95.0
  91.4
  88.9
  87.3
  86.3
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8
  85.8

Shire plc is a biotech company focused on serving people with rare diseases and other specialized conditions. The Company's segment is engaged in research, development, licensing, manufacturing, marketing, distribution and sale of specialist medicines. It focuses its development resources on projects in various therapeutic areas (TAs), including Neuroscience, Ophthalmology, Hematology, Oncology, Immunology, Gastrointestinal (GI)/Metabolic/Endocrinology Diseases. Its Hematology products include ADVATE (Antihemophilic Factor (Recombinant)), ADYNOVATE/ADYNOVI (Antihemophilic Factor (Recombinant), PEGylated)), RIXUBIS (Coagulation Factor IX (Recombinant)), VONVENDI (von Willebrand factor (Recombinant)) and FEIBA (Anti-Inhibitor Coagulant Complex). Its Genetic Diseases products include CINRYZE (C1 esterase inhibitor (human)), FIRAZYR (icatibant), ELAPRASE (idursulfase), REPLAGAL (agalsidase alfa) and VPRIV (velaglucerase alfa).

FINANCIAL RATIOS  of  Shire ADR (SHPG)

Valuation Ratios
P/E Ratio 477.7
Price to Sales 13.7
Price to Book 5.4
Price to Tangible Book
Price to Cash Flow 58.7
Price to Free Cash Flow 77.7
Growth Rates
Sales Growth Rate 77.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 464.3%
Cap. Spend. - 3 Yr. Gr. Rate 32.8%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 68.7%
Total Debt to Equity 79.3%
Interest Coverage 3
Management Effectiveness
Return On Assets 1.6%
Ret/ On Assets - 3 Yr. Avg. 13.8%
Return On Total Capital 1%
Ret/ On T. Cap. - 3 Yr. Avg. 19.8%
Return On Equity 1.7%
Return On Equity - 3 Yr. Avg. 21.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 66.5%
Gross Margin - 3 Yr. Avg. 78.9%
EBITDA Margin 19.6%
EBITDA Margin - 3 Yr. Avg. 38%
Operating Margin 8.4%
Oper. Margin - 3 Yr. Avg. 28.6%
Pre-Tax Margin 4.3%
Pre-Tax Margin - 3 Yr. Avg. 27.1%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 26.6%
Effective Tax Rate -25.9%
Eff/ Tax Rate - 3 Yr. Avg. -7%
Payout Ratio 52.3%

SHPG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SHPG stock intrinsic value calculation we used $15161 million for the last fiscal year's total revenue generated by Shire ADR. The default revenue input number comes from 2017 income statement of Shire 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 SHPG stock valuation model: a) initial revenue growth rate of 33% 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 6.3%, whose default value for SHPG is calculated based on our internal credit rating of Shire 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 Shire 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 SHPG stock the variable cost ratio is equal to 60.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3634 million in the base year in the intrinsic value calculation for SHPG 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 Shire ADR.

Corporate tax rate of 27% is the nominal tax rate for Shire 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 SHPG stock is equal to 1.2%.

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 SHPG are equal to 391%.

Life of production assets of 10 years is the average useful life of capital assets used in Shire 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 SHPG is equal to -5.9%. 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 - $36176 million for Shire 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 907 million for Shire 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 Shire ADR at the current share price and the inputted number of shares is $155.3 billion.

