AmerisourceBergen (ABC:NYS) Fundamental Valuation Report

Fundamental Valuation Report

AmerisourceBergen(ABC:NYS)

Healthcare:Medical Distribution

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$87.43 (USD) 21/11/2018

Weighted Valuation
$96.00 (USD)

Overall Rating
Undervalued by 9.8%

Valuation Models Analyst Consensus: $96.00 (USD)
(in order of importance)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (ABC:NYS USD)

Price 87.43
Range 87.10 – 89.30
52 week 78.98 – 105.48
Open 88.52
Vol / Avg. 1.12M/1.61M
Mkt cap 18.53B
P/E 11.61
Div/yield 1.52/0.02
EPS 7.53
Shares 211.93M
Beta 0.97

Company Description

AmerisourceBergen is one of three major pharmaceutical distributors in the U.S., with highly efficient distribution assets. The firm’s activities include procurement, inventory management, reimbursement consulting, sales forecasts, and logistics services. The firm is also a wholesale leader within the high-growth specialty distribution niche.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for ABC:NYS

Using a discounted cash flow model we generated an intrinsic value of $365.85 (USD) for ABC:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

ABC:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $365.85 1% 5% 1% 5%
WACC (or Ke) 8.17 $458.58 $303.18
Terminal Growth Rate 3.00 $309.56 $449.15
Tax Rate -0.37 $377.18 $354.52
Cash Flow 2,715,400,067 $350.31 $381.39
Capital Expenditures 0 $365.85 $365.85
Long Term Debt 4,407,216,000 $366.89 $364.81

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $143.90 (USD) for ABC:NYS. We also generated a valuation of $86.29 (USD) using other metrics and comparables.
The comparable companies were Cardinal Health (CAH:NYS), Henry Schein (HSIC:NAS) and McKesson (MCK:NYS).

Company ABC:NYS End Date Value
Earnings/Share $7.53 (USD)
Book Value/Share $14.62 (USD)
Sales/Share $740.00 (USD)
Cash Flow/Share $9.61 (USD)
EBITDA/Share $8.52 (USD)
Price Based on Comps Adjustment Factor (%)
$348.03 (USD) 20.2
$46.02 (USD) 0.0
$303.15 (USD) -79.2
$93.99 (USD) -44.9
$122.50 (USD) 25.8
ABC:NYS Ratios Used Average Values CAH:NYS HSIC:NAS MCK:NYS
18.03 PE Ratio 96.82 62.47 29.97 198.03
6.02 PB Ratio 3.15 2.49 4.34 2.61
0.12 PS Ratio 0.41 0.12 0.99 0.12
9.16 PCF Ratio 11.82 5.76 22.04 7.66
13.20 EV to EBITDA 14.38 7.67 13.58 21.89

Multiples

Using a multiples approach we generated a valuation of  $135.37 (USD) for ABC:NYS

Company ABC:NYS End Date Value
Earnings/Share $7.53 (USD)
Book Value/Share $14.62 (USD)
Sales/Share $740.00 (USD)
Cash Flow/Share $9.61 (USD)
EBITDA/Share $8.52 (USD)
Price Based on Comps Adjustment Factor
$216.11 (USD) 0
$138.81 (USD) 0
$100.04 (USD) 0
$74.28 (USD) 0
$147.59 (USD) 0
Ratios Ratio Average
PE Ratio 28.70
PB Ratio 9.50
PS Ratio 0.14
PCF Ratio 7.73
EV to EBITDA 17.32

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  ABC:NYS for the last 10 years was  9.41

We ran the Adjusted Book Value for  ABC:NYS and generated a book value of  $13.76 (USD)
By multiplying these we get an adjusted valuation of  $129.50 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for ABC:NYS. The 3 analysts have a concensus valuation for ABC:NYS for 2019 of $96.00 (USD).

ABC:NYS AmerisourceBergen

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 1 0 4.4000 Outperform 2018-11-20

Current Price: 87.43 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 7.01 7.49
# EPS Analysts 3 2
Mean Revenue 178,314.30 188,754.80
# Revenue Analysts 2 1
Mean Target Price 96.00
Mean Cash Flow 11.61 11.78
Mean EBITDA 2,448.10 2,513.70
Mean Net Income 1,508.80 1,606.50
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate 8.68
Mean Capital Expenditure 462.70 459.00

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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