Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
DexCom Inc., FCFF 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).
- Net Cash Provided by Operating Activities
- The net cash generated from operating activities shows a consistent generally upward trajectory over the five-year period. Starting at $123.2 million in 2018, cash flows increased substantially to $314.5 million in 2019 and continued to grow to $475.6 million in 2020. In 2021, there was a moderate decline to $442.5 million, however, the figure rebounded strongly in 2022, reaching the highest level of $669.5 million during the period under review. This indicates improving operational efficiency and stronger cash inflows from core business activities overall, despite the slight dip noted in 2021.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm exhibited considerable volatility across the years. Beginning at $58.9 million in 2018, FCFF rose significantly to $144.6 million in 2019 and peaked at $285.0 million in 2020. However, a sharp decrease occurred in 2021 with FCFF dropping to just $63.6 million, representing a substantial contraction compared to the previous year. This was followed by a strong recovery in 2022, with free cash flow increasing to $315.4 million, the highest in the five-year period. The fluctuations suggest variations in investment activities or changes in capital expenditure impacting free cash flows, though the firm ended the period with a robust cash position tied to operations after investments.
- Overall Analysis
- The data illustrates a positive growth trend in cash generated from operating activities, reflecting enhanced operational productivity or revenue growth. The free cash flow metric, while generally improving over the longer term, indicates periods of active investment or changes in capital spending strategies, particularly evidenced by the pronounced dip in 2021. The strong rebound in both operating cash flow and free cash flow in 2022 suggests the company managed these fluctuations effectively, positioning it well for financial flexibility going forward.
Interest Paid, Net of Tax
DexCom Inc., interest paid, net of tax calculation
US$ 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).
2 2022 Calculation
Cash paid during the year for interest, tax = Cash paid during the year for interest × EITR
= 12,200 × 12.69% = 1,548
The analysis of the effective income tax rate (EITR) over the five-year period shows a fluctuating pattern. In 2018, the EITR was relatively low at 2.98%, which then sharply increased to 21% in 2019. This was followed by a significant decrease to 11.04% in 2021, and a modest rise to 12.69% in 2022. The variation suggests notable changes in tax strategy or regulatory impacts affecting taxable income and tax liabilities during these years.
The cash paid during the year for interest, net of tax, presented an overall increasing trend from 2018 to 2022. Starting at $2,844 thousand in 2018, there was a substantial jump to over $10,000 thousand in 2019. Although there was a slight dip in 2020 to $8,374 thousand, the amount rebounded to $10,319 thousand in 2021 and further increased to $10,652 thousand in 2022. This upward movement may reflect increased debt levels or higher interest rates, thus raising the interest expenses paid over time.
- Effective Income Tax Rate (EITR)
- Exhibited significant variability, with the lowest point in 2018 (2.98%) and peaking back to 21% in 2019. The rate stabilized somewhat in the last two years, remaining in the 11-13% range. These fluctuations likely indicate changes in applicable tax laws, adjustments in income before taxes, or shifts in the mix of taxable and non-taxable income.
- Cash Paid for Interest, Net of Tax
- Demonstrated a marked increase overall, more than tripling from 2018 to 2019 and maintaining elevated levels thereafter. The dip in 2020 could be attributed to temporary refinancing, reduction in interest rates, or other financial adjustments. The sustained higher interest payments in the subsequent years indicate a possible increase in debt or changes in financing costs.
Enterprise Value to FCFF Ratio, Current
DexCom Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 30,908,961) |
| Free cash flow to the firm (FCFF) | 315,352) |
| Valuation Ratio | |
| EV/FCFF | 98.01 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Abbott Laboratories | 35.00 |
| CVS Health Corp. | 16.45 |
| Elevance Health Inc. | 13.67 |
| Intuitive Surgical Inc. | 143.99 |
| Medtronic PLC | 22.70 |
| UnitedHealth Group Inc. | 14.04 |
| EV/FCFF, Sector | |
| Health Care Equipment & Services | 16.42 |
| EV/FCFF, Industry | |
| Health Care | 18.44 |
Based on: 10-K (reporting date: 2022-12-31).
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
DexCom Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 41,016,904) | 38,537,513) | 38,474,254) | 22,641,443) | 12,793,858) | |
| Free cash flow to the firm (FCFF)2 | 315,352) | 63,619) | 284,974) | 144,590) | 58,944) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 130.07 | 605.75 | 135.01 | 156.59 | 217.05 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Abbott Laboratories | 23.24 | 23.47 | 36.94 | — | — | |
| CVS Health Corp. | 10.00 | 10.30 | 9.42 | — | — | |
| Elevance Health Inc. | 13.32 | 12.74 | 6.04 | — | — | |
| Intuitive Surgical Inc. | 85.45 | 56.01 | 76.70 | — | — | |
| Medtronic PLC | 20.32 | 33.84 | 21.43 | — | — | |
| UnitedHealth Group Inc. | 19.30 | 22.21 | 15.82 | — | — | |
| EV/FCFF, Sector | ||||||
| Health Care Equipment & Services | 17.93 | 19.79 | 16.36 | — | — | |
| EV/FCFF, Industry | ||||||
| Health Care | 17.94 | 17.18 | 18.55 | — | — | |
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).
3 2022 Calculation
EV/FCFF = EV ÷ FCFF
= 41,016,904 ÷ 315,352 = 130.07
4 Click competitor name to see calculations.
The financial data presents several notable trends and fluctuations over the examined periods. The enterprise value (EV) exhibited a steady and substantial increase from 12,793,858 thousand US dollars at the end of 2018 to approximately 41,016,904 thousand US dollars by the end of 2022. This indicates a significant growth in the company's overall valuation during the time frame.
Free cash flow to the firm (FCFF) also demonstrated a general upward trend, increasing from 58,944 thousand US dollars in 2018 to 315,352 thousand US dollars in 2022. However, this growth was not consistent; a peak was observed in 2020 at 284,974 thousand US dollars, followed by a sharp decline in 2021 to 63,619 thousand US dollars, before rebounding strongly in 2022.
The EV/FCFF ratio, which provides insight into valuation relative to free cash flow, showed significant variability. The ratio declined from a very high 217.05 in 2018 to 130.07 by 2022, suggesting that the relative valuation became more favorable over the years. Yet, in 2021, there was a sharp and anomalous increase to 605.75, which corresponds to the period of lower free cash flow, indicating an elevated valuation relative to the cash flow generated during that year.
- Enterprise Value (EV)
- Consistently increased over the five-year period, highlighting an expanding market valuation.
- Free Cash Flow to the Firm (FCFF)
- Displayed growth overall but with a notable dip in 2021, reflecting potential operational or capital expenditure challenges during that year.
- EV/FCFF Ratio
- Generally decreased over time, suggesting improved valuation metrics; however, the spike in 2021 indicates a temporary mismatch between enterprise value and cash flow generation.
In summary, while the company's valuation has grown robustly, the variability in free cash flow, particularly the decline in 2021, impacted key valuation ratios, signaling possible fluctuations in operational performance or investment activities. The recovery in free cash flow in 2022 aligned with a more normalized and lower EV/FCFF ratio, potentially indicating a return to stronger financial health.