Stock Analysis on Net
Stock Analysis on Net

AmerisourceBergen Corp. (NYSE:ABC)

This company has been moved to the archive! The financial data has not been updated since August 2, 2023.

Present Value of Free Cash Flow to Equity (FCFE)

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In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

AmerisourceBergen Corp., free cash flow to equity (FCFE) forecast

US$ in thousands, except per share data

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Year Value FCFEt or Terminal value (TVt) Calculation Present value at 9.86%
01 FCFE0 1,289,969
1 FCFE1 2,913,300 = 1,289,969 × (1 + 125.84%) 2,651,864
2 FCFE2 5,708,924 = 2,913,300 × (1 + 95.96%) 4,730,275
3 FCFE3 9,481,314 = 5,708,924 × (1 + 66.08%) 7,151,000
4 FCFE4 12,913,259 = 9,481,314 × (1 + 36.20%) 8,865,438
5 FCFE5 13,728,735 = 12,913,259 × (1 + 6.32%) 8,579,479
5 Terminal value (TV5) 411,896,773 = 13,728,735 × (1 + 6.32%) ÷ (9.86% – 6.32%) 257,406,081
Intrinsic value of AmerisourceBergen Corp. common stock 289,384,138
 
Intrinsic value of AmerisourceBergen Corp. common stock (per share) $1,431.36
Current share price $191.43

Based on: 10-K (reporting date: 2022-09-30).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.83%
Expected rate of return on market portfolio2 E(RM) 14.44%
Systematic risk of AmerisourceBergen Corp. common stock βABC 0.52
 
Required rate of return on AmerisourceBergen Corp. common stock3 rABC 9.86%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rABC = RF + βABC [E(RM) – RF]
= 4.83% + 0.52 [14.44% – 4.83%]
= 9.86%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

AmerisourceBergen Corp., PRAT model

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Average Sep 30, 2022 Sep 30, 2021 Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017
Selected Financial Data (US$ in thousands)
Cash dividends 391,687 366,648 343,578 338,974 333,041 320,270
Net income (loss) attributable to AmerisourceBergen Corporation 1,698,820 1,539,932 (3,408,716) 855,365 1,658,405 364,484
Revenue 238,587,006 213,988,843 189,893,926 179,589,121 167,939,635 153,143,826
Total assets 56,560,616 57,337,805 44,274,830 39,171,980 37,669,838 35,316,470
Total AmerisourceBergen Corporation stockholders’ equity (deficit) (211,559) 223,354 (1,018,924) 2,878,917 2,932,824 2,064,461
Financial Ratios
Retention rate1 0.77 0.76 — 0.60 0.80 0.12
Profit margin2 0.71% 0.72% -1.80% 0.48% 0.99% 0.24%
Asset turnover3 4.22 3.73 4.29 4.58 4.46 4.34
Financial leverage4 — 256.71 — 13.61 12.84 17.11
Averages
Retention rate 0.61
Profit margin 0.63%
Asset turnover 4.38
Financial leverage 75.07
 
FCFE growth rate (g)5 125.84%

Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).

2022 Calculations

1 Retention rate = (Net income (loss) attributable to AmerisourceBergen Corporation – Cash dividends) ÷ Net income (loss) attributable to AmerisourceBergen Corporation
= (1,698,820 – 391,687) ÷ 1,698,820
= 0.77

2 Profit margin = 100 × Net income (loss) attributable to AmerisourceBergen Corporation ÷ Revenue
= 100 × 1,698,820 ÷ 238,587,006
= 0.71%

3 Asset turnover = Revenue ÷ Total assets
= 238,587,006 ÷ 56,560,616
= 4.22

4 Financial leverage = Total assets ÷ Total AmerisourceBergen Corporation stockholders’ equity (deficit)
= 56,560,616 ÷ -211,559
= —

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.61 × 0.63% × 4.38 × 75.07
= 125.84%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (38,702,333 × 9.86% – 1,289,969) ÷ (38,702,333 + 1,289,969)
= 6.32%

where:
Equity market value0 = current market value of AmerisourceBergen Corp. common stock (US$ in thousands)
FCFE0 = the last year AmerisourceBergen Corp. free cash flow to equity (US$ in thousands)
r = required rate of return on AmerisourceBergen Corp. common stock

FCFE growth rate (g) forecast

AmerisourceBergen Corp., H-model

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Year Value gt
1 g1 125.84%
2 g2 95.96%
3 g3 66.08%
4 g4 36.20%
5 and thereafter g5 6.32%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 125.84% + (6.32% – 125.84%) × (2 – 1) ÷ (5 – 1)
= 95.96%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 125.84% + (6.32% – 125.84%) × (3 – 1) ÷ (5 – 1)
= 66.08%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 125.84% + (6.32% – 125.84%) × (4 – 1) ÷ (5 – 1)
= 36.20%