Enterprise Value to FCFF (EV/FCFF)
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Capital Asset Pricing Model (CAPM)
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Price to Earnings (P/E) since 2005
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Free Cash Flow to The Firm (FCFF)
ON Semiconductor Corp., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The analysis of the financial data over the five-year period reveals notable trends in the company’s cash flow performance.
- Net Cash Provided by Operating Activities
-
There is a consistent upward trend in net cash provided by operating activities from 2019 to 2022, starting at 694.7 million USD in 2019 and increasing steadily each year to reach a peak of approximately 2.63 billion USD in 2022. However, in 2023, a decline is observed, with the amount decreasing to around 1.98 billion USD, indicating a potential slowdown in cash generation from core business operations.
- Free Cash Flow to the Firm (FCFF)
-
Free cash flow to the firm also shows a strong growth trajectory from 2019 through 2022. Beginning at about 241.7 million USD in 2019, FCFF nearly doubles in 2020 to approximately 595.4 million USD. This upward momentum continues more sharply in 2021 and 2022, reaching a high of roughly 1.70 billion USD. A significant decrease occurs in 2023, with FCFF dropping to 505.5 million USD, suggesting either increased capital expenditures, reduced operating cash flow, or both.
Overall, the data indicates robust growth in the company’s cash flows through 2022, reflecting improving operational efficiency and effective cash management. The decline in both operating cash flow and FCFF in 2023 warrants attention as it may impact future investment capacity and financial flexibility.
Interest Paid, Net of Tax
ON Semiconductor Corp., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2 2023 Calculation
Cash paid for interest expense, tax = Cash paid for interest expense × EITR
= × =
The effective income tax rate (EITR) exhibits notable fluctuations over the examined periods. Starting at 22.7% in 2019, it decreased to 21% in 2020 and further declined significantly to 12.7% in 2021. The rate then increased to 19.4% in 2022 before decreasing again to 13.8% in 2023. This pattern indicates variability in tax obligations that may be influenced by changes in tax regulations, company profitability, or tax planning strategies during these years.
The cash paid for interest expense, net of tax, measured in thousands of US dollars, shows an overall fluctuating trend with a peak in 2020. Beginning at 75,136 thousand USD in 2019, it rose to 86,189 thousand USD in 2020. Subsequently, it slightly decreased to 84,594 thousand USD in 2021, followed by a more pronounced reduction to 65,044 thousand USD in 2022 and a further decrease to 63,098 thousand USD in 2023. This downward trend after 2020 suggests efforts to reduce debt levels or improved interest expense management over recent years.
- Effective Income Tax Rate (EITR)
- Decreases observed from 22.7% in 2019 to a low of 12.7% in 2021;
- Increase to 19.4% in 2022 followed by a decline to 13.8% in 2023;
- Indicates variable tax environment or strategic tax management.
- Cash Paid for Interest Expense, net of tax
- Increase from 75,136 thousand USD in 2019 to 86,189 thousand USD in 2020;
- Gradual decline thereafter to 63,098 thousand USD by 2023;
- Reflects potential reduction in borrowing costs or debt obligations over time.
Enterprise Value to FCFF Ratio, Current
ON Semiconductor 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. | |
| Lam Research 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: 2023-12-31).
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
ON Semiconductor Corp., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 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. | ||||||
| Lam Research 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: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
3 2023 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a consistent upward trend from 2019 through 2022, rising from approximately 11.33 billion US dollars to 35.06 billion US dollars. However, in 2023, a slight decline was observed, with the value decreasing to about 34.05 billion US dollars.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm showed significant growth through the period 2019 to 2022. It increased markedly from 242 million US dollars in 2019 to a peak of approximately 1.70 billion US dollars in 2022. In 2023, there was a notable contraction, with FCFF dropping to approximately 505 million US dollars.
- EV to FCFF Ratio
- This valuation ratio declined from 46.88 in 2019 to a low point around 19.86 in 2021, reflecting improved cash flow generation relative to enterprise value. The ratio stabilized somewhat in 2022 at 20.67 but then increased sharply to 67.36 in 2023, indicating a disproportionate decrease in free cash flow relative to enterprise value during the last year.
- Summary of Trends and Insights
- Overall, the data presents a scenario of rapid growth in enterprise value and cash flow generation up to 2022, suggesting enhanced operational performance or market valuation. However, the sharp decline in free cash flow and the corresponding spike in the EV/FCFF ratio in 2023 may signal emerging challenges in sustaining cash flow or changes in market perceptions of the company’s value. The increase in the EV/FCFF ratio in 2023 notably suggests that investors are paying a higher price for each dollar of free cash flow generated, which may raise questions about future cash flow sustainability or increased risk.