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Becton, Dickinson and Co Intrinsic Value: DCF (FCF Based)

: $85.85 (As of Today)
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As of today (2022-08-11), Becton, Dickinson and Co's intrinsic value calculated from the Discounted Cash Flow model is $85.85.

Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Becton, Dickinson and Co's Predictability Rank is 3-Stars.

Margin of Safety (FCF Based) using Discounted Cash Flow model for Becton, Dickinson and Co is -202.15%.

The industry rank for Becton, Dickinson and Co's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:

BDX's Price-to-DCF (FCF Based) is ranked worse than
76.62% of 77 companies
in the Medical Devices & Instruments industry
Industry Median: 1.76 vs BDX: 3.02

Becton, Dickinson and Co Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for Becton, Dickinson and Co's Intrinsic Value: DCF (FCF Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Becton, Dickinson and Co Annual Data
Trend Sep12 Sep13 Sep14 Sep15 Sep16 Sep17 Sep18 Sep19 Sep20 Sep21
Intrinsic Value: DCF (FCF Based)
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 149.09 105.63 151.10 182.39 215.28

Becton, Dickinson and Co Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
Intrinsic Value: DCF (FCF Based) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 250.96 215.28 165.60 110.44 85.85

Becton, Dickinson and Co Intrinsic Value: DCF (FCF Based) Calculation

This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.

Usually a two-stage model is used when calculating a stock's intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 9%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 8.20%
Growth Rate in the growth stage = average free cash flow growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => Average Free Cash Flow Growth Rate in the past 10 years was 8.20% which is less than 20% and higher than 5% => Growth Rate: 8.20%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. Free Cash Flow per Share: fcf = $5.096.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Becton, Dickinson and Co's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[(1+g1)/(1+d)+(1+g1)^2/(1+d)^2+...+(1+g1)^10/(1+d)^10]
+(1+g1)^10/(1+d)^10*[(1+g2)/(1+d)+(1+g2)^2/(1+d)^2+...+(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.082)/(1+0.09) = 0.99266055045872
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.09) = 0.95412844036697

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=Free Cash Flow per Share*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=5.096*16.8459
=85.85

Margin of Safety (FCF Based)=(Intrinsic Value: DCF (FCF Based)-Current Price)/Intrinsic Value: DCF (FCF Based)
=(85.85-259.40)/85.85
=-202.15 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Becton, Dickinson and Co  (NYSE:BDX) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.


Be Aware

What you need to know about the DCF model:

1. The DCF model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.


Becton, Dickinson and Co Intrinsic Value: DCF (FCF Based) Related Terms

Thank you for viewing the detailed overview of Becton, Dickinson and Co's Intrinsic Value: DCF (FCF Based) provided by GuruFocus.com. Please click on the following links to see related term pages.


Becton, Dickinson and Co Business Description

Becton, Dickinson and Co logo
Address
1 Becton Drive, Franklin Lakes, NJ, USA, 07417-1880
Becton, Dickinson is the world's largest manufacturer and distributor of medical surgical products, such as needles, syringes, and sharps-disposal units. The company also manufactures diagnostic instruments and reagents, as well as flow cytometry and cell-imaging systems. BD Interventional (largely the former Bard business) accounts for 23% of revenue. International revenue accounts for 44% of the company's business.
Executives
Hickey David officer: EVP & President, Life Sciences BECTON, DICKINSON AND COMPANY 1 BECTON DRIVE FRANKLIN LAKES NJ 07417
Neal Shana Carol officer: Chief People Officer 9120 LOCKWOOD BOULEVARD MECHANICSVILLE VA 23116
Ezell Antoine C officer: EVP, President, NA & CMO BECTON, DICKINSON AND COMPANY 1 BECTON DRIVE FRANKLIN LAKES NJ 07417
Spoerel Thomas J officer: VP Controller & Chief Acct Off BECTON, DICKINSON AND COMPANY 1 BECTON DRIVE FRANKLIN LAKES NJ 07417
Brown William M director HARRIS CORPORATION 1025 W NASA BOULEVARD MELBOURNE FL 32919
Larson Betty D officer: EVP HR & CHRO C/O C. R. BARD, INC. 730 CENTRAL AVENUE MURRAY HILL NJ 07974
Khichi Samrat S. officer: EVP and General Counsel C/O CATALENT, INC. 14 SCHOOLHOUSE ROAD SOMERSET NJ 08873
Conroy Alexandre officer: EVP of Integrated Supply Chain BECTON, DICKINSON AND COMPANY 1 BECTON DRIVE FRANKLIN LAKES NJ 07417
Campion Simon D officer: EVP and Segment President BECTON, DICKINSON AND COMPANY 1 BECTON DRIVE FRANKLIN LAKES NJ 07417
Scott Bertram L director C/O BECTON DICKERSON & CO 1 BECTON DR FRANKLIN LAKES NJ 07417
Jones Christopher Ian Montague director 110, BANBURY ROAD OXFORD X0 OX2 6JU
Pomeroy Claire director BECTON, DICKINSON AND COMPANY 1 BECTON DRIVE FRANKLIN LAKES NJ 07417
Fraser Claire director C/O BECTON, DICKINSON AND COMPANY FRANKLIN LAKES NJ 07465
Melcher David F director 1650 TYSONS BOULEVARD SUITE 1700 MCLEAN VA 22102
Byington Carrie L director BECTON, DICKINSON AND COMPANY 1 BECTON DRIVE FRANKLIN LAKES NJ 07417

Becton, Dickinson and Co Headlines

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