Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Biogen Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
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The financial trajectory from 2017 to 2021 is characterized by an initial period of significant expansion in cash generation followed by a notable contraction. Both operating cash flows and free cash flow to the firm reached their peak in 2019 before experiencing a sharp decline in the subsequent two years.
- Net Cash Flow from Operating Activities
- A strong upward trend is observed between 2017 and 2019, with cash flow rising from 4.55 billion USD to a peak of 7.08 billion USD. However, this growth reversed sharply in 2020, with a decrease of approximately 40% to 4.23 billion USD. This downward trajectory continued into 2021, where cash flow provided by operating activities fell further to 3.64 billion USD.
- Free Cash Flow to the Firm (FCFF)
- FCFF exhibited rapid growth in the early part of the period, increasing from 2.94 billion USD in 2017 to 6.67 billion USD in 2019. Similar to operating cash flows, FCFF experienced a significant reduction in 2020, falling to 4.02 billion USD. By 2021, the figure stabilized slightly at 3.67 billion USD, though it remained substantially lower than the 2019 peak.
- Cash Flow Correlation and Variance
- Between 2017 and 2020, FCFF moved in close correlation with net cash flow from operating activities. A divergence is noted in 2021, where FCFF slightly exceeded net cash flow from operating activities. This suggests a shift in the relationship between operating cash generation and capital expenditures, as the firm maintained a higher FCFF despite the continued decline in operating cash flows.
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Interest Paid, Net of Tax
Biogen Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2 2021 Calculation
Cash paid during the year for interest, tax = Cash paid during the year for interest × EITR
= 280,800 × 3.00% = 8,424
3 2021 Calculation
Capitalized interest costs related to construction in progress, tax = Capitalized interest costs related to construction in progress × EITR
= 36,300 × 3.00% = 1,089
The analysis of net-of-tax interest expenditures and the effective income tax rate reveals a period of shifting financial obligations and tax positioning between 2017 and 2021.
- Effective Income Tax Rate Trends
- A pronounced downward trajectory is observed in the effective income tax rate, which declined from 25.00% in 2017 to 3.00% by 2021. This significant reduction suggests a substantial decrease in the tax burden over the five-year period.
- Cash Interest Expenditures
- Cash payments for interest, net of tax, exhibited an overall upward trend. Following a slight decrease in 2018 to 189,453 thousand US$, expenditures rose steadily, culminating in a peak of 272,376 thousand US$ in 2021. The most substantial year-over-year increase occurred between 2020 and 2021, indicating an expansion in the net cash cost of debt servicing.
- Capitalized Interest Costs
- Capitalized interest related to construction in progress followed a non-linear pattern. Costs increased from 23,025 thousand US$ in 2017 to a peak of 57,586 thousand US$ in 2019, before declining to 35,211 thousand US$ by 2021. This suggests a period of intensified capital investment in infrastructure that reached its zenith in 2019 and subsequently decelerated.
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Enterprise Value to FCFF Ratio, Current
Biogen Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 42,927,124) |
| Free cash flow to the firm (FCFF) | 3,670,587) |
| Valuation Ratio | |
| EV/FCFF | 11.69 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| AbbVie Inc. | 28.72 |
| Amgen Inc. | 26.72 |
| Bristol-Myers Squibb Co. | 11.09 |
| Danaher Corp. | 31.57 |
| Eli Lilly & Co. | 130.18 |
| Gilead Sciences Inc. | 20.35 |
| Johnson & Johnson | 31.09 |
| Merck & Co. Inc. | 29.16 |
| Pfizer Inc. | 19.58 |
| Regeneron Pharmaceuticals Inc. | 20.25 |
| Thermo Fisher Scientific Inc. | 35.57 |
| Vertex Pharmaceuticals Inc. | 39.42 |
| EV/FCFF, Sector | |
| Pharmaceuticals, Biotechnology & Life Sciences | 27.86 |
| EV/FCFF, Industry | |
| Health Care | 26.33 |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Biogen Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 35,890,898) | 44,904,281) | 60,176,147) | 67,941,735) | 75,435,189) | |
| Free cash flow to the firm (FCFF)2 | 3,670,587) | 4,024,334) | 6,671,081) | 5,645,619) | 2,942,500) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 9.78 | 11.16 | 9.02 | 12.03 | 25.64 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| AbbVie Inc. | 13.18 | — | — | — | — | |
| Amgen Inc. | 15.82 | — | — | — | — | |
| Bristol-Myers Squibb Co. | 10.52 | — | — | — | — | |
| Danaher Corp. | 28.25 | — | — | — | — | |
| Eli Lilly & Co. | 38.39 | — | — | — | — | |
| Gilead Sciences Inc. | 8.42 | — | — | — | — | |
| Johnson & Johnson | 21.25 | — | — | — | — | |
| Merck & Co. Inc. | 23.27 | — | — | — | — | |
| Pfizer Inc. | 8.40 | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 9.81 | — | — | — | — | |
| Thermo Fisher Scientific Inc. | 33.14 | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | 22.47 | — | — | — | — | |
| EV/FCFF, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 16.12 | — | — | — | — | |
| EV/FCFF, Industry | ||||||
| Health Care | 17.80 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= 35,890,898 ÷ 3,670,587 = 9.78
4 Click competitor name to see calculations.
The period between 2017 and 2021 is characterized by a sustained contraction in Enterprise Value and fluctuating Free Cash Flow to the Firm (FCFF), which collectively led to a significant reduction in the EV/FCFF ratio.
- Enterprise Value (EV)
- A consistent decline in Enterprise Value is evident, moving from 75,435,189 thousand USD in 2017 to 35,890,898 thousand USD in 2021. This steady decrease indicates a marked reduction in the total market valuation of the organization over the analyzed timeframe.
- Free Cash Flow to the Firm (FCFF)
- FCFF demonstrated an initial period of growth, increasing from 2,942,500 thousand USD in 2017 to a peak of 6,671,081 thousand USD in 2019. Following this peak, the cash flow declined for two consecutive years, reaching 3,670,587 thousand USD by the end of 2021.
- EV/FCFF Ratio
- The ratio experienced a substantial compression from 25.64 in 2017 to 9.02 in 2019. Despite a brief recovery to 11.16 in 2020, the ratio ended the period at 9.78 in 2021. This trend reflects a significant realignment of the company's valuation relative to its capacity to generate free cash flow for the firm.
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