Enterprise Value to FCFF (EV/FCFF)
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Diamondback Energy Inc. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2012
- Operating Profit Margin since 2012
- Total Asset Turnover since 2012
- Price to Sales (P/S) since 2012
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Free Cash Flow to The Firm (FCFF)
Diamondback Energy Inc., FCFF calculation
US$ in millions
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).
1, 2 See details »
The financial data over the observed periods indicate significant variability in the company's cash flows, reflecting operational performance and investment activities.
- Net Cash Provided by Operating Activities
- The net cash generated from operations shows a generally upward trajectory, beginning at 889 million USD in 2017 and increasing substantially to 3,944 million USD by the end of 2021. This reflects improved operational efficiency or enhanced revenue streams. Despite a slight dip between 2019 and 2020, the overall trend is positive, suggesting strong cash-generating capabilities from core business operations.
- Free Cash Flow to the Firm (FCFF)
- FCFF demonstrates more volatility but reveals a significant growth trend by the end of the five-year period. Initial values are relatively low, with 80 million USD reported in 2017 and an even lower figure of 16 million USD in 2018. However, FCFF increases markedly in 2020 and surges to 2,678 million USD in 2021. This dramatic increase indicates an improved capacity for the company to generate cash after accounting for capital expenditures, potentially providing more value for investors and the ability to reinvest or reduce debt.
- Overall Observations
- Both key cash flow metrics suggest strengthening financial health and operational effectiveness over the period considered. The growing net cash from operating activities combined with the rise in free cash flow strongly suggests that the company has enhanced its cash generation capabilities, particularly highlighted by the sharp increase in FCFF in the last year reported. These positive trends may support greater financial flexibility and investment capacity going forward.
Interest Paid, Net of Tax
Diamondback Energy Inc., interest paid, net of tax calculation
US$ in millions
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
Interest paid, net of capitalized interest, tax = Interest paid, net of capitalized interest × EITR
= × =
3 2021 Calculation
Capitalized interest, tax = Capitalized interest × EITR
= × =
- Effective income tax rate (EITR)
- The effective income tax rate showed a notable decrease from 35% at the end of 2017 to a low of 13% in 2019, indicating a significant reduction in tax expenses relative to income during this period. Subsequently, the rate increased again, reaching 21.7% by the end of 2021, although it remained below the 2017 level. This fluctuation suggests changes in the company's tax planning strategies or alterations in tax regulations impacting the effective tax burden over these years.
- Interest paid, net of capitalized interest, net of tax
- Interest payments experienced an upward trend from 37 million USD in 2017 to a peak of 206 million USD by 2019. After 2019, the interest paid slightly decreased, settling at 152 million USD by the end of 2021. Despite the decline from the peak, interest expenses remained significantly elevated compared to 2017 levels, which may reflect increased borrowing or changes in debt structure across the period.
- Capitalized interest, net of tax
- Capitalized interest showed a general increasing trend from 14 million USD in 2017 to 69 million USD by the end of 2021. There was a notable rise in 2019 to 57 million USD, followed by a slight decline in 2020 before increasing again in 2021. This pattern indicates ongoing investment in assets under construction or development, with capitalized interest costs reflecting these long-term projects.
Enterprise Value to FCFF Ratio, Current
Diamondback Energy Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Chevron Corp. | |
| ConocoPhillips | |
| Exxon Mobil Corp. | |
| Occidental Petroleum Corp. | |
| EV/FCFF, Sector | |
| Oil, Gas & Consumable Fuels | |
| EV/FCFF, Industry | |
| Energy | |
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
Diamondback Energy 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 millions) | ||||||
| Enterprise value (EV)1 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
| EV/FCFF, Sector | ||||||
| Oil, Gas & Consumable Fuels | ||||||
| EV/FCFF, Industry | ||||||
| Energy | ||||||
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
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value showed a fluctuating trend over the analyzed period. It increased significantly from $13,977 million in 2017 to a peak of $22,025 million in 2018, followed by a decline to $16,315 million in 2019. Subsequently, the value experienced a moderate increase in 2020 to $17,630 million and then sharply rose to $29,862 million in 2021, reaching its highest level within the period.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm exhibited considerable variability. Initially, it decreased from $80 million in 2017 to $16 million in 2018, then rebounded to $77 million in 2019. In 2020, FCFF saw a substantial increase to $494 million, followed by an even more pronounced rise to $2,678 million in 2021. This pattern indicates improving cash generation capacity, especially in the latter years.
- EV/FCFF Ratio
- The EV/FCFF ratio started at a high level of 175.3 in 2017 and surged dramatically to 1,402.68 in 2018, reflecting the significant drop in FCFF relative to enterprise value. It then decreased to 212.96 in 2019 as FCFF improved somewhat. The ratio further declined sharply to 35.72 in 2020 and then to 11.15 in 2021. The downward trajectory of this ratio suggests increasing valuation efficiency relative to cash flow, driven primarily by the strong growth in FCFF in the recent years.
- Overall Insights
- The overall analysis indicates a volatile enterprise value combined with a highly variable free cash flow generation. However, the significant improvement in FCFF in 2020 and 2021 substantially enhanced the EV/FCFF ratio, implying improved financial health and potentially better market valuation relative to cash flow. The trends suggest operational improvements or strategic changes that have positively impacted the firm's ability to generate free cash flow.