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Walgreens Boots Alliance Inc. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Free Cash Flow to The Firm (FCFF)
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
- Net Cash Provided by Operating Activities
- Over the six-year period, net cash provided by operating activities shows an overall upward trend from 2014 through 2018, rising from 3,893 million USD in 2014 to a peak of 8,265 million USD in 2018. This indicates an improvement in the company's core operational cash generation over these years. However, in 2019, there is a noticeable decline to 5,594 million USD, indicating a reduction in operational cash inflows compared to the previous year.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm follows a similar pattern to operating cash flow, increasing steadily from 2,879 million USD in 2014 to a peak of 7,379 million USD in 2018. This trend suggests enhanced ability to generate cash after capital expenditures, beneficial for investment and debt servicing. Nevertheless, in 2019, FCFF declines sharply to 4,480 million USD, reflecting lower cash availability for financing activities or reinvestment.
- Overall Trends and Insights
- Both key liquidity metrics demonstrate significant growth from 2014 up to 2018, implying improved operational efficiency and cash generation capacity. The peak values in 2018 signify the most robust cash position within this period. The subsequent decline in 2019 suggests a contraction that may warrant further investigation into operational challenges, increased costs, changes in working capital, or other factors impacting cash flows. Despite the drop, cash flow levels in 2019 remain higher than those at the start of the period, indicating a relatively stronger cash position compared to the beginning of the timeline.
Interest Paid, Net of Tax
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
2 2019 Calculation
Interest paid, tax = Interest paid × EITR
= × =
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibits a consistent downward trend over the six-year period. Starting at a notably high 42.9% in 2014, the rate declines sharply to 19.9% in 2015 and continues a gradual decrease to 13% in 2019. This represents a substantial reduction of nearly 70% from the initial rate. The most pronounced drop is observed between 2014 and 2015, followed by more moderate decreases in subsequent years, indicating possibly improved tax efficiency or changes in tax legislation impacting the company’s tax obligations.
- Interest Paid, Net of Tax (US$ in millions)
- Interest paid, net of tax, demonstrates an overall increasing trend throughout the period. Starting from $92 million in 2014, the amount significantly rises to $378 million in 2015, and continues growing, peaking at $588 million by 2019. Despite a slight decline in 2018 to $481 million from $542 million in 2017, the general trajectory is upward. This expansion in interest expense may indicate increasing debt levels or higher borrowing costs, suggesting a greater reliance on debt financing or changes in interest rates.
Enterprise Value to FCFF Ratio, Current
Selected Financial Data (US$ in millions) | |
Enterprise value (EV) | |
Free cash flow to the firm (FCFF) | |
Valuation Ratio | |
EV/FCFF | |
Benchmarks | |
EV/FCFF, Competitors1 | |
Costco Wholesale Corp. | |
Target Corp. | |
Walmart Inc. |
Based on: 10-K (reporting date: 2019-08-31).
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
Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | |||||||
Enterprise value (EV)1 | |||||||
Free cash flow to the firm (FCFF)2 | |||||||
Valuation Ratio | |||||||
EV/FCFF3 | |||||||
Benchmarks | |||||||
EV/FCFF, Competitors4 | |||||||
Costco Wholesale Corp. | |||||||
Target Corp. | |||||||
Walmart Inc. |
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
3 2019 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a significant increase from 2014 to 2015, rising from approximately $59.2 billion to $104.3 billion. Following this peak, a downward trend was observed, with EV decreasing to around $97.4 billion in 2016, $80.5 billion in 2017, and stabilizing near $81.6 billion in 2018. By 2019, a further decline brought EV down to approximately $66.3 billion. Overall, after the initial surge, the trend reflects a consistent decline in enterprise value over the subsequent four years.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm showed a generally positive trajectory from 2014 through 2018. Starting at roughly $2.9 billion in 2014, FCFF more than doubled in 2015 to $4.8 billion and continued to increase to nearly $7 billion in 2016. Although there was a slight decrease to $6.4 billion in 2017, the cash flow rebounded to about $7.4 billion in 2018. However, in 2019, a notable decline occurred, with FCFF dropping to approximately $4.5 billion. This reflects a pattern of growth with some volatility towards the end of the period.
- EV/FCFF Ratio
- The EV/FCFF ratio decreased markedly from 2014 to 2018, indicating an improving valuation relative to the cash flow generated by the firm. It started at about 20.6 in 2014, increased slightly in 2015 to 21.8, then declined steadily each subsequent year, reaching a low of 11.1 in 2018. However, in 2019, this ratio rose again to approximately 14.8, suggesting a relative increase in valuation or a decrease in cash flow. The overall trend until 2018 demonstrates an enhanced capacity to generate cash flow relative to enterprise value, but the rise in 2019 signals a potential moderation in this improvement.
- Overall Analysis
- The financial data suggests that the company experienced peak enterprise valuation and cash flow growth in the mid-2010s, with enterprise value peaking in 2015 and cash flow peaking in 2018. The decrease in enterprise value from 2015 onward, combined with the increase and subsequent decrease in free cash flow, impacted valuation multiples. The initial reduction in the EV/FCFF ratio reflects improved operational efficiency or market valuation adjustments, but the reversal in 2019 hints at increased caution or changing market conditions affecting the firm’s valuation relative to its cash flow generation.