IMS Health, Inc. (RX)

Discount cash flow analysis

Buy Undervalued by 7.3%

5% margin of safety What's this?


How does this work?

This is an interactive analyst report for IMS Health, Inc., based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

Values in $ millions
2009 2010 2011 2012 2013 2014 2015 2016

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Price history

Sensitivity matrix

Discount Rate %

  -1% $23.88 $23.47 $23.07
Terminal Growth% 0 $23.99 $23.58 $23.17
  +1% $24.10 $23.69 $23.28

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $36.07 (undervalued by 64.1%) - 9 years ago
  • Diegoengel created a new valuation of $23.58 (undervalued by 12.07%) - over 11 years ago
  • GordonGekko created a new valuation of $16.85 (undervalued by 21.4%) - 12 years ago


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The boring details

All amounts in millions Figures
Enterprise Value: 5,198
Net Debt (Long-term borrowings less cash): 1,188
Equity Value: 3,838
Number of Shares Outstanding: 182,000,000
Calculated value per share: $23.58

Enterprise Value is the present value of the post-tax cash flows for a business into the future.

Calcuation of EV


  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.



  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.

CAPM model


  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.