Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Keurig Dr Pepper 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).
The analysis of cash flow metrics from 2018 to 2021 indicates a general upward trajectory in both operating cash generation and free cash flow available to the firm, despite some volatility in the intermediate years.
- Operating Cash Flow Performance
- Net cash provided by operating activities grew significantly from US$ 1,613 million in 2018 to US$ 2,874 million in 2021. The most substantial increase occurred between 2018 and 2019, with a rise of approximately 53%. Following this surge, cash generation remained relatively stable in 2020 before resuming an upward trend in 2021.
- FCFF Trends and Volatility
- Free cash flow to the firm exhibited a sharp increase from US$ 1,608 million in 2018 to a peak of US$ 2,671 million in 2019. This was followed by a moderate decline to US$ 2,441 million in 2020 and a slight recovery to US$ 2,499 million by the end of 2021. While FCFF levels remain substantially higher than the 2018 baseline, the metric has demonstrated more variance than the net cash provided by operating activities.
- Cash Flow Conversion and Capital Allocation
- A comparison between operating cash and FCFF reveals shifting dynamics in capital utilization. In 2019, FCFF exceeded operating cash flow, suggesting a period of minimal capital expenditures or other cash inflows that bolstered the firm's free cash position. Conversely, in 2020 and 2021, FCFF remained below operating cash flows, indicating a transition toward higher capital investment or changes in the financing structure affecting the total cash available to the firm.
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Interest Paid, Net of Tax
Keurig Dr Pepper 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).
2 2021 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 477 × 23.30% = 111
A significant escalation in net interest payments occurred between 2018 and 2019, followed by a period of relative stability and a subsequent modest decline through 2021.
- Cash Paid for Interest, Net of Tax
- Net interest expenditures increased by approximately 124% from 172 million US dollars in 2018 to 386 million US dollars in 2019. This suggests a substantial increase in debt obligations or a shift in the company's capital structure. The outflow peaked in 2020 at 389 million US dollars before contracting to 366 million US dollars in 2021, reflecting a stabilization of debt servicing costs.
- Effective Income Tax Rate (EITR)
- The effective income tax rate experienced a slight increase to 26.00% in 2019 from 25.50% in 2018. Following this peak, a consistent downward trend is observed, with the rate declining to 24.40% in 2020 and further to 23.30% in 2021.
The interaction between these two metrics indicates that the reduction in net interest paid in 2021 occurred despite a lowering effective tax rate. Since a lower tax rate typically reduces the tax shield benefit of interest expenses—thereby increasing the net cash outflow if gross interest remains constant—the observed decline to 366 million US dollars implies a reduction in the underlying gross interest expense during the final year of the period.
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Enterprise Value to FCFF Ratio, Current
Keurig Dr Pepper Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 66,533) |
| Free cash flow to the firm (FCFF) | 2,499) |
| Valuation Ratio | |
| EV/FCFF | 26.63 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Coca-Cola Co. | 65.97 |
| Mondelēz International Inc. | 30.45 |
| PepsiCo Inc. | 24.36 |
| Philip Morris International Inc. | 29.95 |
| EV/FCFF, Sector | |
| Food, Beverage & Tobacco | 31.57 |
| EV/FCFF, Industry | |
| Consumer Staples | 33.71 |
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
Keurig Dr Pepper Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Enterprise value (EV)1 | 63,990) | 57,004) | 54,362) | 51,224) | |
| Free cash flow to the firm (FCFF)2 | 2,499) | 2,441) | 2,671) | 1,608) | |
| Valuation Ratio | |||||
| EV/FCFF3 | 25.61 | 23.35 | 20.36 | 31.85 | |
| Benchmarks | |||||
| EV/FCFF, Competitors4 | |||||
| Coca-Cola Co. | 25.28 | — | — | — | |
| Mondelēz International Inc. | 31.98 | — | — | — | |
| PepsiCo Inc. | 33.08 | — | — | — | |
| Philip Morris International Inc. | 16.35 | — | — | — | |
| EV/FCFF, Sector | |||||
| Food, Beverage & Tobacco | 24.71 | — | — | — | |
| EV/FCFF, Industry | |||||
| Consumer Staples | 20.91 | — | — | — | |
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).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= 63,990 ÷ 2,499 = 25.61
4 Click competitor name to see calculations.
The financial trajectory between 2018 and 2021 reflects a consistent expansion in enterprise value alongside a significant shift in cash flow generation. While the total enterprise value grew steadily throughout the period, the valuation multiple experienced notable volatility driven by a sharp improvement in cash flow efficiency starting in 2019.
- Enterprise Value Trends
- A continuous upward trend is observed in the enterprise value, which increased from 51,224 million USD in 2018 to 63,990 million USD in 2021. This steady growth indicates a consistent increase in the total market valuation of the company's operations.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF demonstrated a substantial increase between 2018 and 2019, rising from 1,608 million USD to 2,671 million USD. Following this initial surge, the figures remained relatively stable, experiencing a slight contraction in 2020 before recovering to 2,499 million USD by the end of 2021.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio saw a significant reduction from 31.85 in 2018 to 20.36 in 2019, a result of the rapid growth in FCFF outpacing the growth in enterprise value during that specific window. However, from 2019 to 2021, the ratio trended upward again, reaching 25.61. This subsequent increase suggests that enterprise value growth has resumed a faster pace than the growth of free cash flows over the latter half of the period.
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