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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 12,421.7123,960.7411,759.0110,107.1611,174.0113,246.0813,944.2813,843.8813,744.2113,645.2513,547.00
EBITDA (%)
EBIT 5,433.6717,270.495,383.794,637.596,499.788,724.998,070.138,012.037,954.347,897.077,840.21
EBIT (%)
Depreciation 6,988.046,690.256,375.225,469.574,674.234,521.095,874.155,831.865,789.875,748.185,706.79
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 17,485.5015,720.4113,425.8914,342.698,497.868,864.5513,230.4813,135.2213,040.6512,946.7612,853.54
Total Cash (%)
Account Receivables 7,186.196,626.906,485.827,018.086,872.927,071.346,991.046,940.706,890.736,841.116,791.86
Account Receivables (%)
Inventories 6,226.275,570.994,700.444,864.495,095.515,438.845,391.295,352.475,313.935,275.675,237.69
Inventories (%)
Accounts Payable 2,272.102,627.112,531.922,806.443,101.443,319.982,830.012,809.632,789.402,769.322,749.38
Accounts Payable (%)
Capital Expenditure -1,549.96-1,317.78-1,283.73-1,612.21-1,889.75-2,613.69-1,738.31-1,725.80-1,713.37-1,701.03-1,688.79
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 88.31
Diluted Shares Outstanding 2,600.38
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 229,639.25
Total Capital 249,445.25
Debt Weighting 7.94
Equity Weighting 92.06
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 12,421.7123,960.7411,759.0110,107.1611,174.0113,246.0813,944.2813,843.8813,744.2113,645.2513,547.00
EBIT 5,433.6717,270.495,383.794,637.596,499.788,724.998,070.138,012.037,954.347,897.077,840.21
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 4,405.3611,921.034,441.823,919.652,395.026,217.855,719.525,678.345,637.465,596.875,556.57
Depreciation 6,988.046,690.256,375.225,469.574,674.234,521.095,874.155,831.865,789.875,748.185,706.79
Accounts Receivable -559.29141.08-532.26145.17-198.4280.3150.3449.9749.6149.26
Inventories -655.28870.54-164.05-231.02-343.3447.5638.8238.5438.2637.98
Accounts Payable -355.00-95.19274.52295.00218.54-489.97-20.38-20.23-20.08-19.94
Capital Expenditure --232.18-34.04328.47277.54723.94-875.38-12.52-12.43-12.34-12.25
UFCF 11,393.3919,948.6611,699.449,295.907,555.9511,139.6610,356.1811,566.4611,483.1811,400.5011,318.42
WACC
PV UFCF 9,677.7710,100.709,371.078,694.148,066.10
SUM PV UFCF 88,082.32

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 7.01
Free cash flow (t + 1) 11,771.15
Terminal Value 391,068.18
Present Value of Terminal Value 278,695.95

Intrinsic Value

Enterprise Value 366,778.28
Net Debt 10,941.45
Equity Value 355,836.83
Shares Outstanding 2,600.38
Equity Value Per Share 136.84