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AMGN Amgen 190.49 91.73  sell
PFE Pfizer 37.33 24.58  sell

COMPANY NEWS

▶ Shire plc : Rule 2.9 Announcement   [Jul-20-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jul-19-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jul-17-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jul-12-18 02:01AM  GlobeNewswire]
▶ Company News For Jul 11, 2018   [Jul-11-18 10:04AM  Zacks]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ U.S. regulator backs Takeda's $62B acquisition of Shire   [Jul-10-18 10:58AM  American City Business Journals]
▶ Shire plc : Rule 2.9 announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jul-09-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jul-04-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jul-03-18 02:01AM  GlobeNewswire]
▶ Shire plc : Total voting rights   [Jul-02-18 08:01AM  GlobeNewswire]
▶ Shire plc: Director/PDMR Shareholding   [02:02AM  GlobeNewswire]
▶ Shire plc : Form 8 (DD) - Susan Kilsby   [02:01AM  GlobeNewswire]
▶ Shire plc : Form 8 (DD) - Steven Gillis   [02:01AM  GlobeNewswire]
▶ Shire plc : Form 8 (DD) - Sara Mathew   [02:01AM  GlobeNewswire]
▶ Shire plc : Form 8 (DD) - Olivier Bohuon   [02:01AM  GlobeNewswire]
▶ Shire plc : Form 8 (DD) - Ian Clark   [02:01AM  GlobeNewswire]
▶ Shire plc : Form 8 (DD) - Gail Fosler   [02:01AM  GlobeNewswire]
▶ Shire plc : Form 8 (DD) - David Ginsburg   [02:01AM  GlobeNewswire]
▶ Shire plc : Form 8 (DD) - Albert Stroucken   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jun-29-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 announcement   [Jun-27-18 02:01AM  GlobeNewswire]
▶ [$$] Takeda chief seeks to allay £46bn Shire bid concerns   [Jun-26-18 10:14PM  Financial Times]
▶ Shire plc : Rule 2.9 Announcement   [02:02AM  GlobeNewswire]
▶ FDA approves $1.2B plasma manufacturing center near Covington   [Jun-22-18 10:14AM  American City Business Journals]
▶ Shire plc : Rule 2.9 Announcement   [05:01AM  GlobeNewswire]
▶ Nike takes a dive, Spotify surges, Shire up slightly   [Jun-21-18 02:03PM  Yahoo Finance]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Shire plc: Rule 2.9 Announcement   [Jun-19-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jun-18-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jun-13-18 02:01AM  GlobeNewswire]
▶ How Takeda CEO Sells Japan's Biggest Deal to Doubters   [Jun-12-18 07:01AM  Bloomberg]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jun-08-18 02:02AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [Jun-07-18 02:01AM  GlobeNewswire]
▶ 'Right to Try' Law Says Yes, the Drug Company Says No   [Jun-06-18 05:56PM  The Wall Street Journal]
▶ Shire plc : Rule 2.9 announcement   [02:02AM  GlobeNewswire]
▶ Shire plc : Director/PDMR Shareholding   [Jun-04-18 10:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ What Does Shire plcs (LON:SHP) Ownership Structure Look Like?   [Jun-01-18 10:34AM  Simply Wall St.]
▶ Shire plc : Total voting rights   [07:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [May-30-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [May-28-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [May-24-18 02:01AM  GlobeNewswire]
▶ Shire plc : Block listing Interim Review   [May-23-18 10:32AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:02AM  GlobeNewswire]
▶ Shire plc : Director Declaration   [May-22-18 11:46AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Roche Proves Again Why It Will Likely Rout Shire's Hemophilia Business   [May-21-18 04:51PM  Investor's Business Daily]
▶ Shire plc : Rule 2.9 Announcement   [02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [May-18-18 02:01AM  GlobeNewswire]
▶ Biogen, Shire called out by FDA for gaming generic access rule   [10:27AM  American City Business Journals]
▶ Shire plc: Rule 2.9 Announcement   [May-16-18 02:01AM  GlobeNewswire]
▶ Shire plc : Rule 2.9 Announcement   [02:02AM  GlobeNewswire]
▶ Takeda and Shire: A Pricey Marriage   [May-14-18 06:28PM  Motley Fool]
▶ Value Stocks Investors Love   [May-13-18 05:02AM  Simply Wall St.]
▶ Iconic Genzyme building faces uncertain future after Shire-Takeda deal   [May-11-18 05:41AM  American City Business Journals]
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