Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Enphase Energy Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 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).
The financial trajectory from 2019 to 2023 demonstrates a period of rapid expansion in cash generation, characterized by aggressive growth peaking in 2022, followed by a moderate contraction in the final year of the period.
- Operating Cash Flow Dynamics
- Net cash provided by operating activities exhibited consistent year-over-year growth between 2019 and 2022. A significant acceleration occurred between 2021 and 2022, where the value increased from 352,028 thousand to 744,817 thousand, representing a growth of approximately 111%. A slight decline was observed in 2023, with cash flow retreating to 696,780 thousand.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF followed a similar upward trajectory, rising from 126,403 thousand in 2019 to a peak of 698,774 thousand in 2022. The surge in 2022 was particularly pronounced, increasing by approximately 133% relative to the previous year. In 2023, a more substantial contraction was observed compared to operating cash flow, with FCFF dropping to 586,768 thousand, a decrease of roughly 16% from the 2022 peak.
- Cash Conversion and Capital Allocation Insights
- A strong correlation is maintained between operating cash flow and FCFF throughout the observed period. The variance between these two metrics, reflecting capital expenditures and other adjustments, remained relatively proportional until 2023. In the final year, the gap between operating cash flow and FCFF widened, indicating an increase in capital outflows or investments relative to the cash generated from operations.
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Interest Paid, Net of Tax
Enphase Energy Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 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).
2 2023 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 455 × 14.46% = 66
A consistent downward trajectory in cash paid for interest, net of tax, is observed over the five-year period from 2019 to 2023. Total net interest expenditures decreased from 2,124 thousand US dollars in 2019 to 389 thousand US dollars in 2023, representing an overall reduction of approximately 81.7%.
- Interest Expenditure Trends
- The most substantial decline occurred between 2019 and 2021, during which cash paid for interest, net of tax, fell from 2,124 thousand US dollars to 579 thousand US dollars. The pace of reduction decelerated in the latter two years, with the 2023 value of 389 thousand US dollars showing a minimal decrease from the 400 thousand US dollars reported in 2022. This pattern indicates a significant deleveraging process or a strategic restructuring of debt obligations.
- Effective Income Tax Rate Dynamics
- The effective income tax rate remained constant at 21.00% from 2019 through 2021. A sharp contraction to 12.10% was observed in 2022, followed by a slight increase to 14.46% in 2023. Since interest is reported net of tax, the reduction in the tax rate during 2022 and 2023 diminished the tax shield benefit of interest expenses. Consequently, while the gross interest burden declined, the lower tax rate meant a smaller portion of those payments was offset by tax savings compared to the 2019-2021 period.
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Enterprise Value to FCFF Ratio, Current
Enphase Energy Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 16,225,150) |
| Free cash flow to the firm (FCFF) | 586,768) |
| Valuation Ratio | |
| EV/FCFF | 27.65 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Advanced Micro Devices Inc. | 116.77 |
| Analog Devices Inc. | 39.52 |
| Applied Materials Inc. | 42.76 |
| Broadcom Inc. | 49.63 |
| Intel Corp. | — |
| KLA Corp. | 42.41 |
| Lam Research Corp. | 45.72 |
| Marvell Technology Inc. | 75.52 |
| Micron Technology Inc. | 11.85 |
| NVIDIA Corp. | 44.61 |
| Qualcomm Inc. | 12.79 |
| Texas Instruments Inc. | 85.27 |
| EV/FCFF, Sector | |
| Semiconductors & Semiconductor Equipment | 222.22 |
| EV/FCFF, Industry | |
| Information Technology | 72.18 |
Based on: 10-K (reporting date: 2023-12-31).
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
Enphase Energy Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 16,225,150) | 28,692,770) | 19,534,069) | 24,617,110) | 7,088,097) | |
| Free cash flow to the firm (FCFF)2 | 586,768) | 698,774) | 300,099) | 197,257) | 126,403) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 27.65 | 41.06 | 65.09 | 124.80 | 56.08 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 225.41 | 38.82 | 43.41 | — | — | |
| Analog Devices Inc. | 25.61 | 23.12 | 39.16 | 27.12 | — | |
| Applied Materials Inc. | 17.40 | 19.06 | 26.22 | 22.52 | — | |
| Broadcom Inc. | 28.53 | 14.74 | 19.47 | 16.54 | — | |
| Intel Corp. | — | — | 16.94 | — | — | |
| KLA Corp. | 19.99 | 19.05 | 26.29 | — | — | |
| Lam Research Corp. | 17.99 | 24.08 | 24.40 | — | — | |
| Marvell Technology Inc. | 32.51 | 83.26 | 44.07 | — | — | |
| Micron Technology Inc. | — | 16.58 | 28.79 | — | — | |
| NVIDIA Corp. | 142.92 | 78.06 | 69.50 | — | — | |
| Qualcomm Inc. | 11.61 | 18.18 | 17.47 | 30.89 | — | |
| Texas Instruments Inc. | 89.85 | 27.02 | 24.20 | — | — | |
| EV/FCFF, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 59.47 | 35.63 | 26.35 | — | — | |
| EV/FCFF, Industry | ||||||
| Information Technology | 33.99 | 26.47 | 27.37 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
3 2023 Calculation
EV/FCFF = EV ÷ FCFF
= 16,225,150 ÷ 586,768 = 27.65
4 Click competitor name to see calculations.
The financial data indicates a period of significant valuation volatility followed by a consistent trend toward multiple compression between 2019 and 2023. While the company experienced a substantial expansion in Enterprise Value and operational cash flow during the early part of the period, the relationship between these two metrics shifted from extreme optimism to a more conservative valuation.
- Enterprise Value (EV) Trends
- Enterprise Value exhibited high volatility, starting at approximately 7.09 billion USD in 2019 and peaking at 28.69 billion USD in 2022. A sharp increase was observed in 2020, followed by a temporary decline in 2021, a secondary peak in 2022, and a significant correction in 2023, where the value decreased to 16.23 billion USD.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF demonstrated a consistent upward trajectory from 2019 to 2022, growing from 126.40 million USD to a peak of 698.77 million USD. This represents a significant improvement in the company's ability to generate cash available to all capital providers. A slight moderation occurred in 2023, with FCFF declining to 586.77 million USD.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio peaked in 2020 at 124.80, signaling a period where the market valuation far exceeded the actual cash flow generation. From 2021 onward, a persistent downward trend is observed, with the ratio falling to 65.09 in 2021, 41.06 in 2022, and finally reaching 27.65 in 2023. This compression suggests that the market has recalibrated its valuation expectations, bringing the multiple closer to historical norms as the underlying cash flows grew more sustainably than the enterprise value.
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