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Microsoft Excel LibreOffice Calc

Bristol-Myers Squibb Co. (NYSE:BMY)


Dividend Discount Model (DDM)

Intermediate level


Intrinsic Stock Value (Valuation Summary)

Bristol-Myers Squibb Co., dividends per share (DPS) forecast

US$

Microsoft Excel LibreOffice Calc
Year Value DPSt or Terminal value (TVt) Calculation Present value at
0 DPS01
1 DPS1 = × (1 + )
2 DPS2 = × (1 + )
3 DPS3 = × (1 + )
4 DPS4 = × (1 + )
5 DPS5 = × (1 + )
5 Terminal value (TV5) = × (1 + ) ÷ ()
Intrinsic value of Bristol-Myers Squibb Co.’s common stock (per share)
Current share price

Based on: 10-K (filing date: 2020-02-24).

1 DPS0 = Sum of the last year dividends per share of Bristol-Myers Squibb Co.’s common stock. 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)

Microsoft Excel LibreOffice Calc
Assumptions
Rate of return on LT Treasury Composite1 RF
Expected rate of return on market portfolio2 E(RM)
Systematic risk of Bristol-Myers Squibb Co.’s common stock βBMY
 
Required rate of return on Bristol-Myers Squibb Co.’s common stock3 rBMY

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 rBMY = RF + βBMY [E(RM) – RF]
= + []
=


Dividend Growth Rate (g)

Dividend growth rate (g) implied by PRAT model

Bristol-Myers Squibb Co., PRAT model

Microsoft Excel LibreOffice Calc
Average Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Cash dividends declared
Net earnings attributable to BMS
Revenues
Total assets
Total Bristol-Myers Squibb Company shareholders’ equity
Financial Ratios
Retention rate1
Profit margin2
Asset turnover3
Financial leverage4
Averages
Retention rate
Profit margin
Asset turnover
Financial leverage
 
Dividend growth rate (g)5

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-25), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-12).

2019 Calculations

1 Retention rate = (Net earnings attributable to BMS – Cash dividends declared) ÷ Net earnings attributable to BMS
= () ÷ =

2 Profit margin = 100 × Net earnings attributable to BMS ÷ Revenues
= 100 × ÷ =

3 Asset turnover = Revenues ÷ Total assets
= ÷ =

4 Financial leverage = Total assets ÷ Total Bristol-Myers Squibb Company shareholders’ equity
= ÷ =

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= × × × =


Dividend growth rate (g) implied by Gordon growth model

g = 100 × (P0 × rD0) ÷ (P0 + D0)
= 100 × ( × ) ÷ ( + ) =

where:
P0 = current price of share of Bristol-Myers Squibb Co.’s common stock
D0 = the last year dividends per share of Bristol-Myers Squibb Co.’s common stock
r = required rate of return on Bristol-Myers Squibb Co.’s common stock


Dividend growth rate (g) forecast

Bristol-Myers Squibb Co., H-model

Microsoft Excel LibreOffice Calc
Year Value gt
1 g1
2 g2
3 g3
4 g4
5 and thereafter g5

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

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= + () × (2 – 1) ÷ (5 – 1) =

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= + () × (3 – 1) ÷ (5 – 1) =

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= + () × (4 – 1) ÷ (5 – 1) =