Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Walgreens Boots Alliance Inc., FCFE calculation
US$ in millions
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).
Between fiscal years 2014 and 2019, cash flow metrics exhibited significant fluctuations, characterized by a period of growth followed by a contraction in the final reported year. While operating cash flows remained positive throughout the period, the cash flow available to equity holders demonstrated heightened volatility.
- Net Cash Provided by Operating Activities
- Operating cash flows showed a general upward trajectory from 2014 to 2018, increasing from 3,893 million USD to a peak of 8,265 million USD. This growth was interrupted by a slight dip in 2017, followed by a notable decline to 5,594 million USD in 2019, representing a decrease of approximately 32% from the 2018 peak.
- Free Cash Flow to Equity (FCFE)
- FCFE displayed substantial variance across the analyzed period. A sharp increase was observed between 2014 and 2016, with values rising from 2,237 million USD to a peak of 11,751 million USD. This was followed by a severe reversal in 2017, where FCFE turned negative at -263 million USD. A recovery occurred in 2018 to 8,494 million USD, before declining to 6,400 million USD in 2019.
- Cash Flow Correlation and Volatility
- A divergence between operating cash flows and FCFE is evident, particularly in 2016 and 2017. In 2016, FCFE significantly exceeded operating cash flow, which suggests potential inflows from financing activities or asset divestitures. Conversely, in 2017, the transition to negative FCFE despite strong operating cash flows indicates a period of intense capital expenditure or significant debt redemption. The 2019 fiscal year shows a synchronized decline in both metrics, reflecting a contraction in overall cash generation capacity.
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Price to FCFE Ratio, Current
Walgreens Boots Alliance Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 866,534,089 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 6,400) |
| FCFE per share | 7.39 |
| Current share price (P) | 39.01 |
| Valuation Ratio | |
| P/FCFE | 5.28 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Costco Wholesale Corp. | 47.12 |
| Target Corp. | 22.65 |
| Walmart Inc. | 50.88 |
Based on: 10-K (reporting date: 2019-08-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Walgreens Boots Alliance Inc., historical P/FCFE calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 892,541,146 | 949,164,514 | 1,009,549,218 | 1,083,282,661 | 1,088,793,571 | 950,386,889 | |
| Selected Financial Data (US$) | |||||||
| Free cash flow to equity (FCFE) (in millions)2 | 6,400) | 8,494) | (263) | 11,751) | 6,000) | 2,237) | |
| FCFE per share3 | 7.17 | 8.95 | -0.26 | 10.85 | 5.51 | 2.35 | |
| Share price1, 4 | 55.80 | 70.90 | 69.36 | 81.02 | 84.95 | 60.20 | |
| Valuation Ratio | |||||||
| P/FCFE5 | 7.78 | 7.92 | — | 7.47 | 15.42 | 25.58 | |
| Benchmarks | |||||||
| P/FCFE, Competitors6 | |||||||
| 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).
1 Data adjusted for splits and stock dividends.
3 2019 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 6,400,000,000 ÷ 892,541,146 = 7.17
4 Closing price as at the filing date of Walgreens Boots Alliance Inc. Annual Report.
5 2019 Calculation
P/FCFE = Share price ÷ FCFE per share
= 55.80 ÷ 7.17 = 7.78
6 Click competitor name to see calculations.
Analysis of the valuation and cash flow metrics reveals a significant compression in the Price to Free Cash Flow to Equity (P/FCFE) multiple over the observed six-year period. While the share price experienced an initial surge, the valuation multiple declined sharply, reflecting a decoupling between the market price and the company's capacity to generate cash flow for equity holders.
- Share Price Performance
- An upward trajectory was observed from August 2014 to August 2015, with the share price peaking at 84.95 US$. Subsequently, a consistent downward trend ensued, resulting in a price of 55.80 US$ by August 2019, representing a decline of approximately 34% from the 2015 peak.
- FCFE per Share Volatility
- Free Cash Flow to Equity per share exhibited substantial volatility. Growth was rapid between 2014 and 2016, rising from 2.35 US$ to a peak of 10.85 US$. A sharp reversal occurred in 2017, where FCFE per share turned negative at -0.26 US$. Recovery followed in 2018 with a return to 8.95 US$, before moderating to 7.17 US$ in 2019.
- P/FCFE Multiple Analysis
- The P/FCFE ratio underwent a dramatic contraction, falling from 25.58 in 2014 to 7.47 in 2016. This compression indicates that growth in cash flow significantly outpaced the growth in share price during the early part of the period. Due to the negative FCFE in 2017, the ratio was not calculable for that year. From 2018 to 2019, the multiple stabilized between 7.78 and 7.92, suggesting a new, lower valuation baseline compared to the high multiples observed in 2014.
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