Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Marriott International Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The financial data demonstrates the cash flow performance of Marriott International Inc. over the five-year period from 2015 to 2019.
- Net cash provided by operating activities
- There is a noticeable upward trend from 2015 to 2017, with cash generated by operating activities increasing from approximately $1.43 billion to $2.44 billion, marking a substantial improvement in operating cash inflows. In 2018, the figure slightly decreased but remained near the elevated 2017 level at about $2.36 billion. However, in 2019, there was a significant decline to approximately $1.69 billion, indicating a reduction in cash flow generated from core operations compared to the previous two years.
- Free cash flow to the firm (FCFF)
- Similar to operating cash flows, free cash flow exhibited a strengthening pattern between 2015 and 2017, rising from around $1.08 billion to $2.16 billion. In 2018, FCFF decreased modestly to approximately $2.03 billion but sustained a relatively high level. The year 2019 experienced a more pronounced drop in FCFF to about $1.31 billion, reflecting decreased cash generation after capital expenditures and other investments.
Overall, the data indicates marked growth in cash generation capabilities during the initial three-year period, with a peak in 2017. This was followed by a plateau in 2018 and a notable decline in both operating cash flow and free cash flow in 2019. Such trends could suggest increased operational or market challenges in the latest year analyzed, impacting the firm's liquidity and free cash resources.
Interest Paid, Net of Tax
Marriott International Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2 2019 Calculation
Cash paid for interest, net of amounts capitalized, tax = Cash paid for interest, net of amounts capitalized × EITR
= 348 × 20.70% = 72
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibited a fluctuating trend over the analyzed period. It started at 31.5% in 2015, increased to a peak of 34.1% in 2016, then marginally decreased to 33.3% in 2017. A significant drop occurred in 2018 when the rate fell sharply to 20.3%, and it remained relatively stable with a slight increase to 20.7% in 2019. Overall, the latter years indicate a reduction in tax rate burden compared to the earlier years, potentially reflecting changes in tax legislation or optimization measures.
- Cash Paid for Interest, Net
- The amount of cash paid net of interest demonstrated a consistent upward trajectory throughout the period. Beginning at $78 million in 2015, this figure progressively rose each year, reaching $109 million in 2016, $156 million in 2017, $231 million in 2018, and culminating at $276 million in 2019. This steady increase suggests growing interest expenses, possibly due to higher leverage or increasing interest rates affecting debt servicing costs.
Enterprise Value to FCFF Ratio, Current
Marriott International Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 37,405) |
| Free cash flow to the firm (FCFF) | 1,308) |
| Valuation Ratio | |
| EV/FCFF | 28.60 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Airbnb Inc. | 17.43 |
| Booking Holdings Inc. | 21.71 |
| Chipotle Mexican Grill Inc. | 47.30 |
| McDonald’s Corp. | 32.27 |
| Starbucks Corp. | 31.52 |
Based on: 10-K (reporting date: 2019-12-31).
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
Marriott International Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 49,504) | 51,303) | 58,357) | 41,398) | 20,472) | |
| Free cash flow to the firm (FCFF)2 | 1,308) | 2,032) | 2,163) | 1,412) | 1,082) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 37.85 | 25.25 | 26.98 | 29.32 | 18.92 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | |
| Starbucks Corp. | 30.98 | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
3 2019 Calculation
EV/FCFF = EV ÷ FCFF
= 49,504 ÷ 1,308 = 37.85
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a pronounced upward trajectory from 2015 through 2017, escalating from approximately $20.5 billion to nearly $58.4 billion. This increase signifies a substantial growth in market valuation over this period. However, a reversal occurred in 2018 and continued into 2019, with EV declining to around $51.3 billion and $49.5 billion respectively, indicating a contraction in valuation following the peak in 2017.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm showed consistent growth from 2015 to 2017, increasing from $1.08 billion to $2.16 billion, reflecting improving cash generation capabilities. In 2018, FCFF slightly decreased to $2.03 billion, and in 2019 it declined more significantly to $1.31 billion, indicating potential challenges in cash flow generation or increased capital expenditures.
- EV to FCFF Ratio
- The EV/FCFF ratio, which measures the valuation relative to cash flow, rose from 18.92 in 2015 to a peak of 29.32 in 2016, before trending downward to 25.25 in 2018. In 2019, this ratio increased sharply to 37.85, driven primarily by the decline in FCFF coupled with sustained enterprise value. This elevated ratio may suggest market expectations of future growth or a potential overvaluation relative to cash flow in 2019.