Intrinsic value of Thermo Fisher Scientific - TMO

Previous Close

$228.10

  Intrinsic Value

$186.22

stock screener

  Rating & Target

hold

-18%

Previous close

$228.10

 
Intrinsic value

$186.22

 
Up/down potential

-18%

 
Rating

hold

We calculate the intrinsic value of TMO 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 91.9

 

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, %
  21.80
  20.12
  18.61
  17.25
  16.02
  14.92
  13.93
  13.04
  12.23
  11.51
  10.86
  10.27
  9.74
  9.27
  8.84
  8.46
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
  6.65
  6.49
  6.34
  6.21
  6.09
  5.98
  5.88
  5.79
Revenue, $m
  25,478
  30,604
  36,299
  42,560
  49,379
  56,746
  64,650
  73,077
  82,016
  91,455
  101,385
  111,800
  122,694
  134,068
  145,924
  158,268
  171,108
  184,458
  198,332
  212,750
  227,733
  243,306
  259,496
  276,335
  293,855
  312,091
  331,084
  350,872
  371,501
  393,015
Variable operating expenses, $m
  19,569
  22,662
  26,098
  29,875
  33,990
  38,435
  43,203
  48,288
  53,681
  59,376
  61,170
  67,453
  74,026
  80,889
  88,042
  95,490
  103,237
  111,291
  119,662
  128,361
  137,400
  146,796
  156,564
  166,724
  177,294
  188,297
  199,756
  211,695
  224,141
  237,122
Fixed operating expenses, $m
  1,189
  1,215
  1,241
  1,269
  1,297
  1,325
  1,354
  1,384
  1,415
  1,446
  1,478
  1,510
  1,543
  1,577
  1,612
  1,647
  1,684
  1,721
  1,759
  1,797
  1,837
  1,877
  1,918
  1,961
  2,004
  2,048
  2,093
  2,139
  2,186
  2,234
Total operating expenses, $m
  20,758
  23,877
  27,339
  31,144
  35,287
  39,760
  44,557
  49,672
  55,096
  60,822
  62,648
  68,963
  75,569
  82,466
  89,654
  97,137
  104,921
  113,012
  121,421
  130,158
  139,237
  148,673
  158,482
  168,685
  179,298
  190,345
  201,849
  213,834
  226,327
  239,356
Operating income, $m
  4,720
  6,727
  8,960
  11,416
  14,093
  16,986
  20,092
  23,405
  26,921
  30,633
  38,738
  42,836
  47,125
  51,602
  56,270
  61,131
  66,188
  71,446
  76,912
  82,592
  88,496
  94,632
  101,013
  107,650
  114,556
  121,746
  129,235
  137,038
  145,173
  153,659
EBITDA, $m
  10,256
  12,532
  15,064
  17,848
  20,884
  24,164
  27,685
  31,441
  35,426
  39,634
  44,063
  48,708
  53,569
  58,644
  63,935
  69,444
  75,176
  81,135
  87,329
  93,767
  100,457
  107,412
  114,643
  122,164
  129,991
  138,139
  146,625
  155,467
  164,686
  174,302
Interest expense (income), $m
  458
  1,134
  1,505
  1,919
  2,379
  2,885
  3,435
  4,031
  4,669
  5,350
  6,072
  6,834
  7,637
  8,478
  9,358
  10,277
  11,234
  12,232
  13,269
  14,347
  15,468
  16,633
  17,843
  19,101
  20,409
  21,769
  23,184
  24,658
  26,192
  27,790
  29,457
Earnings before tax, $m
  3,586
  5,223
  7,041
  9,037
  11,208
  13,551
  16,062
  18,736
  21,571
  24,562
  31,903
  35,200
  38,647
  42,244
  45,994
  49,897
  53,957
  58,178
  62,565
  67,124
  71,863
  76,789
  81,912
  87,241
  92,787
  98,562
  104,577
  110,846
  117,383
  124,203
Tax expense, $m
  968
  1,410
  1,901
  2,440
  3,026
  3,659
  4,337
  5,059
  5,824
  6,632
  8,614
  9,504
  10,435
  11,406
  12,418
  13,472
  14,568
  15,708
  16,892
  18,124
  19,403
  20,733
  22,116
  23,555
  25,053
  26,612
  28,236
  29,928
  31,693
  33,535
Net income, $m
  2,618
  3,813
  5,140
  6,597
  8,182
  9,892
  11,725
  13,677
  15,747
  17,930
  23,290
  25,696
  28,212
  30,838
  33,575
  36,425
  39,388
  42,470
  45,672
  49,001
  52,460
  56,056
  59,796
  63,686
  67,735
  71,950
  76,341
  80,918
  85,690
  90,668

