Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
SolarEdge 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).
The financial data indicates notable fluctuations in the cash flow metrics over the five-year period ending in 2022.
- Net cash provided by operating activities
-
This measure showed an overall upward trend from 2018 through 2019, increasing from approximately $189 million to $259 million. However, in subsequent years, a declining pattern emerged, with values falling to about $223 million in 2020 and further to roughly $214 million in 2021. The most significant decline occurred in 2022, when net cash from operating activities sharply dropped to approximately $31 million, indicating a substantial reduction in operational cash generation capacity.
- Free cash flow to the firm (FCFF)
-
FCFF followed a similar pattern to operating cash flow initially, rising from $153 million in 2018 to about $191 million in 2019. After 2019, there was a consistent decline, with FCFF decreasing to roughly $105 million in 2020 and then to $74 million in 2021. In 2022, FCFF turned negative, reaching approximately -$132 million. This shift to negative free cash flow suggests increased capital expenditures or other uses of cash surpassing operating cash inflows, potentially indicating investment in growth or challenges in cash management.
In summary, both key cash flow indicators demonstrate a peak around 2019, followed by a downward trajectory, culminating in a steep decline in 2022. The transition to negative free cash flow in the latest period warrants further exploration to understand the underlying causes and implications for the firm’s financial health.
Interest Paid, Net of Tax
SolarEdge Technologies Inc., interest paid, net of tax calculation
US$ 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
Interest expenses, tax = Interest expenses × EITR
= 11,538 × 47.10% = 5,434
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibited notable variability over the five-year period. Beginning at a low of 6.6% in 2018, the rate increased significantly to 18.8% in 2019. This was followed by a moderate decrease to 14.2% in 2020 and further decline to 9.6% in 2021. However, in 2022, there was a substantial increase to 47.1%, representing the highest rate recorded in the observed period. This sharp rise in 2022 indicates a significant change in the company's tax burden or tax strategy compared to prior years.
- Interest Expenses, Net of Tax
- Interest expenses, net of tax, showed an overall increasing trend from 2018 to 2021, rising from $2,999 thousand in 2018 to a peak of $9,641 thousand in 2021. This increase suggests growing debt levels or higher borrowing costs during these years. In 2022, interest expenses decreased to $6,104 thousand, indicating a reduction of approximately 36.7% from the previous year. This decline may reflect changes in debt structure, refinancing, or improved interest rates.
Enterprise Value to FCFF Ratio, Current
SolarEdge Technologies Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 13,622,712) |
| Free cash flow to the firm (FCFF) | (131,953) |
| Valuation Ratio | |
| EV/FCFF | — |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Advanced Micro Devices Inc. | 104.78 |
| Analog Devices Inc. | 37.31 |
| Applied Materials Inc. | 17.34 |
| Broadcom Inc. | 82.61 |
| Intel Corp. | — |
| KLA Corp. | 32.99 |
| Lam Research Corp. | 26.76 |
| Micron Technology Inc. | 311.39 |
| NVIDIA Corp. | 70.16 |
| Qualcomm Inc. | 14.72 |
| Texas Instruments Inc. | 86.98 |
| EV/FCFF, Sector | |
| Semiconductors & Semiconductor Equipment | 143.32 |
| EV/FCFF, Industry | |
| Information Technology | 60.20 |
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
SolarEdge 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 | 16,251,983) | 12,963,187) | 16,239,122) | 5,888,095) | 1,695,011) | |
| Free cash flow to the firm (FCFF)2 | (131,953) | 74,519) | 104,548) | 191,169) | 153,470) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | — | 173.96 | 155.33 | 30.80 | 11.04 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 38.82 | 43.41 | 126.98 | — | — | |
| Analog Devices Inc. | 23.12 | 39.16 | 27.12 | 21.67 | — | |
| Applied Materials Inc. | 19.06 | 26.22 | 22.52 | 18.91 | — | |
| Broadcom Inc. | 14.74 | 19.47 | 16.54 | 15.04 | — | |
| Intel Corp. | — | 16.94 | 11.08 | — | — | |
| KLA Corp. | 19.05 | 26.29 | 18.70 | — | — | |
| Lam Research Corp. | 24.08 | 24.40 | 26.78 | — | — | |
| Micron Technology Inc. | 16.58 | 28.79 | 188.88 | 13.85 | — | |
| NVIDIA Corp. | 78.06 | 69.50 | 41.66 | — | — | |
| Qualcomm Inc. | 18.18 | 17.47 | 30.89 | 14.91 | — | |
| Texas Instruments Inc. | 27.02 | 24.20 | 27.67 | — | — | |
| EV/FCFF, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 34.98 | 26.15 | 21.95 | — | — | |
| EV/FCFF, Industry | ||||||
| Information Technology | 26.35 | 27.35 | 23.73 | — | — | |
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
= 16,251,983 ÷ -131,953 = —
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value shows a significant overall upward trend from 2018 to 2022. Starting at approximately $1.7 billion in 2018, it climbed sharply to nearly $5.9 billion in 2019 and further surged to over $16.2 billion by 2020. Although there was a decline in 2021 to about $12.96 billion, the value rebounded again in 2022 to $16.25 billion, indicating substantial volatility but general growth over the five-year period.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm demonstrated a declining trend throughout the period. Beginning with a positive $153 million in 2018, it increased moderately in 2019 to $191 million but then declined sharply in subsequent years. In 2020, FCFF dropped to about $105 million, decreased further to $74.5 million in 2021, and turned negative in 2022 with a value of -$132 million. This trend reflects a deteriorating cash generation capability at the firm level over time.
- EV/FCFF Ratio
- The EV/FCFF ratio exhibits a pronounced upward trajectory from 2018 to 2021, highlighting increased valuation relative to free cash flow. The ratio escalated from 11.04 in 2018 to 30.8 in 2019 and then surged dramatically to 155.33 in 2020 and further to 173.96 in 2021. The absence of this ratio for 2022 is likely due to the negative FCFF, which renders the ratio undefined or meaningless. The rapidly rising ratio up to 2021 suggests that the firm's valuation grew at a much faster pace than its free cash flow generation, indicating potential market optimism or overvaluation risk.