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Forest Laboratories Inc (NYSE:FRX)
Intrinsic Value: Projected FCF
\$0.00 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Forest Laboratories Inc's projected FCF intrinsic value is \$0.00. The stock price of Forest Laboratories Inc is \$99.00. Therefore, Forest Laboratories Inc's Price to Intrinsic Value: Projected FCF Ratio of today is 0.0.

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding

Here Forest Laboratories Inc's FCF(6 year avg) is calculate as

Forest Laboratories Inc Quarterly Data

 201112 201203 201206 201209 201212 201303 201306 201309 201312 201403 total_freecashflow 300 -18 72 -118 -39 31 -55 88 177 -133 200906 200909 200912 201003 201006 201009 201012 201103 201106 201109 total_freecashflow 335 202 269 181 349 226 159 86 321 289 200806 200809 200812 200903 total_freecashflow 312 218 268 206

Add all the Free Cash Flow together and divide 6 will get Forest Laboratories Inc's FCF(6 year avg) = \$621.27.

Forest Laboratories Inc's Intrinsic Value: Projected FCF for today is calculated as

 Intrinsic Value = (Growth Multiple * Free Cash Flow(6 year avg) + Total Equity(Mar14) * 0.8) / Shares Outstanding = (9.52035159596 * 621.266 + 6165.564 * 0.8) / 279.292 = 38.84

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Forest Laboratories Inc's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

 Price to Intrinsic Value: Projected FCF = Share Price / Intrinsic Value: Projected FCF = 99.00 / 38.8379257359 = 2.55

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Forest Laboratories Inc Annual Data

 Mar05 Mar06 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Projected FCF 25.26 29.35 36.06 38.55 41.45 44.53 48.52 52.88 43.43 38.84

Forest Laboratories Inc Quarterly Data

 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Projected FCF 54.06 52.88 49.11 44.61 42.06 43.43 40.88 39.99 39.18 38.84
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