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
  69,046
  82,939
  98,372
  115,338
  133,818
  153,784
  175,203
  198,042
  222,266
  247,846
  274,757
  302,980
  332,504
  363,329
  395,459
  428,911
  463,709
  499,886
  537,485
  576,558
  617,162
  659,365
  703,241
  748,875
  796,354
  845,776
  897,246
  950,873
  1,006,777
  1,065,083
Adjusted assets (=assets-cash), $m
  69,046
  82,939
  98,372
  115,338
  133,818
  153,784
  175,203
  198,042
  222,266
  247,846
  274,757
  302,980
  332,504
  363,329
  395,459
  428,911
  463,709
  499,886
  537,485
  576,558
  617,162
  659,365
  703,241
  748,875
  796,354
  845,776
  897,246
  950,873
  1,006,777
  1,065,083
Revenue / Adjusted assets
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
  0.369
Average production assets, $m
  27,567
  33,114
  39,276
  46,050
  53,428
  61,400
  69,951
  79,070
  88,742
  98,955
  109,699
  120,967
  132,755
  145,062
  157,890
  171,246
  185,139
  199,584
  214,595
  230,195
  246,407
  263,257
  280,775
  298,994
  317,951
  337,683
  358,232
  379,644
  401,964
  425,243
Working capital, $m
  3,873
  4,652
  5,517
  6,469
  7,506
  8,625
  9,827
  11,108
  12,466
  13,901
  15,411
  16,994
  18,650
  20,378
  22,181
  24,057
  26,008
  28,038
  30,146
  32,338
  34,615
  36,982
  39,443
  42,003
  44,666
  47,438
  50,325
  53,333
  56,468
  59,738
Total debt, $m
  27,866
  35,534
  44,053
  53,419
  63,620
  74,641
  86,464
  99,071
  112,443
  126,563
  141,418
  156,997
  173,294
  190,309
  208,045
  226,511
  245,719
  265,689
  286,444
  308,012
  330,425
  353,721
  377,941
  403,131
  429,339
  456,620
  485,032
  514,634
  545,493
  577,678
Total liabilities, $m
  38,114
  45,782
  54,301
  63,667
  73,868
  84,889
  96,712
  109,319
  122,691
  136,811
  151,666
  167,245
  183,542
  200,557
  218,293
  236,759
  255,967
  275,937
  296,692
  318,260
  340,673
  363,969
  388,189
  413,379
  439,587
  466,868
  495,280
  524,882
  555,741
  587,926
Total equity, $m
  30,933
  37,156
  44,071
  51,671
  59,951
  68,895
  78,491
  88,723
  99,575
  111,035
  123,091
  135,735
  148,962
  162,771
  177,166
  192,152
  207,741
  223,949
  240,794
  258,298
  276,488
  295,395
  315,052
  335,496
  356,767
  378,908
  401,966
  425,991
  451,036
  477,157
Total liabilities and equity, $m
  69,047
  82,938
  98,372
  115,338
  133,819
  153,784
  175,203
  198,042
  222,266
  247,846
  274,757
  302,980
  332,504
  363,328
  395,459
  428,911
  463,708
  499,886
  537,486
  576,558
  617,161
  659,364
  703,241
  748,875
  796,354
  845,776
  897,246
  950,873
  1,006,777
  1,065,083
Debt-to-equity ratio
  0.900
  0.960
  1.000
  1.030
  1.060
  1.080
  1.100
  1.120
  1.130
  1.140
  1.150
  1.160
  1.160
  1.170
  1.170
  1.180
  1.180
  1.190
  1.190
  1.190
  1.200
  1.200
  1.200
  1.200
  1.200
  1.210
  1.210
  1.210
  1.210
  1.210
Adjusted equity ratio
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448
  0.448

