Enterprise Value to FCFF (EV/FCFF)
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- Balance Sheet: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
- Analysis of Debt
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Free Cash Flow to The Firm (FCFF)
Lam Research Corp., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
- Net cash provided by operating activities
- The net cash generated from operating activities demonstrated fluctuations over the examined period. Starting at $3,176,013 thousand in June 2019, it decreased notably to $2,126,451 thousand in June 2020. This was followed by a significant recovery and growth to $3,588,163 thousand in June 2021. The amount dipped again to $3,099,674 thousand in June 2022 before rising sharply to a peak of $5,178,938 thousand in June 2023. The most recent data from June 2024 shows a slight decline to $4,652,269 thousand, albeit still reflecting a strong cash generation capacity compared to earlier years.
- Free cash flow to the firm (FCFF)
- The free cash flow to the firm exhibited a trend largely consistent with operating cash flows. It began at $2,941,431 thousand in June 2019 and declined to $2,070,510 thousand in June 2020. Subsequently, FCFF increased to $3,391,926 thousand by June 2021, then fell to $2,695,430 thousand in June 2022. A notable increase occurred in June 2023, reaching $4,811,491 thousand, followed by a reduction to $4,181,039 thousand in June 2024. This pattern indicates a strong ability to generate free cash flow, with variability likely influenced by operational and investment activities.
- Overall Trends and Insights
- Both net cash from operating activities and free cash flow to the firm show a cyclical pattern with a dip in 2020, probably associated with external challenges impacting cash generation. Recovery thereafter suggests improved operational efficiency or favorable market conditions. The substantial rise in 2023 across both metrics reflects an enhanced liquidity and potential capacity for investment or debt reduction. The moderate decrease in 2024 should be monitored but does not undermine the firm's relatively strong cash flow position.
Interest Paid, Net of Tax
Lam Research Corp., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
2 2024 Calculation
Cash payments for interest, tax = Cash payments for interest × EITR
= × =
- Effective Income Tax Rate (EITR)
- The effective income tax rate shows a generally stable pattern with slight fluctuations over the six-year period. Starting at 10.43% in 2019, it increased to 12.55% in 2020, then decreased to 10.58% in 2021. From 2021 onward, the rate gradually rose again, reaching 12.21% by 2024. This indicates a relatively consistent tax strategy with minor yearly adjustments.
- Cash Payments for Interest, Net of Tax
- Cash payments for interest, net of tax, display significant variability over the years. Beginning at approximately $68.9 million in 2019, these payments more than doubled to $150.3 million in 2020. This upward trend continued to $182.4 million in 2021, indicating increased debt servicing or higher interest rates during that period. Subsequently, the payments declined moderately to $155.7 million in 2022 and remained relatively stable through 2023 and 2024, with values of approximately $154.3 million and $152.0 million respectively. This suggests a reduction in interest expenses or debt levels following the peak in 2021, stabilizing at a higher level than in 2019.
Enterprise Value to FCFF Ratio, Current
Lam Research Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Advanced Micro Devices Inc. | |
| Analog Devices Inc. | |
| Applied Materials Inc. | |
| Broadcom Inc. | |
| Intel Corp. | |
| KLA Corp. | |
| Micron Technology Inc. | |
| NVIDIA Corp. | |
| Qualcomm Inc. | |
| Texas Instruments Inc. | |
| EV/FCFF, Sector | |
| Semiconductors & Semiconductor Equipment | |
| EV/FCFF, Industry | |
| Information Technology | |
Based on: 10-K (reporting date: 2024-06-30).
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
Lam Research Corp., historical EV/FCFF calculation, comparison to benchmarks
| Jun 30, 2024 | Jun 25, 2023 | Jun 26, 2022 | Jun 27, 2021 | Jun 28, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Enterprise value (EV)1 | |||||||
| Free cash flow to the firm (FCFF)2 | |||||||
| Valuation Ratio | |||||||
| EV/FCFF3 | |||||||
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Advanced Micro Devices Inc. | |||||||
| Analog Devices Inc. | |||||||
| Applied Materials Inc. | |||||||
| Broadcom Inc. | |||||||
| Intel Corp. | |||||||
| KLA Corp. | |||||||
| Micron Technology Inc. | |||||||
| NVIDIA Corp. | |||||||
| Qualcomm Inc. | |||||||
| Texas Instruments Inc. | |||||||
| EV/FCFF, Sector | |||||||
| Semiconductors & Semiconductor Equipment | |||||||
| EV/FCFF, Industry | |||||||
| Information Technology | |||||||
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).
3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV) Trend
- The enterprise value showed a substantial increase from 30.7 billion US dollars in mid-2019 to a peak of approximately 82.8 billion in mid-2021. Following this peak, there was a notable decline to about 64.9 billion in mid-2022, before rising again to reach around 102.7 billion in mid-2024. Overall, the EV more than tripled over the five-year period, indicating significant market value growth despite some fluctuations.
- Free Cash Flow to the Firm (FCFF) Pattern
- The free cash flow to the firm exhibited considerable variability. Starting at roughly 2.9 billion US dollars in 2019, it decreased to 2.1 billion in 2020, then increased markedly to 3.4 billion in 2021. This was followed by a decline to 2.7 billion in 2022, a sharp rise to 4.8 billion in 2023—the highest in the period—and a subsequent decrease to 4.2 billion in 2024. This pattern suggests fluctuations in operational cash generation capability, with a generally positive trend towards higher FCFF in recent years.
- EV to FCFF Ratio Analysis
- The EV/FCFF ratio indicates valuation relative to cash flow generation. In 2019, the ratio was relatively low at 10.44, indicating a favorable valuation compared to cash flow. A sharp rise occurred in 2020 to 26.78, followed by a slight decline but remaining elevated in 2021 and 2022 (24.4 and 24.08 respectively). The ratio decreased to 17.99 in 2023, suggesting improved relative valuation, but increased again to 24.56 in 2024. Overall, the ratio shows that the market's valuation became more demanding in relation to free cash flow following 2019, with some improvements in 2023, but it remained relatively high in 2024.
- Summary of Insights
- The enterprise value growth outpaced increases in free cash flow, reflected in higher EV/FCFF ratios except for the 2023 dip. This indicates that investor expectations or market sentiment may have driven valuations beyond fundamental cash flow improvements during certain periods. The variability in FCFF points to possible fluctuations in business operations or investment cycles. The notable decline in EV in 2022 contrasted with the recovery in 2023 and 2024 suggests external factors or market adjustments impacted valuation temporarily. Maintaining attention on cash flow trends alongside valuation multiples is advisable for assessing underlying financial health and market perception.