Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Illumina Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
Between 2016 and 2020, a consistent upward trajectory is observed in both the generation of operating cash and the resulting free cash flow to the firm. The period is characterized by significant growth in liquidity, with a stabilization phase occurring between 2018 and 2020.
- Net Cash Provided by Operating Activities
- Operating cash flow exhibited a general increase, rising from 687 million US$ in 2016 to 1,080 million US$ in 2020. A peak was recorded in 2018 at 1,142 million US$, followed by a slight contraction in 2019 to 1,051 million US$ before recovering in the final year of the period.
- Free Cash Flow to the Firm (FCFF)
- FCFF grew substantially from 427 million US$ in 2016 to 891 million US$ in 2020. The most pronounced growth occurred between 2017 and 2018, where FCFF increased by approximately 50%, moving from 565 million US$ to 846 million US$. From 2018 to 2020, FCFF remained relatively stable, maintaining a range between 842 million US$ and 891 million US$.
- Operating Cash Flow to FCFF Conversion Efficiency
- A positive trend in cash conversion efficiency is evident. In 2016, FCFF represented approximately 62% of net cash provided by operating activities. By 2020, this ratio increased to approximately 82.5%. This indicates that a larger proportion of operating cash is being retained as free cash flow, suggesting a potential optimization of capital expenditures relative to operational cash generation.
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Interest Paid, Net of Tax
Illumina Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
2 2020 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 0 × 23.36% = 0
The analysis of the available financial metrics reveals a significant fluctuation in the Effective Income Tax Rate (EITR) between 2016 and 2020, while no data is available for interest expenditures.
- Effective Income Tax Rate Trends
- A notable V-shaped pattern is observed in the EITR over the five-year period. The rate began at 23.72% in 2016 and underwent a steady decline, reaching a low of 11.30% by December 30, 2018. This lower threshold was maintained with minimal variance in 2019, where the rate stood at 11.45%. However, a sharp reversal occurred in 2020, with the EITR increasing to 23.36%, effectively returning the rate to its 2016 levels.
- Interest Expenditure Analysis
- There is an absence of numerical data regarding the cash paid for interest, net of tax, for all years in the reporting period. Consequently, it is not possible to determine the actual cash outflows related to interest or analyze how the fluctuations in the effective tax rate impacted the net cost of borrowing.
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Enterprise Value to FCFF Ratio, Current
Illumina Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 61,504) |
| Free cash flow to the firm (FCFF) | 891) |
| Valuation Ratio | |
| EV/FCFF | 69.03 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| AbbVie Inc. | 29.01 |
| Amgen Inc. | 28.05 |
| Bristol-Myers Squibb Co. | 11.31 |
| Danaher Corp. | 31.25 |
| Eli Lilly & Co. | 143.74 |
| Gilead Sciences Inc. | 22.06 |
| Johnson & Johnson | 31.85 |
| Merck & Co. Inc. | 29.72 |
| Pfizer Inc. | 19.90 |
| Regeneron Pharmaceuticals Inc. | 24.61 |
| Thermo Fisher Scientific Inc. | 36.05 |
| Vertex Pharmaceuticals Inc. | 41.73 |
Based on: 10-K (reporting date: 2020-12-31).
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
Illumina Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 69,822) | 41,239) | 41,525) | 31,596) | 23,847) | |
| Free cash flow to the firm (FCFF)2 | 891) | 842) | 846) | 565) | 427) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 78.36 | 48.98 | 49.08 | 55.92 | 55.80 | |
| 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: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
3 2020 Calculation
EV/FCFF = EV ÷ FCFF
= 69,822 ÷ 891 = 78.36
4 Click competitor name to see calculations.
Between 2016 and 2020, a significant expansion in enterprise value was observed, while free cash flow to the firm experienced more moderate growth, leading to a substantial increase in the EV/FCFF valuation multiple by the end of the period.
- Enterprise Value (EV) Trends
- Enterprise value demonstrated a strong upward trajectory, increasing from 23,847 million USD in 2016 to 69,822 million USD in 2020. The most pronounced growth occurred between 2019 and 2020, where the value surged from 41,239 million USD to 69,822 million USD, representing an increase of approximately 69% in a single year.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF exhibited steady growth during the initial phase of the period, rising from 427 million USD in 2016 to 846 million USD in 2018. Following this peak, cash flow generation entered a plateau phase, remaining relatively stagnant through 2019 and 2020, ending at 891 million USD.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio remained stable at approximately 55.8 to 55.9 between 2016 and 2017. A downward trend was observed in 2018 and 2019, with the ratio compressing to 49.08 and 48.98 respectively, indicating that cash flow growth was keeping pace with or slightly exceeding the growth in enterprise value. However, 2020 saw a sharp expansion of the multiple to 78.36, reflecting a decoupling where the market valuation increased far more rapidly than the underlying free cash flow.
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