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,618
  3,813
  5,140
  6,597
  8,182
  9,892
  11,725
  13,677
  15,747
  17,930
  23,290
  25,696
  28,212
  30,838
  33,575
  36,425
  39,388
  42,470
  45,672
  49,001
  52,460
  56,056
  59,796
  63,686
  67,735
  71,950
  76,341
  80,918
  85,690
  90,668
Depreciation, amort., depletion, $m
  5,536
  5,805
  6,104
  6,433
  6,791
  7,178
  7,593
  8,036
  8,505
  9,001
  5,325
  5,872
  6,444
  7,042
  7,665
  8,313
  8,987
  9,689
  10,417
  11,175
  11,961
  12,779
  13,630
  14,514
  15,434
  16,392
  17,390
  18,429
  19,513
  20,643
Funds from operations, $m
  8,153
  9,617
  11,244
  13,030
  14,973
  17,070
  19,318
  21,713
  24,252
  26,931
  28,615
  31,568
  34,657
  37,880
  41,240
  44,738
  48,376
  52,158
  56,089
  60,175
  64,421
  68,836
  73,426
  78,200
  83,169
  88,343
  93,731
  99,347
  105,202
  111,311
Change in working capital, $m
  693
  779
  866
  952
  1,037
  1,120
  1,201
  1,281
  1,359
  1,435
  1,509
  1,583
  1,656
  1,729
  1,802
  1,876
  1,952
  2,029
  2,109
  2,191
  2,277
  2,367
  2,461
  2,559
  2,663
  2,772
  2,887
  3,008
  3,136
  3,270
Cash from operations, $m
  7,460
  8,838
  10,378
  12,078
  13,936
  15,950
  18,117
  20,432
  22,893
  25,496
  27,105
  29,985
  33,001
  36,151
  39,438
  42,861
  46,424
  50,129
  53,981
  57,984
  62,144
  66,469
  70,965
  75,641
  80,506
  85,571
  90,844
  96,339
  102,067
  108,041
Maintenance CAPEX, $m
  -1,099
  -1,338
  -1,607
  -1,907
  -2,235
  -2,594
  -2,981
  -3,396
  -3,838
  -4,308
  -4,804
  -5,325
  -5,872
  -6,444
  -7,042
  -7,665
  -8,313
  -8,987
  -9,689
  -10,417
  -11,175
  -11,961
  -12,779
  -13,630
  -14,514
  -15,434
  -16,392
  -17,390
  -18,429
  -19,513
New CAPEX, $m
  -4,937
  -5,547
  -6,162
  -6,774
  -7,378
  -7,972
  -8,552
  -9,118
  -9,672
  -10,213
  -10,744
  -11,268
  -11,788
  -12,307
  -12,828
  -13,356
  -13,893
  -14,444
  -15,012
  -15,600
  -16,211
  -16,850
  -17,518
  -18,219
  -18,956
  -19,732
  -20,550
  -21,411
  -22,320
  -23,279
Cash from investing activities, $m
  -6,036
  -6,885
  -7,769
  -8,681
  -9,613
  -10,566
  -11,533
  -12,514
  -13,510
  -14,521
  -15,548
  -16,593
  -17,660
  -18,751
  -19,870
  -21,021
  -22,206
  -23,431
  -24,701
  -26,017
  -27,386
  -28,811
  -30,297
  -31,849
  -33,470
  -35,166
  -36,942
  -38,801
  -40,749
  -42,792
Free cash flow, $m
  1,424
  1,953
  2,609
  3,397
  4,323
  5,385
  6,584
  7,918
  9,383
  10,975
  11,557
  13,392
  15,340
  17,400
  19,568
  21,841
  24,218
  26,698
  29,280
  31,967
  34,758
  37,657
  40,667
  43,792
  47,036
  50,404
  53,902
  57,538
  61,318
  65,249
Issuance/(repayment) of debt, $m
  6,858
  7,668
  8,519
  9,365
  10,201
  11,021
  11,823
  12,607
  13,372
  14,120
  14,855
  15,579
  16,298
  17,015
  17,736
  18,465
  19,208
  19,970
  20,755
  21,568
  22,413
  23,296
  24,220
  25,190
  26,209
  27,281
  28,411
  29,602
  30,859
  32,185
Issuance/(repurchase) of shares, $m
  2,902
  2,411
  1,774
  1,004
  97
  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  
  9,760
  10,079
  10,293
  10,369
  10,298
  11,021
  11,823
  12,607
  13,372
  14,120
  14,855
  15,579
  16,298
  17,015
  17,736
  18,465
  19,208
  19,970
  20,755
  21,568
  22,413
  23,296
  24,220
  25,190
  26,209
  27,281
  28,411
  29,602
  30,859
  32,185
Total cash flow (excl. dividends), $m
  11,184
  12,033
  12,902
  13,767
  14,621
  16,406
  18,408
  20,525
  22,755
  25,095
  26,412
  28,971
  31,638
  34,415
  37,304
  40,306
  43,426
  46,667
  50,035
  53,534
  57,171
  60,953
  64,887
  68,981
  73,244
  77,685
  82,314
  87,140
  92,177
  97,433
Retained Cash Flow (-), $m
  -5,520
  -6,224
  -6,914
  -7,601
  -8,279
  -8,945
  -9,596
  -10,232
  -10,852
  -11,460
  -12,056
  -12,644
  -13,227
  -13,809
  -14,394
  -14,986
  -15,589
  -16,208
  -16,845
  -17,504
  -18,191
  -18,907
  -19,657
  -20,444
  -21,271
  -22,141
  -23,058
  -24,025
  -25,045
  -26,121
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
  5,664
  5,809
  5,988
  6,166
  6,342
  7,462
  8,812
  10,293
  11,902
  13,636
  14,356
  16,327
  18,411
  20,606
  22,909
  25,320
  27,837
  30,460
  33,191
  36,030
  38,981
  42,046
  45,230
  48,538
  51,973
  55,544
  59,255
  63,115
  67,132
  71,313
Discount rate, %
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.51
  9.99
  10.49
  11.01
  11.57
  12.14
  12.75
  13.39
  14.06
  14.76
  15.50
  16.27
  17.09
  17.94
  18.84
  19.78
  20.77
  21.81
  22.90
  24.04
  25.25
  26.51
  27.83
  29.22
PV of cash for distribution, $m
  5,289
  5,031
  4,776
  4,496
  4,192
  4,434
  4,664
  4,805
  4,850
  4,796
  4,307
  4,127
  3,868
  3,549
  3,185
  2,798
  2,403
  2,019
  1,657
  1,328
  1,039
  793
  589
  426
  300
  205
  136
  87
  54
  33
Current shareholders' claim on cash, %
  96.9
  94.9
  93.7
  93.1
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0

