Discounted Cash Flow (DCF) Analysis Levered

Merck & Co., Inc. (MRK)

$104.32

+1.38 (+1.34%)
All numbers are in Millions, Currency in USD
Stock DCF: 111.49 | 104.32 | undervalue

Free Cash Flow

Year
A/P
2017
Actual
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Projected
2023
Projected
2024
Projected
2025
Projected
2026
Projected
Revenue 40,12242,29446,84047,99448,70451,15253,723.0456,423.3159,259.3062,237.84
Revenue (%)
Operating Cash Flow 6,44710,92213,44010,25314,10912,370.3812,992.1513,645.1714,331.0215,051.33
Operating Cash Flow (%)
Capital Expenditure -1,888-2,615-3,473-4,684-4,448-3,805.24-3,996.50-4,197.38-4,408.35-4,629.93
Capital Expenditure (%)
Free Cash Flow 4,5598,3079,9675,5699,6618,565.148,995.659,447.799,922.6710,421.41

Weighted Average Cost Of Capital

Share price $ 104.32
Beta 0.393
Diluted Shares Outstanding 2,530
Cost of Debt
Tax Rate 5.98
After-tax Cost of Debt 2.28%
Risk-Free Rate
Market Risk Premium
Cost of Equity 5.469
Total Debt 33,102
Total Equity 263,929.60
Total Capital 297,031.60
Debt Weighting 11.14
Equity Weighting 88.86
Wacc

Build Up Free Cash Flow

Year
A/P
2017
Actual
2018
Actual
2019
Actual
2020
Actual
2021
Actual
2022
Projected
2023
Projected
2024
Projected
2025
Projected
2026
Projected
Revenue 40,12242,29446,84047,99448,70451,15253,723.0456,423.3159,259.3062,237.84
Operating Cash Flow 6,44710,92213,44010,25314,10912,370.3812,992.1513,645.1714,331.0215,051.33
Capital Expenditure -1,888-2,615-3,473-4,684-4,448-3,805.24-3,996.50-4,197.38-4,408.35-4,629.93
Free Cash Flow 4,5598,3079,9675,5699,6618,565.148,995.659,447.799,922.6710,421.41
WACC
PV LFCF 6,351.416,346.356,341.306,336.256,331.20
SUM PV LFCF 40,678.84

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.11
Free cash flow (t + 1) 10,629.84
Terminal Value 341,795.36
Present Value of Terminal Value 266,407.21

Intrinsic Value

Enterprise Value 307,086.06
Net Debt 25,006
Equity Value 282,080.06
Shares Outstanding 2,530
Equity Value Per Share 111.49