Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Teradyne Inc., FCFE 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 cash flow performance from 2019 to 2023 reveals a period of significant growth followed by a sharp contraction and subsequent stabilization.
- Net Cash Provided by Operating Activities
- Operating cash flows exhibited a strong upward trajectory between 2019 and 2021, ascending from US$ 578,750 thousand to a peak of US$ 1,098,366 thousand. This growth phase was followed by a substantial decline in 2022, where cash provided by operating activities fell to US$ 577,923 thousand, effectively returning to 2019 levels. The 2023 figure of US$ 585,231 thousand indicates a plateau in operating cash generation.
- Free Cash Flow to Equity (FCFE)
- FCFE followed a similar growth pattern initially, rising from US$ 444,108 thousand in 2019 to a peak of US$ 683,958 thousand in 2020. A divergence is noted in 2021; while operating cash flows reached their highest point, FCFE declined slightly to US$ 622,904 thousand, indicating a higher allocation of funds toward capital expenditures or debt repayments. A significant reduction occurred in 2022, with FCFE dropping to US$ 347,915 thousand, followed by a modest recovery to US$ 375,325 thousand in 2023.
- Cash Flow Volatility and Convergence
- A high degree of correlation exists between operating cash flows and FCFE, as both metrics experienced a simultaneous peak and subsequent decline. The period between 2021 and 2022 was characterized by the highest volatility, with both metrics decreasing by approximately 47% and 44% respectively. By the end of 2023, the cash flow profile shows a convergence toward the baseline levels established in 2019, though FCFE remains lower than its 2019 starting point.
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Price to FCFE Ratio, Current
Teradyne Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 156,111,885 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in thousands) | 375,325) |
| FCFE per share | 2.40 |
| Current share price (P) | 120.44 |
| Valuation Ratio | |
| P/FCFE | 50.10 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Advanced Micro Devices Inc. | 94.18 |
| Analog Devices Inc. | 32.84 |
| Applied Materials Inc. | 42.30 |
| Broadcom Inc. | 57.74 |
| Intel Corp. | — |
| KLA Corp. | 44.91 |
| Lam Research Corp. | 55.94 |
| Marvell Technology Inc. | 64.09 |
| Micron Technology Inc. | 15.18 |
| NVIDIA Corp. | 45.27 |
| Qualcomm Inc. | 12.75 |
| Texas Instruments Inc. | 83.28 |
| P/FCFE, Sector | |
| Semiconductors & Semiconductor Equipment | 180.57 |
| P/FCFE, Industry | |
| Information Technology | 70.99 |
Based on: 10-K (reporting date: 2023-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Teradyne Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 153,080,607 | 156,047,868 | 162,417,046 | 166,694,772 | 166,784,497 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in thousands)2 | 375,325) | 347,915) | 622,904) | 683,958) | 444,108) | |
| FCFE per share3 | 2.45 | 2.23 | 3.84 | 4.10 | 2.66 | |
| Share price1, 4 | 102.48 | 100.77 | 111.52 | 132.39 | 60.49 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 41.80 | 45.20 | 29.08 | 32.27 | 22.72 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Advanced Micro Devices Inc. | 241.70 | 33.46 | 44.72 | — | — | |
| Analog Devices Inc. | 22.28 | 24.14 | 34.67 | 33.98 | — | |
| Applied Materials Inc. | 17.53 | 19.17 | 27.20 | 23.21 | — | |
| Broadcom Inc. | 30.06 | 14.62 | 22.35 | 9.16 | — | |
| Intel Corp. | — | — | 14.25 | — | — | |
| KLA Corp. | 26.78 | 9.01 | 28.06 | — | — | |
| Lam Research Corp. | 18.67 | 24.95 | 34.58 | — | — | |
| Marvell Technology Inc. | 34.85 | 13.90 | 72.25 | — | — | |
| Micron Technology Inc. | — | 18.66 | 37.24 | — | — | |
| NVIDIA Corp. | 151.07 | 54.83 | 35.22 | — | — | |
| Qualcomm Inc. | 11.97 | 19.13 | 17.93 | 34.91 | — | |
| Texas Instruments Inc. | 37.61 | 23.88 | 21.87 | — | — | |
| P/FCFE, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 47.29 | 28.10 | 25.18 | — | — | |
| P/FCFE, Industry | ||||||
| Information Technology | 33.12 | 26.68 | 27.39 | — | — | |
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).
1 Data adjusted for splits and stock dividends.
3 2023 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 375,325,000 ÷ 153,080,607 = 2.45
4 Closing price as at the filing date of Teradyne Inc. Annual Report.
5 2023 Calculation
P/FCFE = Share price ÷ FCFE per share
= 102.48 ÷ 2.45 = 41.80
6 Click competitor name to see calculations.
The analysis of the Price to Free Cash Flow to Equity (P/FCFE) ratio reveals a significant expansion in valuation multiples between 2019 and 2023. While the share price experienced a sharp initial increase followed by a period of consolidation, the P/FCFE ratio trended upward, indicating an increasing premium attributed to each dollar of free cash flow available to equity holders.
- Share Price Dynamics
- A substantial increase in share price occurred between 2019 and 2020, rising from 60.49 to 132.39. Following this peak, the price underwent a gradual correction, stabilizing in the range of 100.77 to 102.48 during the 2022 and 2023 fiscal years.
- FCFE per Share Trends
- Free Cash Flow to Equity per share peaked in 2020 at 4.10. A subsequent decline is observed, with a notable drop to 2.23 in 2022, representing a significant contraction in cash flow generation per share. A modest recovery to 2.45 was recorded in 2023.
- P/FCFE Ratio Interpretation
- The P/FCFE ratio grew from 22.72 in 2019 to 41.80 in 2023. The most pronounced spike occurred in 2022, where the ratio reached 45.20. This peak was primarily driven by the sharp contraction in FCFE per share rather than share price appreciation, as the share price decreased during that period. This indicates a period where the valuation multiple expanded significantly due to declining cash flow yields.
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