Thermo Fisher Scientific Inc. develops, manufactures and sells a range of products. The Company provides analytical instruments, equipment, reagents and consumables, software and services for research, manufacturing, analysis, discovery and diagnostics. It operates through four segments: Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Services. The Life Sciences Solutions segment provides a portfolio of reagents, instruments and consumables. The Analytical Instruments segment provides a range of instruments, consumables, software and services. The Specialty Diagnostics segment offers a range of diagnostic test kits, reagents, culture media, instruments and associated products. The Laboratory Products and Services segment offers controlled temperature technologies products, growth protection and separation products, and water and laboratory products.

FINANCIAL RATIOS  of  Thermo Fisher Scientific (TMO)

Valuation Ratios
P/E Ratio 44.4
Price to Sales 4.9
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 28.4
Price to Free Cash Flow 33.1
Growth Rates
Sales Growth Rate 7.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 5%
Cap. Spend. - 3 Yr. Gr. Rate 9.5%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 71.4%
Total Debt to Equity 77.2%
Interest Coverage 5
Management Effectiveness
Return On Assets 5.7%
Ret/ On Assets - 3 Yr. Avg. 5.9%
Return On Total Capital 5.6%
Ret/ On T. Cap. - 3 Yr. Avg. 5.8%
Return On Equity 9.4%
Return On Equity - 3 Yr. Avg. 9.7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 45.8%
Gross Margin - 3 Yr. Avg. 45.3%
EBITDA Margin 23.2%
EBITDA Margin - 3 Yr. Avg. 24%
Operating Margin 13.4%
Oper. Margin - 3 Yr. Avg. 14%
Pre-Tax Margin 11.1%
Pre-Tax Margin - 3 Yr. Avg. 11.6%
Net Profit Margin 11.1%
Net Profit Margin - 3 Yr. Avg. 11.3%
Effective Tax Rate -0%
Eff/ Tax Rate - 3 Yr. Avg. 2.3%
Payout Ratio 11.8%

TMO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TMO stock intrinsic value calculation we used $20918 million for the last fiscal year's total revenue generated by Thermo Fisher Scientific. The default revenue input number comes from 0001 income statement of Thermo Fisher Scientific. 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 TMO stock valuation model: a) initial revenue growth rate of 21.8% 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 7.1%, whose default value for TMO is calculated based on our internal credit rating of Thermo Fisher Scientific, 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 Thermo Fisher Scientific.
    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 TMO stock the variable cost ratio is equal to 80.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1163 million in the base year in the intrinsic value calculation for TMO 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 Thermo Fisher Scientific.

Corporate tax rate of 27% is the nominal tax rate for Thermo Fisher Scientific. 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 TMO 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 TMO are equal to 108.2%.

Life of production assets of 20.6 years is the average useful life of capital assets used in Thermo Fisher Scientific 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 TMO is equal to 15.2%. 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 - $25413 million for Thermo Fisher Scientific - 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 402.796 million for Thermo Fisher Scientific 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 Thermo Fisher Scientific at the current share price and the inputted number of shares is $91.9 billion.

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▶ Thermo Fisher Scientific to Host Analyst Meeting   [Apr-30-18 04:05PM  PR Newswire]
▶ Thermo Fisher: 1Q Earnings Snapshot   [06:11AM  Associated Press]

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