Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
O’Reilly Automotive Inc., FCFE calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
An analysis of the cash flow metrics from 2017 to 2021 reveals a general upward trajectory in liquidity generation, characterized by a substantial acceleration in operating cash flows during the latter half of the period.
- Net Cash Provided by Operating Activities
- A consistent growth pattern is observed in operating cash flows, which increased from 1,403,687 thousand US dollars in 2017 to 3,207,310 thousand US dollars by 2021. A significant inflection point occurred between 2019 and 2020, where cash provided by operations grew by approximately 66%, signaling a marked improvement in the core operational efficiency or volume of the business.
- Free Cash Flow to Equity (FCFE) Trends
- FCFE exhibited greater volatility compared to operating cash flows. A downward trend was evident between 2017 and 2019, with values declining from 2,029,421 thousand US dollars to 1,557,505 thousand US dollars. This was followed by a sharp recovery in 2020, peaking at 2,615,380 thousand US dollars, before experiencing a slight contraction to 2,470,539 thousand US dollars in 2021.
- Comparative Analysis of OCF and FCFE
- Throughout the five-year period, FCFE consistently remained higher than net cash provided by operating activities. This divergence indicates that the company likely utilized net borrowing or other financing inflows to augment the cash available to equity holders beyond what was generated by standard operations. The gap between these two metrics narrowed in 2021 as operating cash flows continued to climb while FCFE slightly decreased.
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Price to FCFE Ratio, Current
O’Reilly Automotive Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 62,575,911 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in thousands) | 2,470,539) |
| FCFE per share | 39.48 |
| Current share price (P) | 833.51 |
| Valuation Ratio | |
| P/FCFE | 21.11 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Amazon.com Inc. | 132.83 |
| Home Depot Inc. | 25.09 |
| Lowe’s Cos. Inc. | 10.59 |
| TJX Cos. Inc. | 31.00 |
| P/FCFE, Sector | |
| Consumer Discretionary Distribution & Retail | 95.53 |
| P/FCFE, Industry | |
| Consumer Discretionary | 115.17 |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
O’Reilly Automotive Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 66,600,918 | 70,206,669 | 74,897,080 | 78,375,610 | 83,670,900 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in thousands)2 | 2,470,539) | 2,615,380) | 1,557,505) | 1,663,808) | 2,029,421) | |
| FCFE per share3 | 37.09 | 37.25 | 20.80 | 21.23 | 24.25 | |
| Share price1, 4 | 649.24 | 447.33 | 368.72 | 367.96 | 244.19 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 17.50 | 12.01 | 17.73 | 17.33 | 10.07 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Amazon.com Inc. | — | — | — | — | — | |
| Home Depot Inc. | 15.41 | — | — | — | — | |
| Lowe’s Cos. Inc. | 12.28 | — | — | — | — | |
| TJX Cos. Inc. | 10.55 | — | — | — | — | |
| P/FCFE, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 59.10 | — | — | — | — | |
| P/FCFE, Industry | ||||||
| Consumer Discretionary | 83.41 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
3 2021 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 2,470,539,000 ÷ 66,600,918 = 37.09
4 Closing price as at the filing date of O’Reilly Automotive Inc. Annual Report.
5 2021 Calculation
P/FCFE = Share price ÷ FCFE per share
= 649.24 ÷ 37.09 = 17.50
6 Click competitor name to see calculations.
The period from 2017 to 2021 is characterized by a consistent and significant appreciation in share price, which increased from 244.19 US$ to 649.24 US$. This growth occurred alongside fluctuating Free Cash Flow to Equity (FCFE) per share, which experienced a moderate decline between 2017 and 2019 before a substantial increase in 2020 and relative stability in 2021.
- Price to FCFE (P/FCFE) Valuation Trends
- An initial valuation expansion is observed between 2017 and 2019, during which the P/FCFE ratio rose from 10.07 to 17.73. This upward trend in the multiple occurred despite a slight decrease in FCFE per share from 24.25 US$ to 20.80 US$, indicating that the market attributed a higher premium to the company's cash flow generation during this timeframe.
- Ratio Compression in 2020
- In 2020, the P/FCFE ratio contracted to 12.01. This compression was the result of a sharp increase in FCFE per share, which rose to 37.25 US$, effectively outpacing the increase in the share price for that fiscal year and lowering the valuation multiple.
- Recent Valuation Re-expansion
- By December 31, 2021, the P/FCFE ratio expanded again to 17.50. This movement was primarily driven by a significant surge in the share price to 649.24 US$, while the FCFE per share remained nearly constant at 37.09 US$, leading to a higher valuation multiple relative to the underlying cash flow.
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