Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Roper Technologies Inc., FCFF calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
Analysis of the cash flow performance from 2018 through 2022 reveals a period of sustained growth followed by a substantial contraction in the final reporting year.
- Growth Trajectory (2018–2021)
- A steady upward trend is observed in both cash provided by operating activities and free cash flow to the firm (FCFF) between 2018 and 2021. FCFF increased from 1,504,672 thousand USD in 2018 to a peak of 1,975,361 thousand USD in 2021. The most significant expansion occurred between 2020 and 2021, during which FCFF rose by approximately 21.1%.
- Fiscal Year 2022 Performance
- A significant decrease in cash generation is evident in 2022. FCFF declined to 695,099 thousand USD, representing a 64.8% reduction from the 2021 peak. This trend is mirrored in the cash provided by operating activities, which fell to 606,600 thousand USD, the lowest level recorded in the five-year period.
- FCFF and Operating Cash Flow Relationship
- Throughout the observed period, FCFF consistently remained higher than the cash provided by operating activities. This persistent variance indicates that the adjustments for interest expenses (net of tax) exceeded capital expenditures, resulting in a net positive contribution to the free cash flow available to the firm across all analyzed years.
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Interest Paid, Net of Tax
Roper Technologies Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
2 2022 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 206,500 × 23.10% = 47,702
The financial data indicates a period of growth in after-tax interest expenditures between 2018 and 2021, followed by a moderate contraction in 2022. This trend occurred alongside a gradual and steady increase in the effective income tax rate.
- Interest Expenditure Trends
- Cash paid for interest, net of tax, exhibited a consistent upward trajectory from 2018 through 2021. Starting at 133,172 thousand USD in 2018, the figure rose to a peak of 171,761 thousand USD in 2021. The most pronounced increase occurred between 2019 and 2020, where expenditures grew by approximately 14%. However, this growth trend reversed in 2022, with payments declining to 158,799 thousand USD, a reduction of approximately 7.5% from the prior year.
- Effective Income Tax Rate (EITR) Analysis
- The effective income tax rate remained relatively stable over the five-year period, moving within a narrow band between 20.60% and 23.10%. Following a slight dip to 20.60% in 2019, the rate increased annually, reaching its highest point of 23.10% in 2022. Because interest is typically tax-deductible, the gradual increase in the EITR suggests a slight increase in the tax shield's value, although the net cash paid for interest was driven primarily by the underlying gross interest obligations rather than tax rate fluctuations.
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Enterprise Value to FCFF Ratio, Current
Roper Technologies Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 58,644,366) |
| Free cash flow to the firm (FCFF) | 695,099) |
| Valuation Ratio | |
| EV/FCFF | 84.37 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Apple Inc. | 36.94 |
| Arista Networks Inc. | 44.68 |
| Cisco Systems Inc. | 28.07 |
| Dell Technologies Inc. | 22.93 |
| Lumentum Holdings Inc. | 126.16 |
| Super Micro Computer Inc. | — |
| EV/FCFF, Sector | |
| Technology Hardware & Equipment | 43.46 |
| EV/FCFF, Industry | |
| Information Technology | 68.65 |
Based on: 10-K (reporting date: 2022-12-31).
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
Roper Technologies Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 51,446,203) | 53,952,121) | 49,546,610) | 41,884,369) | 37,664,445) | |
| Free cash flow to the firm (FCFF)2 | 695,099) | 1,975,361) | 1,631,709) | 1,535,230) | 1,504,672) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 74.01 | 27.31 | 30.36 | 27.28 | 25.03 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Apple Inc. | 22.40 | 26.45 | — | — | — | |
| Arista Networks Inc. | 89.98 | 38.47 | — | — | — | |
| Cisco Systems Inc. | 13.55 | 15.50 | — | — | — | |
| Dell Technologies Inc. | 6.45 | 9.28 | — | — | — | |
| Lumentum Holdings Inc. | 14.52 | 8.11 | — | — | — | |
| Super Micro Computer Inc. | — | 25.04 | — | — | — | |
| EV/FCFF, Sector | ||||||
| Technology Hardware & Equipment | 20.80 | 23.54 | — | — | — | |
| EV/FCFF, Industry | ||||||
| Information Technology | 26.47 | 27.37 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
3 2022 Calculation
EV/FCFF = EV ÷ FCFF
= 51,446,203 ÷ 695,099 = 74.01
4 Click competitor name to see calculations.
Between 2018 and 2022, the Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio exhibited a period of relative stability followed by a sharp escalation in the final year. While the enterprise value grew steadily for the majority of the period, a significant divergence occurred in 2022, where the valuation multiple increased dramatically due to a substantial contraction in cash flow generation.
- Enterprise Value Trends
- The enterprise value demonstrated a consistent upward trajectory from December 31, 2018, through December 31, 2021, rising from approximately 37.66 billion US$ to a peak of 53.95 billion US$. A slight correction occurred in 2022, with the value decreasing to 51.45 billion US$.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF showed incremental growth from 2018 to 2021, peaking at 1.98 billion US$ in 2021. However, 2022 marked a severe decline in cash flow generation, dropping to 695.10 million US$, which represents a decrease of approximately 64.8% compared to the previous year.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio remained within a moderate range of 25.03 to 30.36 between 2018 and 2021, suggesting a consistent relationship between the firm's valuation and its cash flow. In 2022, the ratio spiked to 74.01. This expansion was driven primarily by the precipitous drop in FCFF rather than an increase in enterprise value, indicating a significant misalignment between the firm's market value and its realized cash flow during the final period.
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