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).
The financial performance between 2015 and 2019 is characterized by significant volatility in cash generation, marked by a peak in 2016, a severe contraction in 2017, and a sustained recovery through 2019.
- Operating Cash Flow Trends
- Net cash provided by operating activities exhibited a sharp increase from US$ 2,467 million in 2015 to US$ 5,238 million in 2016. This growth was followed by a precipitous decline in 2017, where cash flow dropped to US$ 527 million. A consistent upward trajectory resumed in the following two years, with figures rising to US$ 2,574 million in 2018 and US$ 3,552 million in 2019.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF patterns closely mirrored those of operating cash flow, peaking at US$ 4,844 million in 2016 before falling to a period low of US$ 216 million in 2017. The subsequent recovery was robust, with FCFF increasing to US$ 2,952 million in 2018 and further expanding to US$ 3,732 million by the end of 2019.
- Comparative Analysis of Cash Flow Metrics
- A divergence in the relationship between operating cash flow and FCFF is observed toward the end of the period. From 2015 to 2017, FCFF remained lower than net cash provided by operating activities. However, in 2018 and 2019, FCFF exceeded operating cash flow, suggesting a shift in capital expenditure requirements or other adjustments that increased the cash available to the firm relative to its operational cash generation.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
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
An analysis of the financial period from 2015 to 2019 reveals a significant upward trajectory in net cash outflows for interest, characterized by a peak in 2018 followed by a reduction in 2019. This period was marked by substantial volatility in the effective income tax rate, which directly influences the net cost of interest payments.
- Cash Paid for Interest Trends
- The net cash paid for interest experienced a sharp increase from 449 million US dollars in 2015 to 853 million US dollars in 2016. This upward trend continued through 2017 and reached a maximum of 1,204 million US dollars in 2018, representing an overall increase of approximately 168% from the 2015 baseline. In 2019, this figure decreased to 948 million US dollars, signaling a moderate contraction in net interest costs.
- Effective Income Tax Rate Volatility
- The effective income tax rate remained relatively stable between 27.5% and 28.6% from 2016 to 2017, following a higher rate of 36.2% in 2015. A notable anomaly occurred in 2018, where the rate dropped sharply to 8.9%. By 2019, the rate returned to a level consistent with prior years, settling at 27.4%.
- Correlation Between Tax Rates and Interest Outflows
- Despite the significant reduction in the effective income tax rate in 2018, which typically lowers the net cost of interest through tax shields, the net cash paid for interest reached its five-year peak during that same period. This suggests that the increase in gross interest obligations substantially exceeded the benefit derived from the lowered tax rate. The subsequent decline in net interest paid in 2019 coincided with the tax rate returning to historical norms, indicating a potential shift in debt levels or financing costs.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
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. | 64.92 |
| Mondelēz International Inc. | 29.75 |
| PepsiCo Inc. | 23.60 |
| Philip Morris International Inc. | 30.90 |
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.
The analysis of the Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio reveals significant volatility and a general trend of valuation contraction between 2015 and 2019.
- Enterprise Value Trends
- The Enterprise Value peaked in 2016 at 141,537 million USD before entering a period of sustained decline. By December 31, 2019, the value had decreased to 59,922 million USD, representing a substantial reduction in the overall market valuation of the entity over the four-year period following the peak.
- Free Cash Flow to the Firm (FCFF) Dynamics
- Cash flow generation exhibited instability, characterized by a severe contraction in 2017 where FCFF dropped to 216 million USD. Following this low, a recovery trend emerged, with FCFF increasing to 2,952 million USD in 2018 and further expanding to 3,732 million USD by 2019.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio experienced extreme fluctuations, most notably an anomalous spike to 538.75 in 2017, which was a direct result of the precipitous decline in FCFF. Subsequent years demonstrated a marked compression of the ratio, falling to 22.09 in 2018 and reaching 16.06 in 2019. This downward trajectory suggests a transition toward a lower valuation multiple relative to the company's capacity to generate free cash flow for the firm.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?