Stock Analysis on Net
Stock Analysis on Net

Thermo Fisher Scientific Inc. (NYSE:TMO) 

Present Value of Free Cash Flow to Equity (FCFE)

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In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Thermo Fisher Scientific Inc., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

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Year Value FCFEt or Terminal value (TVt) Calculation Present value at 16.59%
01 FCFE0 11,684
1 FCFE1 13,245 = 11,684 × (1 + 13.36%) 11,360
2 FCFE2 14,898 = 13,245 × (1 + 12.48%) 10,960
3 FCFE3 16,625 = 14,898 × (1 + 11.59%) 10,489
4 FCFE4 18,405 = 16,625 × (1 + 10.71%) 9,960
5 FCFE5 20,212 = 18,405 × (1 + 9.82%) 9,381
5 Terminal value (TV5) 327,719 = 20,212 × (1 + 9.82%) ÷ (16.59% – 9.82%) 152,108
Intrinsic value of Thermo Fisher Scientific Inc. common stock 204,259
 
Intrinsic value of Thermo Fisher Scientific Inc. common stock (per share) $549.85
Current share price $509.97

Based on: 10-K (reporting date: 2025-12-31).

1 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)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.54%
Expected rate of return on market portfolio2 E(RM) 17.37%
Systematic risk of Thermo Fisher Scientific Inc. common stock βTMO 0.94
 
Required rate of return on Thermo Fisher Scientific Inc. common stock3 rTMO 16.59%

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 rTMO = RF + βTMO [E(RM) – RF]
= 4.54% + 0.94 [17.37% – 4.54%]
= 16.59%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Thermo Fisher Scientific Inc., PRAT model

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Average Dec 31, 2025 Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in millions)
Dividends declared 650 596 541 471 410
Net income attributable to Thermo Fisher Scientific Inc. 6,704 6,335 5,995 6,950 7,725
Revenues 44,556 42,879 42,857 44,915 39,211
Total assets 110,343 97,321 98,726 97,154 95,123
Total Thermo Fisher Scientific Inc. shareholders’ equity 53,407 49,584 46,735 43,978 40,793
Financial Ratios
Retention rate1 0.90 0.91 0.91 0.93 0.95
Profit margin2 15.05% 14.77% 13.99% 15.47% 19.70%
Asset turnover3 0.40 0.44 0.43 0.46 0.41
Financial leverage4 2.07 1.96 2.11 2.21 2.33
Averages
Retention rate 0.92
Profit margin 15.80%
Asset turnover 0.43
Financial leverage 2.14
 
FCFE growth rate (g)5 13.36%

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

2025 Calculations

1 Retention rate = (Net income attributable to Thermo Fisher Scientific Inc. – Dividends declared) ÷ Net income attributable to Thermo Fisher Scientific Inc.
= (6,704 – 650) ÷ 6,704
= 0.90

2 Profit margin = 100 × Net income attributable to Thermo Fisher Scientific Inc. ÷ Revenues
= 100 × 6,704 ÷ 44,556
= 15.05%

3 Asset turnover = Revenues ÷ Total assets
= 44,556 ÷ 110,343
= 0.40

4 Financial leverage = Total assets ÷ Total Thermo Fisher Scientific Inc. shareholders’ equity
= 110,343 ÷ 53,407
= 2.07

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.92 × 15.80% × 0.43 × 2.14
= 13.36%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (189,446 × 16.59% – 11,684) ÷ (189,446 + 11,684)
= 9.82%

where:
Equity market value0 = current market value of Thermo Fisher Scientific Inc. common stock (US$ in millions)
FCFE0 = the last year Thermo Fisher Scientific Inc. free cash flow to equity (US$ in millions)
r = required rate of return on Thermo Fisher Scientific Inc. common stock

FCFE growth rate (g) forecast

Thermo Fisher Scientific Inc., H-model

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Year Value gt
1 g1 13.36%
2 g2 12.48%
3 g3 11.59%
4 g4 10.71%
5 and thereafter g5 9.82%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 13.36% + (9.82% – 13.36%) × (2 – 1) ÷ (5 – 1)
= 12.48%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 13.36% + (9.82% – 13.36%) × (3 – 1) ÷ (5 – 1)
= 11.59%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 13.36% + (9.82% – 13.36%) × (4 – 1) ÷ (5 – 1)
= 10.71%