Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Kraft Foods Group Inc., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
A substantial contraction in cash generation is evident between 2012 and 2014, characterized by a downward trend in both operating cash flows and free cash flow to equity. The most significant volatility occurred during the transition from 2012 to 2013, with a subsequent stabilization at lower levels in 2014.
- Net Cash Provided by Operating Activities
- Operating cash flows declined from 3,035 million US$ in 2012 to 2,020 million US$ in 2014. A primary reduction of approximately 32.7% was observed between 2012 and 2013, followed by a marginal decrease of 1.1% in the following year, indicating a stabilization of core operational cash generation.
- Free Cash Flow to Equity (FCFE)
- FCFE experienced a severe decline, falling from 8,576 million US$ in 2012 to 1,617 million US$ in 2013, and further decreasing to 1,487 million US$ in 2014. The 2012 figure was exceptionally high relative to operating cash flows, suggesting significant net borrowing or other financing inflows during that period. By 2013 and 2014, FCFE dropped below the level of operating cash flow, indicating a shift where capital expenditures exceeded net borrowing.
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Price to FCFE Ratio, Current
Kraft Foods Group Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 591,940,002 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 1,487) |
| FCFE per share | 2.51 |
| Current share price (P) | 85.88 |
| Valuation Ratio | |
| P/FCFE | 34.19 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| lululemon athletica inc. | 11.24 |
| Nike Inc. | 23.54 |
Based on: 10-K (reporting date: 2014-12-27).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Kraft Foods Group Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| No. shares of common stock outstanding1 | 587,988,695 | 596,311,563 | 593,372,593 | |
| Selected Financial Data (US$) | ||||
| Free cash flow to equity (FCFE) (in millions)2 | 1,487) | 1,617) | 8,576) | |
| FCFE per share3 | 2.53 | 2.71 | 14.45 | |
| Share price1, 4 | 64.17 | 55.09 | 51.66 | |
| Valuation Ratio | ||||
| P/FCFE5 | 25.37 | 20.32 | 3.57 | |
| Benchmarks | ||||
| P/FCFE, Competitors6 | ||||
| lululemon athletica inc. | — | — | — | |
| Nike Inc. | — | — | — | |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 Data adjusted for splits and stock dividends.
3 2014 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,487,000,000 ÷ 587,988,695 = 2.53
4 Closing price as at the filing date of Kraft Foods Group Inc. Annual Report.
5 2014 Calculation
P/FCFE = Share price ÷ FCFE per share
= 64.17 ÷ 2.53 = 25.37
6 Click competitor name to see calculations.
The financial performance over the three-year period is characterized by a significant divergence between equity valuation and cash flow generation. While the market value of the shares increased consistently, the free cash flow to equity (FCFE) per share experienced a substantial contraction, leading to a rapid expansion of the P/FCFE ratio.
- Share Price Movement
- A consistent upward trajectory is observed in the share price, rising from 51.66 USD in 2012 to 64.17 USD by 2014. This represents a steady increase in market valuation over the analyzed period.
- Free Cash Flow to Equity (FCFE) per Share
- A sharp decline in FCFE per share occurred between 2012 and 2013, falling from 14.45 USD to 2.71 USD. This downward trend persisted into 2014, with the value further decreasing to 2.53 USD. This contraction indicates a significant reduction in the cash available to be distributed to equity holders.
- P/FCFE Ratio Analysis
- The P/FCFE ratio escalated from 3.57 in 2012 to 25.37 by 2014. The dramatic spike in this ratio is the result of the concurrent rise in share price and the collapse of FCFE per share. This transition indicates that the equity became significantly more expensive relative to its fundamental cash flow output, shifting from a low-multiple valuation to a high-multiple valuation within a short timeframe.
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