Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
NXP Semiconductors N.V., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
The cash flow profile exhibits significant volatility between 2017 and 2021, characterized by a substantial peak in 2018 followed by a sharp correction and a subsequent period of gradual recovery.
- Operating Cash Flow Trajectory
- Net cash provided by operating activities grew sharply from US$ 2,447 million in 2017 to a peak of US$ 4,369 million in 2018. A significant contraction occurred in 2019, with cash flow dropping to US$ 2,373 million. A steady upward trend resumed from 2020 onward, with operating cash flow reaching US$ 3,077 million by the end of 2021.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF mirrors the volatility observed in operating cash flows, reaching a maximum of US$ 3,736 million in 2018 before declining to US$ 1,860 million in 2019. Following this decline, FCFF entered a recovery phase, increasing to US$ 2,097 million in 2020 and US$ 2,225 million in 2021. Despite the recovery, the FCFF levels in 2021 remained below the 2017 baseline and significantly below the 2018 peak.
- Analysis of Cash Conversion and Capital Outlay
- The relationship between operating cash flows and FCFF indicates fluctuations in capital expenditures. Between 2017 and 2020, the gap between these two metrics remained relatively consistent. However, in 2021, the divergence widened significantly; while operating cash flow increased by US$ 595 million compared to the previous year, FCFF only grew by US$ 128 million, suggesting a substantial increase in capital investments during the 2021 fiscal year.
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Interest Paid, Net of Tax
NXP Semiconductors N.V., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
2 2021 Calculation
Net cash paid during the period for interest, tax = Net cash paid during the period for interest × EITR
= 356 × 12.50% = 45
An analysis of the net cash paid for interest, net of tax, reveals a general upward trajectory over the five-year period from 2017 to 2021, characterized by a consistent increase in outflows following a brief decline in 2018.
- Net Interest Payment Trends
- Net cash paid for interest, net of tax, rose from 184 million US dollars in 2017 to 312 million US dollars in 2021. After a moderate decrease to 164 million US dollars in 2018, the annual expenditure increased steadily, with a notable acceleration in the final year of the period analyzed.
- Effective Income Tax Rate (EITR) Fluctuations
- The effective income tax rate displayed significant volatility. A sharp reduction is observed between 2017 and 2019, where the rate fell from 25.00% to a low of 6.90%. This was followed by a return to 25.00% in 2020 and a subsequent decline to 12.50% in 2021.
- Correlation Analysis
- The net cash outflow for interest is inherently linked to the tax shield provided by interest expenses. Despite the substantial fluctuations in the effective income tax rate, the overall trend in net interest payments remained positive. This suggests that the increase in gross interest obligations likely outpaced the variations in tax relief, resulting in a higher net cash burden over time.
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Enterprise Value to FCFF Ratio, Current
NXP Semiconductors N.V., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 53,797) |
| Free cash flow to the firm (FCFF) | 2,225) |
| Valuation Ratio | |
| EV/FCFF | 24.18 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Advanced Micro Devices Inc. | 116.77 |
| Analog Devices Inc. | 39.52 |
| Applied Materials Inc. | 42.76 |
| Broadcom Inc. | 49.63 |
| Intel Corp. | — |
| KLA Corp. | 42.41 |
| Lam Research Corp. | 45.72 |
| Marvell Technology Inc. | 75.52 |
| Micron Technology Inc. | 11.85 |
| NVIDIA Corp. | 44.61 |
| Qualcomm Inc. | 12.79 |
| Texas Instruments Inc. | 85.27 |
| EV/FCFF, Sector | |
| Semiconductors & Semiconductor Equipment | 132.27 |
| EV/FCFF, Industry | |
| Information Technology | 68.75 |
Based on: 10-K (reporting date: 2021-12-31).
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
NXP Semiconductors N.V., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 58,239) | 54,993) | 38,605) | 32,345) | 42,945) | |
| Free cash flow to the firm (FCFF)2 | 2,225) | 2,097) | 1,860) | 3,736) | 2,015) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 26.18 | 26.22 | 20.75 | 8.66 | 21.32 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 43.41 | — | — | — | — | |
| Analog Devices Inc. | 39.16 | 27.12 | — | — | — | |
| Applied Materials Inc. | 26.22 | 22.52 | — | — | — | |
| Broadcom Inc. | 19.47 | 16.54 | — | — | — | |
| Intel Corp. | 16.94 | — | — | — | — | |
| KLA Corp. | 26.29 | — | — | — | — | |
| Lam Research Corp. | 24.40 | — | — | — | — | |
| Marvell Technology Inc. | 44.07 | — | — | — | — | |
| Micron Technology Inc. | 28.79 | — | — | — | — | |
| NVIDIA Corp. | 69.50 | — | — | — | — | |
| Qualcomm Inc. | 17.47 | 30.89 | — | — | — | |
| Texas Instruments Inc. | 24.20 | — | — | — | — | |
| EV/FCFF, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 26.35 | — | — | — | — | |
| EV/FCFF, Industry | ||||||
| Information Technology | 27.37 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= 58,239 ÷ 2,225 = 26.18
4 Click competitor name to see calculations.
The financial performance and valuation metrics from 2017 to 2021 exhibit significant volatility, characterized by a divergent trend between Enterprise Value (EV) and Free Cash Flow to the Firm (FCFF).
- Enterprise Value Trends
- A contraction in Enterprise Value is observed between 2017 and 2018, falling from 42,945 million to 32,345 million. However, a sustained upward trajectory followed, with the valuation increasing to 58,239 million by December 31, 2021. This represents a substantial expansion in the overall value of the business operations over the latter half of the analyzed period.
- Free Cash Flow to the Firm Analysis
- FCFF reached a peak in 2018 at 3,736 million, which was significantly higher than the levels recorded in any other year. A sharp decline occurred in 2019, where cash flow fell to 1,860 million. Although a gradual recovery is evident in 2020 and 2021, the FCFF ended the period at 2,225 million, remaining well below the 2018 high.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio demonstrates extreme variance, reaching a period low of 8.66 in 2018 due to the simultaneous occurrence of a valuation dip and a cash flow peak. Following 2019, the ratio expanded rapidly and stabilized at approximately 26.22 in 2020 and 26.18 in 2021. This indicates a significant multiple expansion, suggesting that the market valuation increased at a rate that far outpaced the growth of free cash flows.
The overall trend indicates a shift in valuation dynamics. The transition from a ratio of 8.66 in 2018 to over 26x by 2021 highlights an increased premium attributed to the company's enterprise value relative to its realized cash generation capabilities.
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