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Discounted Cash Flow (DCF) Analysis Unlevered


Merck & Company Inc. (new)

Merck & Company Inc. (new) (MRK)

Healthcare

Operating Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 44,033.0042,236.4539,499.5339,807.6340,122.1142,292.7141,988.2141,685.8941,385.7541,087.7840,791.94
Revenue (%)
EBITDA 12,421.7123,960.7411,759.0110,107.1611,174.0113,246.0814,364.1714,260.7414,158.0714,056.1313,954.92
EBITDA (%)
EBIT 5,433.6717,270.495,383.794,637.596,499.788,724.998,649.578,587.298,525.478,464.088,403.14
EBIT (%)
Depreciation 6,988.046,690.256,375.225,469.574,674.234,521.095,714.595,673.455,632.605,592.055,551.78
Depreciation (%)

Balance Sheet Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Total Cash 17,485.5015,720.4113,425.8914,342.698,497.868,864.5512,541.8812,451.5812,361.9212,272.9212,184.55
Total Cash (%)
Account Receivables 7,186.196,626.906,485.827,018.086,872.927,071.347,020.436,969.886,919.706,869.886,820.41
Account Receivables (%)
Inventories 6,226.275,570.994,700.444,864.495,095.515,438.845,282.125,244.095,206.335,168.845,131.63
Inventories (%)
Accounts Payable 2,272.102,627.112,531.922,806.443,101.443,319.982,960.172,938.862,917.702,896.692,875.83
Accounts Payable (%)
Capital Expenditure -1,549.96-1,317.78-1,283.73-1,612.21-1,889.75-2,613.69-1,788.70-1,775.82-1,763.03-1,750.34-1,737.74
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 85.37
Diluted Shares Outstanding -
Cost of Debt
Tax Rate 28.74
After-tax Cost of Debt -1.39
Risk-Free Rate
Market Risk Premium
Cost of Equity 7.31
Total Debt 19,806.00
Total Equity -
Total Capital 19,806.00
Debt Weighting 100.00
Equity Weighting 0.00
Wacc

Build Up Free Cash

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 44,033.0042,236.4539,499.5339,807.6340,122.1142,292.7141,988.2141,685.8941,385.7541,087.7840,791.94
EBITDA 12,421.7123,960.7411,759.0110,107.1611,174.0113,246.0814,364.1714,260.7414,158.0714,056.1313,954.92
EBIT 5,433.6717,270.495,383.794,637.596,499.788,724.998,649.578,587.298,525.478,464.088,403.14
Tax Rate 18.92%30.97%17.50%15.48%63.15%28.74%29.13%29.13%29.13%29.13%29.13%
EBIAT 4,405.3611,921.034,441.823,919.652,395.026,217.856,130.186,086.056,042.235,998.725,955.53
Depreciation 6,988.046,690.256,375.225,469.574,674.234,521.095,714.595,673.455,632.605,592.055,551.78
Accounts Receivable -559.29141.08-532.26145.17-198.4250.9150.5550.1849.8249.46
Inventories -655.28870.54-164.05-231.02-343.34156.7338.0337.7637.4937.22
Accounts Payable -355.00-95.19274.52295.00218.54-359.81-21.31-21.16-21.01-20.86
Capital Expenditure --232.18-34.04328.47277.54723.94-824.99-12.88-12.79-12.69-12.60
UFCF 11,393.3919,948.6611,699.449,295.907,555.9511,139.6610,867.6211,813.8811,728.8211,644.3711,560.53
WACC
PV UFCF 10,494.0311,015.6110,560.3510,123.909,705.50
SUM PV UFCF 105,666.22

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 3.56
Free cash flow (t + 1) 12,022.96
Terminal Value -2,732,490.06
Present Value of Terminal Value -2,294,026.24

Intrinsic Value

Enterprise Value -2,188,360.02
Net Debt 10,941.45
Equity Value -2,199,301.47
Shares Outstanding -
Equity Value Per Share -Infinity

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
5.56 (%) Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy -Infinity Sell -Infinity Sell -Infinity Sell
5.06 (%) Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy -Infinity Sell -Infinity Sell
4.56 (%) Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy -Infinity Sell -Infinity Sell
4.06 (%) Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy -Infinity Sell
3.56 (%) Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy -Infinity Sell
3.06 (%) Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy
2.56 (%) Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy
2.06 (%) Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy
1.56 (%) Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy Infinity Buy