DCF Tool

MRK

Merck & Co Inc – Pharmaceutical Preparation Manufacturing
For 130 years, Merck, known as MSD outside of the United States and Canada, has been inventing for life, bringing forward medicines and vaccines for many of the world's most challenging diseases in pursuit of its mission to save and improve lives. It demonstrates its commitment to patients and population health by increasing access to health care through far-reaching policies, programs and partnerships. Today, Merck continues to be at the forefront of research to prevent and treat diseases that threaten people and animals - including cancer, infectious diseases such as HIV and Ebola, and emerging animal diseases - as we aspire to be the premier research-intensive biopharmaceutical company in the world.
Analysis Results
Intrinsic Value $50.43
Latest Price $86.12
Relative Value 71% overvalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of -6.6%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 4.7%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of -6.6%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2022 6.05 5.77
2023 5.65 5.15
2024 5.27 4.59
2025 4.93 4.09
2026 4.6 3.65
Terminal Value

Assuming the company was sold after the projection period at an exit multiple of 30, the terminal value of the company would be 138 billion. This corresponds to a present value of 104 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 23.3 billion. Adding in the terminal value gives a total present value of 128 billion.

There are presently 2.53 billion outstanding shares, so the intrinsic value per share is 50.43.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 30,266,000,000
Current Cash 8,096,000,000
Current Liabilities 23,872,000,000
Current Debt 2,412,000,000
Non-Cash Working Capital (NCWC) 710,000,000
Change in NCWC 1,904,000,000
EBIT 13,199,000,000
Tax Provision 1,521,000,000
Depreciation and Amortization 3,214,000,000
Capital Expenditure -4,448,000,000
Unlevered Free Cash Flow 12,422,521,219
Current Assets 27,764,000,000
Current Cash 8,062,000,000
Current Liabilities 27,327,000,000
Current Debt 6,431,000,000
Non-Cash Working Capital (NCWC) -1,194,000,000
Change in NCWC 383,000,000
EBIT 8,483,000,000
Tax Provision 1,709,000,000
Depreciation and Amortization 3,625,000,000
Capital Expenditure -4,684,000,000
Unlevered Free Cash Flow 6,157,876,237
Current Assets 27,483,000,000
Current Cash 10,450,000,000
Current Liabilities 22,220,000,000
Current Debt 3,610,000,000
Non-Cash Working Capital (NCWC) -1,577,000,000
Change in NCWC -1,690,000,000
EBIT 12,241,000,000
Tax Provision 1,687,000,000
Depreciation and Amortization 3,652,000,000
Capital Expenditure -3,473,000,000
Unlevered Free Cash Flow 8,928,659,542
Current Assets 25,875,000,000
Current Cash 8,864,000,000
Current Liabilities 22,206,000,000
Current Debt 5,308,000,000
Non-Cash Working Capital (NCWC) 113,000,000
Change in NCWC -598,000,000
EBIT 8,931,000,000
Tax Provision 2,508,000,000
Depreciation and Amortization 4,519,000,000
Capital Expenditure -2,615,000,000
Unlevered Free Cash Flow 7,662,704,171
Current Assets 24,766,000,000
Current Cash 8,498,000,000
Current Liabilities 18,614,000,000
Current Debt 3,057,000,000
Non-Cash Working Capital (NCWC) 711,000,000
Change in NCWC 1,074,000,000
EBIT 7,351,000,000
Tax Provision 4,103,000,000
Depreciation and Amortization 4,637,000,000
Capital Expenditure -1,888,000,000
Unlevered Free Cash Flow 6,548,765,680
Current Assets 30,614,000,000
Current Cash 14,341,000,000
Current Liabilities 17,204,000,000
Current Debt 568,000,000
Non-Cash Working Capital (NCWC) -363,000,000
Change in NCWC -82,000,000
EBIT 6,116,000,000
Tax Provision 718,000,000
Depreciation and Amortization 5,441,000,000
Capital Expenditure -1,614,000,000
Unlevered Free Cash Flow 8,918,461,257
Current Assets 29,764,000,000
Current Cash 13,427,000,000
Current Liabilities 19,203,000,000
Current Debt 2,585,000,000
Non-Cash Working Capital (NCWC) -281,000,000
Change in NCWC -1,673,000,000
EBIT 7,752,000,000
Tax Provision 942,000,000
Depreciation and Amortization 6,375,000,000
Capital Expenditure -1,283,000,000
Unlevered Free Cash Flow 9,818,957,044
Current Assets 33,173,000,000
Current Cash 15,719,000,000
Current Liabilities 18,766,000,000
Current Debt 2,704,000,000
Non-Cash Working Capital (NCWC) 1,392,000,000
Change in NCWC -3,460,000,000
EBIT 6,940,000,000
Tax Provision 5,349,000,000
Depreciation and Amortization 6,691,000,000
Capital Expenditure -1,317,000,000
Unlevered Free Cash Flow 6,706,105,537
Current Assets 35,685,000,000
Current Cash 17,486,000,000
Current Liabilities 17,868,000,000
Current Debt 4,521,000,000
Non-Cash Working Capital (NCWC) 4,852,000,000
Change in NCWC 169,000,000
EBIT 8,069,000,000
Tax Provision 1,028,000,000
Depreciation and Amortization 6,988,000,000
Capital Expenditure -1,548,000,000
Unlevered Free Cash Flow 12,182,069,972
Current Assets 34,857,000,000
Current Cash 16,141,000,000
Current Liabilities 18,348,000,000
Current Debt 4,315,000,000
Non-Cash Working Capital (NCWC) 4,683,000,000
Change in NCWC 729,000,000
EBIT 10,519,000,000
Tax Provision 2,440,000,000
Depreciation and Amortization 6,978,000,000
Capital Expenditure -1,954,000,000
Unlevered Free Cash Flow 13,335,009,497

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