Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Kraft Heinz Co., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Net cash provided by operating activities
- The net cash provided by operating activities exhibited significant fluctuations over the five-year period. Initially, there was a notable increase from 2,467 million US dollars in 2015 to 5,238 million US dollars in 2016, indicating a strong improvement in operating cash generation. However, this was followed by a sharp decline to 527 million US dollars in 2017, suggesting potential operational challenges or one-time impacts during that year. The value partially recovered in 2018 to 2,574 million US dollars and further improved to 3,552 million US dollars in 2019, signaling a return to healthier operational cash flows, though not reaching the peak levels observed in 2016.
- Free cash flow to the firm (FCFF)
- The free cash flow to the firm mirrored the volatility observed in operating cash flows. It rose substantially from 2,268 million US dollars in 2015 to 4,844 million US dollars in 2016, indicating strong cash generation after accounting for capital expenditures. Similar to operating cash flows, FCFF experienced a pronounced downturn in 2017, plunging to only 216 million US dollars. The subsequent years showed a recovery trend with FCFF increasing to 2,952 million US dollars in 2018 and further to 3,732 million US dollars in 2019. This trend suggests that while the company faced significant cash flow constraints in 2017, it was able to enhance its free cash flow generation capacity in the following years.
- Overall trends and insights
- The overall cash flow trends indicate a period of strong cash generation in 2016, followed by a marked decline in 2017. The recovery phase from 2018 through 2019 demonstrates the company's ability to regain operating efficiency and improve its cash generation capabilities. The volatility experienced in 2017 warrants further investigation into underlying factors such as changes in working capital, capital expenditures, or operational disruptions during that period. Nonetheless, the positive trajectory in the latter years suggests a stabilization of financial performance relating to cash flow.
Interest Paid, Net of Tax
Kraft Heinz Co., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2 2019 Calculation
Cash paid during the period for interest, tax = Cash paid during the period for interest × EITR
= 1,306 × 27.40% = 358
The analysis of the effective income tax rate (EITR) over the five-year period reveals notable fluctuations. The EITR started at 36.2% in 2015, then displayed a declining trend reaching a low point of 8.9% in 2018. In the final year, 2019, the rate rebounded to 27.4%, which, while higher than the prior year, remained lower than the starting figure in 2015. This pattern suggests varying impacts of tax policies or company-specific tax strategies throughout the years, possibly influenced by changes in tax legislation or restructuring efforts.
Regarding cash paid for interest net of tax, the data shows a generally increasing trend from 2015 through 2018, starting at $449 million and rising to $1,204 million. This represents more than a doubling over four years. The year 2019, however, experienced a decrease to $948 million. The initial growth may indicate increased debt levels or higher interest rates, while the subsequent decline could reflect debt repayments, improved refinancing terms, or a reduction in interest-bearing liabilities.
- Effective Income Tax Rate (EITR)
- Shows a decreasing trend from 2015 to 2018, hitting a significant low of 8.9% before increasing again in 2019.
- Cash Paid for Interest (net of tax)
- Increased substantially from 2015 to 2018, followed by a decline in 2019, indicating changes in debt and interest expense management.
Enterprise Value to FCFF Ratio, Current
Kraft Heinz Co., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 69,123) |
| Free cash flow to the firm (FCFF) | 3,732) |
| Valuation Ratio | |
| EV/FCFF | 18.52 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Coca-Cola Co. | 53.83 |
| Mondelēz International Inc. | 27.21 |
| PepsiCo Inc. | 25.09 |
| Philip Morris International Inc. | 27.18 |
Based on: 10-K (reporting date: 2019-12-28).
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
Kraft Heinz Co., historical EV/FCFF calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 59,922) | 65,217) | 116,405) | 141,537) | 114,624) | |
| Free cash flow to the firm (FCFF)2 | 3,732) | 2,952) | 216) | 4,844) | 2,268) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 16.06 | 22.09 | 538.75 | 29.22 | 50.54 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
3 2019 Calculation
EV/FCFF = EV ÷ FCFF
= 59,922 ÷ 3,732 = 16.06
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a fluctuating trend over the five-year span. Starting at 114,624 million USD at the end of 2015, it increased notably to 141,537 million USD by the end of 2016. Subsequently, it declined sharply to 116,405 million USD in 2017, followed by a significant drop to 65,217 million USD in 2018, and a further decrease to 59,922 million USD in 2019. Overall, the enterprise value showed a peak in 2016 before a pronounced downward trajectory through 2019.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm demonstrated volatility during the period. Starting at 2,268 million USD in 2015, it more than doubled to 4,844 million USD in 2016. However, there was a dramatic decline to 216 million USD in 2017, indicating a significant dip in cash generation. After this trough, FCFF rebounded to 2,952 million USD in 2018 and experienced further growth to 3,732 million USD in 2019. Despite the fluctuation, the years following 2017 showed recovery in free cash flow.
- EV to FCFF Ratio
- The ratio of enterprise value to free cash flow to the firm displayed considerable variability, reflecting the combined effect of changes in both EV and FCFF. The ratio began at 50.54 in 2015 and declined substantially to 29.22 in 2016, driven by a higher increase in FCFF relative to EV. In 2017, the ratio surged dramatically to 538.75 due to the steep decrease in FCFF despite a moderate reduction in EV, indicating a temporary overvaluation relative to cash flow. Following this spike, the ratio decreased significantly to 22.09 in 2018 and further to 16.06 in 2019, correlating with improved free cash flow and continued reductions in enterprise value, suggesting a more favorable valuation based on cash flow generation in the latter years.