Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
CoStar Group Inc., FCFE calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 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).
The analysis of cash flow performance from 2018 to 2022 reveals a general trajectory of growth in operational efficiency coupled with significant volatility in the cash available to equity holders.
- Net Cash Provided by Operating Activities
- A consistent upward trend is observed from 2018 to 2020, with cash flow increasing from 335.46 million to 486.11 million. Following this growth phase, operational cash flows entered a period of stabilization, maintaining a range between 469.73 million and 478.62 million throughout 2021 and 2022.
- Free Cash Flow to Equity (FCFE) Trends
- FCFE demonstrated substantial fluctuations over the five-year period. After a steady increase between 2018 and 2019, a significant spike occurred in 2020, where FCFE reached 1.42 billion. This peak was followed by a sharp contraction in 2021 to 405.12 million, before recovering slightly to 447.99 million by the end of 2022.
- Correlation Between Operating Cash Flow and FCFE
- Under normal conditions, FCFE tracked closely with operating cash flows, typically remaining slightly below those figures. However, 2020 presents a notable divergence where FCFE nearly tripled the net cash provided by operating activities. This suggests a substantial net inflow from financing activities or a significant reduction in capital expenditures during that fiscal year, which deviated from the historical relationship between the two metrics.
Overall, while operational cash generation has remained stable and healthy, the FCFE profile indicates periods of aggressive capital restructuring or anomalous financing events, particularly during the 2020 fiscal year.
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Price to FCFE Ratio, Current
CoStar Group Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 408,336,600 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in thousands) | 447,988) |
| FCFE per share | 1.10 |
| Current share price (P) | 84.38 |
| Valuation Ratio | |
| P/FCFE | 76.91 |
| Benchmarks | |
| P/FCFE, Industry | |
| Industrials | 39.12 |
Based on: 10-K (reporting date: 2022-12-31).
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
CoStar Group Inc., historical P/FCFE calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2022-12-31), 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).
1 Data adjusted for splits and stock dividends.
3 2022 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 447,988,000 ÷ 406,772,431 = 1.10
4 Closing price as at the filing date of CoStar Group Inc. Annual Report.
5 2022 Calculation
P/FCFE = Share price ÷ FCFE per share
= 72.13 ÷ 1.10 = 65.49
An analysis of the valuation metrics from 2018 to 2022 reveals a volatile relationship between share price and Free Cash Flow to Equity (FCFE), resulting in significant fluctuations in the P/FCFE ratio.
- Valuation Trend Analysis
- The P/FCFE ratio demonstrates a non-linear trajectory, beginning at 54.53 in 2018 and reaching a five-year peak of 65.49 by the end of 2022. The most significant deviation in this trend occurred in 2020, when the ratio compressed sharply to 23.20, representing the lowest valuation multiple in the observed period.
- Impact of Cash Flow Volatility
- The valuation compression observed in 2020 is primarily attributable to a substantial spike in FCFE per share, which rose to 3.60 from 1.12 in the preceding year. This surge in cash flow generation significantly outpaced the growth in share price, which reached 83.62, thereby driving the P/FCFE ratio downward.
- Post-2020 Multiple Expansion
- Following the 2020 period, the P/FCFE ratio experienced a rapid expansion, climbing to 52.16 in 2021 and 65.49 in 2022. This trend was driven by a normalization of FCFE per share, which fell back to 1.03 and 1.10 respectively, occurring simultaneously with a share price recovery from 53.50 to 72.13. This indicates that the market returned to pricing the equity at a high premium relative to its normalized cash flow generation.
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