Microsoft Excel LibreOffice Calc

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate


Free Cash Flow to The Firm (FCFF)

Celgene Corp., FCFF calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net income 2,940  1,999  1,602  2,000  1,450 
Net noncash charges 135  1,432  932  692  772 
Change in current assets and liabilities, excluding the effect of acquisitions 2,171  546  (50) 115 
Net cash provided by operating activities 5,246  3,976  2,484  2,806  2,226 
Interest paid, net of tax1 368  444  193  169  79 
Capital expenditures (279) (236) (286) (150) (120)
Free cash flow to the firm (FCFF) 5,335  4,185  2,390  2,825  2,185 

Based on: 10-K (filing date: 2018-02-07), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-20), 10-K (filing date: 2014-02-13).

Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Celgene Corp.'s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Celgene Corp.'s FCFF increased from 2015 to 2016 and from 2016 to 2017.

Interest Paid, Net of Tax

Celgene Corp., interest paid, net of tax calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Effective Income Tax Rate (EITR)
EITR1 31.80% 15.70% 20.80% 14.10% 12.90%
Interest Paid, Net of Tax
Interest paid, before tax 539  527  243  196  91 
Less: Interest paid, tax2 171  83  51  28  12 
Interest paid, net of tax 368  444  193  169  79 

Based on: 10-K (filing date: 2018-02-07), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-20), 10-K (filing date: 2014-02-13).

2017 Calculations

2 Interest paid, tax = Interest paid × EITR
= 539 × 31.80% = 171


Enterprise Value to FCFF Ratio, Current

Celgene Corp., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 52,499 
Free cash flow to the firm (FCFF) 5,335 
Ratio
EV/FCFF 9.84
Benchmarks
EV/FCFF, Competitors
Abbott Laboratories 31.67
AbbVie Inc. 16.22
Allergan PLC 15.33
Amgen Inc. 10.88
Biogen Inc. 23.52
Bristol-Myers Squibb Co. 21.01
Eli Lilly & Co. 27.68
Gilead Sciences Inc. 8.37
Johnson & Johnson 22.85
Merck & Co. Inc. 44.32
Pfizer Inc. 16.19
Regeneron Pharmaceuticals Inc. 35.08
EV/FCFF, Sector
Pharmaceuticals & Biotechnology 18.76
EV/FCFF, Industry
Health Care 19.71

Based on: 10-K (filing date: 2018-02-07).

If company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.

Otherwise, if company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.


Enterprise Value to FCFF Ratio, Historical

Celgene Corp., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 75,373  96,260  85,544  98,142  65,942 
Free cash flow to the firm (FCFF)2 5,335  4,185  2,390  2,825  2,185 
Ratio
EV/FCFF3 14.13 23.00 35.79 34.75 30.18
Benchmarks
EV/FCFF, Competitors
Abbott Laboratories 26.99 36.35 30.00 27.54 25.21
AbbVie Inc. 21.20 17.64 14.93 32.10 14.33
Allergan PLC 15.54 69.00 36.43 39.81 40.63
Amgen Inc. 11.16 11.23 11.51 13.76 16.49
Biogen Inc. 26.28 14.61 20.11 34.00 32.88
Bristol-Myers Squibb Co. 24.77 51.76 87.88 35.51 28.83
Eli Lilly & Co. 19.87 23.22 43.88 24.69 12.89
Gilead Sciences Inc. 9.72 6.44 6.51 12.63 43.41
Johnson & Johnson 20.44 19.65 16.62 17.44 17.27
Merck & Co. Inc. 33.91 20.51 13.16 24.11 16.28
Pfizer Inc. 13.91 14.94 14.19 12.81 11.91
Regeneron Pharmaceuticals Inc. 32.57 38.99 57.44 97.24 73.58
EV/FCFF, Sector
Pharmaceuticals & Biotechnology 18.02 17.50 16.56 20.04 18.65
EV/FCFF, Industry
Health Care 18.52 18.16 16.97 19.42 17.84

Based on: 10-K (filing date: 2018-02-07), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-20), 10-K (filing date: 2014-02-13).

2017 Calculations

3 EV/FCFF = EV ÷ FCFF
= 75,373 ÷ 5,335 = 14.13

Ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Celgene Corp.'s EV/FCFF ratio declined from 2015 to 2016 and from 2016 to 2017.