Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Celgene Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Operating Cash Flow Trends
- The net cash provided by operating activities exhibited a fluctuating but overall increasing trend from 2014 to 2018. Starting at $2,806 million in 2014, there was a decline in 2015 to $2,484 million. However, in the subsequent years, the operating cash flow increased substantially, reaching $5,171 million by 2018. This represents an approximate 85% increase from 2014 to 2018, suggesting improvements in the company's core operating efficiency or revenue generation capability during this period.
- Free Cash Flow to the Firm (FCFF) Trends
- Free cash flow to the firm followed a similar pattern as operating cash flow. The FCFF decreased slightly from $2,825 million in 2014 to $2,390 million in 2015, reflecting some short-term challenges or increased capital expenditures. After 2015, FCFF increased sharply each year, reaching $5,411 million by 2018. This steady upward trend indicates enhanced cash generation after accounting for capital expenditures, implying stronger financial flexibility and potential for reinvestment or debt repayment.
- Relationship between Operating Cash Flow and FCFF
- Both metrics demonstrated parallel trajectories over the analyzed period, with FCFF consistently marginally higher than the net cash provided by operating activities. This slight difference could suggest variations in capital spending or working capital adjustments over the years. The closeness of these values indicates effective management of investment activities relative to cash from operations, maintaining healthy free cash flow generation.
- Overall Financial Cash Flow Insights
- The general pattern observed points to a company that overcame a dip in cash generation around 2015 and achieved notable growth in operational cash flows and free cash flow afterwards. This consistent increase over the four-year span ending in 2018 reflects an improving financial position, likely enabling greater strategic flexibility. The data also implies stability in cash conversion processes, which is positive for sustaining operations and funding growth initiatives.
Interest Paid, Net of Tax
Celgene Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
2 2018 Calculation
Interest paid, tax = Interest paid × EITR
= 689 × 17.20% = 119
- Effective Income Tax Rate (EITR)
- The effective income tax rate shows considerable variability across the surveyed period. It begins at 14.1% in 2014, increases to 20.8% in 2015, then decreases to 15.7% in 2016. It experiences a significant drop to 2.4% in 2017 before rising again to 17.2% in 2018. This pattern suggests fluctuations in taxable income, possible changes in tax legislation, or the impact of one-time events affecting tax obligations in certain years.
- Interest Paid, Net of Tax
- The net interest paid increases steadily throughout the period. Starting at US$169 million in 2014, it rises to US$193 million in 2015 and then experiences substantial growth in 2016 to US$444 million. This upward trajectory continues with US$526 million in 2017 and reaches US$570 million in 2018. This trend indicates a rising cost of debt financing or increased borrowing over these years, reflecting potential changes in capital structure or interest rates.
Enterprise Value to FCFF Ratio, Current
Celgene Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 91,115) |
| Free cash flow to the firm (FCFF) | 5,411) |
| Valuation Ratio | |
| EV/FCFF | 16.84 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| AbbVie Inc. | 23.30 |
| Amgen Inc. | 15.69 |
| Bristol-Myers Squibb Co. | 8.31 |
| Danaher Corp. | 29.12 |
| Eli Lilly & Co. | 186.25 |
| Gilead Sciences Inc. | 15.41 |
| Johnson & Johnson | 22.19 |
| Merck & Co. Inc. | 12.25 |
| Pfizer Inc. | 14.65 |
| Regeneron Pharmaceuticals Inc. | 14.72 |
| Thermo Fisher Scientific Inc. | 26.20 |
| Vertex Pharmaceuticals Inc. | — |
Based on: 10-K (reporting date: 2018-12-31).
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
Celgene Corp., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 77,219) | 75,373) | 96,260) | 85,544) | 98,142) | |
| Free cash flow to the firm (FCFF)2 | 5,411) | 5,493) | 4,185) | 2,390) | 2,825) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 14.27 | 13.72 | 23.00 | 35.79 | 34.75 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
3 2018 Calculation
EV/FCFF = EV ÷ FCFF
= 77,219 ÷ 5,411 = 14.27
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value demonstrated a fluctuating trend over the five-year period. It started at approximately $98.1 billion at the end of 2014, decreased to about $85.5 billion in 2015, and then increased again to roughly $96.3 billion in 2016. Subsequently, it declined significantly to $75.4 billion in 2017 before registering a slight increase to $77.2 billion in 2018. Overall, the trend indicates volatility with a general downward movement after 2016.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm showed a positive growth trajectory throughout the period. Starting from $2.825 billion in 2014, it slightly decreased to $2.390 billion in 2015 but then increased substantially to $4.185 billion in 2016. The upward trend continued with FCFF reaching $5.493 billion in 2017 and slightly declining to $5.411 billion in 2018. This progression suggests improving cash generation capabilities after an initial dip in 2015.
- EV/FCFF Ratio
- The EV/FCFF ratio experienced a marked decrease from very high levels towards more moderate levels. Beginning at 34.75 at the end of 2014, the ratio increased marginally to 35.79 in 2015 but then saw a pronounced decline in subsequent years: 23.00 in 2016, 13.72 in 2017, and 14.27 in 2018. This decreasing trend reflects a relative increase in free cash flow compared to enterprise value, potentially signaling improved valuation or efficiency in cash generation.