Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
AbbVie Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
The analysis of the financial data over the reported periods reveals notable trends in cash flows related to the company's operating activities and free cash flow to the firm (FCFF).
- Cash Flows from Operating Activities
- The cash flows from operating activities showed a general upward trend from 2020 to 2022, increasing from $17,588 million to $24,943 million, indicating improvement in the company's core operational performance during this period. However, in 2023, this figure slightly decreased to $22,839 million and continued to decline in 2024 to $18,806 million, suggesting a potential weakening in the underlying cash-generating capacity from operations in the most recent years.
- Free Cash Flow to the Firm (FCFF)
- Similarly, the FCFF exhibited a steady increase from $18,859 million in 2020 to a peak of $26,486 million in 2022, showing strong free cash generation capability which is essential for funding growth, debt repayment, or shareholder returns. Despite this positive trajectory, the FCFF declined to $23,988 million in 2023 and further to $20,053 million in 2024, mirroring the downturn observed in operating cash flows and suggesting a reduction in available free cash resources in recent periods.
Overall, the data indicates a period of growth in cash flow metrics leading up to 2022, followed by a reversal that may warrant closer evaluation of operational efficiency, capital expenditure, and other factors influencing cash flow sustainability.
Interest Paid, Net of Tax
AbbVie Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
2 2024 Calculation
Interest paid, net of portion capitalized, tax = Interest paid, net of portion capitalized × EITR
= 2,811 × 21.00% = 590
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibited a significant decline from 21% in 2020 to 11.1% in 2021, representing a noteworthy reduction of nearly half. In 2022, the rate increased slightly to 12.1%, indicating some stabilization at a lower level compared to 2020. However, in 2023, the tax rate reverted closer to the initial level at 22%, signifying a notable upward adjustment. The data for 2024 shows a slight decrease to 21%, essentially maintaining the higher rate observed in the previous year. Overall, there is a pattern of a sharp decline followed by a gradual return to the original high tax rate level within the observed period.
- Interest Paid, Net of Portion Capitalized, Net of Tax (US$ in millions)
- Interest paid increased from 2020 to 2021, rising from $2,069 million to $2,411 million, which represents a significant upward trend in interest expenses. The amount paid steadily declined in the two subsequent years, reaching $1,926 million in 2023, reflecting a reduction in interest burden over that period. However, the value increased again in 2024 to $2,221 million, indicating an uptick in interest obligations toward the end of the period. This pattern suggests variability in financing costs, with a peak in 2021, a trough in 2023, and a subsequent rise in 2024.
Enterprise Value to FCFF Ratio, Current
AbbVie Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 433,312) |
| Free cash flow to the firm (FCFF) | 20,053) |
| Valuation Ratio | |
| EV/FCFF | 21.61 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Amgen Inc. | 15.24 |
| Bristol-Myers Squibb Co. | 8.78 |
| Danaher Corp. | 28.71 |
| Eli Lilly & Co. | 170.58 |
| Gilead Sciences Inc. | 14.30 |
| Johnson & Johnson | 20.39 |
| Merck & Co. Inc. | 12.16 |
| Pfizer Inc. | 14.76 |
| Regeneron Pharmaceuticals Inc. | 14.80 |
| Thermo Fisher Scientific Inc. | 24.20 |
| Vertex Pharmaceuticals Inc. | — |
| EV/FCFF, Sector | |
| Pharmaceuticals, Biotechnology & Life Sciences | 22.44 |
| EV/FCFF, Industry | |
| Health Care | 22.14 |
Based on: 10-K (reporting date: 2024-12-31).
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
AbbVie Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 402,112) | 357,064) | 321,803) | 321,636) | 263,033) | |
| Free cash flow to the firm (FCFF)2 | 20,053) | 23,988) | 26,486) | 24,401) | 18,859) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 20.05 | 14.89 | 12.15 | 13.18 | 13.95 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Amgen Inc. | 15.35 | 22.22 | 16.01 | 15.82 | 14.51 | |
| Bristol-Myers Squibb Co. | 9.94 | 9.14 | 13.87 | 10.52 | 11.63 | |
| Danaher Corp. | 28.93 | 36.34 | 25.74 | 28.25 | 30.66 | |
| Eli Lilly & Co. | 200.93 | 655.33 | 59.14 | 38.37 | 39.01 | |
| Gilead Sciences Inc. | 14.50 | 13.41 | 13.58 | 8.42 | 13.60 | |
| Johnson & Johnson | 18.16 | 19.30 | 23.80 | 21.25 | 20.75 | |
| Merck & Co. Inc. | 13.24 | 37.84 | 19.09 | 23.27 | 34.12 | |
| Pfizer Inc. | 15.33 | 32.24 | 9.15 | 8.40 | 21.74 | |
| Regeneron Pharmaceuticals Inc. | 19.30 | 23.99 | 17.96 | 9.81 | 25.74 | |
| Thermo Fisher Scientific Inc. | 26.13 | 28.85 | 31.61 | 33.14 | 26.14 | |
| Vertex Pharmaceuticals Inc. | — | 29.45 | 16.68 | 22.47 | 16.00 | |
| EV/FCFF, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 23.57 | 27.24 | 17.95 | 16.12 | 19.74 | |
| EV/FCFF, Industry | ||||||
| Health Care | 24.03 | 25.94 | 18.56 | 17.80 | 19.47 | |
Based on: 10-K (reporting date: 2024-12-31), 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).
3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 402,112 ÷ 20,053 = 20.05
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value demonstrates a consistent upward trajectory over the five-year period, increasing from $263,033 million in 2020 to $402,112 million in 2024. This growth suggests a rising market valuation, reflecting either enhanced market confidence or expansion of the company's operations or asset base.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm exhibited growth from 2020 to 2022, increasing from $18,859 million to $26,486 million. However, subsequent years showed a decline with FCFF decreasing to $23,988 million in 2023 and further to $20,053 million in 2024. This pattern indicates a peak in free cash generation in 2022, followed by a downturn in the following two years.
- EV/FCFF Ratio
- The EV/FCFF ratio decreased from 13.95 in 2020 to a low of 12.15 in 2022, suggesting improving valuation multiples relative to free cash flow during that period. However, this ratio reversed its trend in 2023, rising sharply to 14.89 and then to 20.05 in 2024. The increasing ratio indicates that enterprise value grew at a faster pace than free cash flow, possibly signaling heightened market expectations, overvaluation, or a decline in cash flow generation capacity relative to the firm's valuation.
- Overall Analysis
- Over the observed period, while the enterprise value consistently increased, free cash flow showed a rise followed by a decline, leading to a notable increase in the EV/FCFF ratio towards the end. This divergence between enterprise value growth and free cash flow reduction in the last two years could warrant closer examination of underlying operational performance, investment activities, or market factors affecting valuation.