Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Abbott Laboratories, 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).
- Net Cash from Operating Activities
- The net cash generated from operating activities exhibited a rising trend from 2020 to 2021, increasing from $7,901 million to $10,533 million. However, in 2022, there was a decline to $9,581 million, followed by a more significant drop in 2023 to $7,261 million. In 2024, the figure rose again to $8,558 million, indicating some recovery but not reaching the peak observed in 2021.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm showed a similar pattern to net operating cash flows. It increased substantially from $6,221 million in 2020 to $9,116 million in 2021. Thereafter, a decrease occurred in 2022, with FCFF falling to $8,274 million. The decline continued into 2023, reaching $5,628 million, marking the lowest level in the observed period. In 2024, FCFF rebounded somewhat, climbing to $6,828 million, though remaining below its 2020 and 2021 values.
- Overall Observations
- Both net cash from operating activities and free cash flow to the firm displayed peak values in 2021, followed by a downward trend over the subsequent two years. The declines in 2022 and 2023 were notable, suggesting potential operational or capital expenditure challenges during this period. The partial recovery in 2024 may indicate improvements in cash-generating ability or cost management, although neither key cash flow metric returned to the earlier peak levels within the timeframe analyzed.
Interest Paid, Net of Tax
Abbott Laboratories, interest paid, net of tax calculation
US$ 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, tax = Interest paid × EITR
= 604 × 21.00% = 127
- Effective Income Tax Rate (EITR)
- The effective income tax rate demonstrates a general upward trend over the observed period. Starting at 9.5% in 2020, it increased significantly to 13.9% in 2021 and further to 16.5% in 2022. There was a slight decline in 2023 to 14.1%, followed by a notable rise to 21% in 2024. This progression indicates increasing tax expenses relative to income, which could be influenced by changes in tax regulations, adjustments in earnings composition, or shifts in geographic profit distribution.
- Interest Paid, Net of Tax
- Interest paid, net of tax, fluctuated throughout the period. Beginning at $497 million in 2020, the amount decreased slightly to $468 million in 2021 and remained relatively stable at $470 million in 2022. A marked increase occurred in 2023, with interest payments rising to $569 million, followed by a decrease to $477 million in 2024. These variations suggest adjustments in financing costs or debt levels, possibly due to refinancing activities, interest rate changes, or shifts in leverage strategy.
Enterprise Value to FCFF Ratio, Current
Abbott Laboratories, current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 216,063) |
| Free cash flow to the firm (FCFF) | 6,828) |
| Valuation Ratio | |
| EV/FCFF | 31.64 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Elevance Health Inc. | 11.80 |
| Intuitive Surgical Inc. | 138.89 |
| Medtronic PLC | 23.11 |
| UnitedHealth Group Inc. | 13.43 |
| EV/FCFF, Sector | |
| Health Care Equipment & Services | 20.60 |
| EV/FCFF, Industry | |
| Health Care | 21.62 |
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
Abbott Laboratories, 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 | 240,390) | 205,452) | 192,330) | 213,980) | 229,787) | |
| Free cash flow to the firm (FCFF)2 | 6,828) | 5,628) | 8,274) | 9,116) | 6,221) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 35.21 | 36.51 | 23.24 | 23.47 | 36.94 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Elevance Health Inc. | 15.57 | 14.19 | 13.32 | 12.74 | 6.04 | |
| Intuitive Surgical Inc. | 153.43 | 170.92 | 85.45 | 56.01 | 76.70 | |
| Medtronic PLC | 20.58 | 26.54 | 20.32 | 33.84 | 21.43 | |
| UnitedHealth Group Inc. | 20.57 | 17.59 | 19.30 | 22.21 | 15.82 | |
| EV/FCFF, Sector | ||||||
| Health Care Equipment & Services | 25.57 | 22.68 | 20.44 | 23.51 | 18.77 | |
| 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
= 240,390 ÷ 6,828 = 35.21
4 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals several key trends and patterns regarding the company's enterprise value, free cash flow to the firm (FCFF), and their ratio.
- Enterprise Value (EV)
- The enterprise value shows a decreasing trend from 2020 to 2022, falling from $229,787 million to $192,330 million. However, this decline reverses in the subsequent years, with EV increasing to $205,452 million in 2023 and further to $240,390 million in 2024, surpassing the initial 2020 level. This fluctuation suggests variable market perceptions or changes in capital structure and operating conditions during these years.
- Free Cash Flow to the Firm (FCFF)
- FCFF exhibits variability without a consistent upward or downward trend. It rises significantly from $6,221 million in 2020 to a peak of $9,116 million in 2021, then decreases to $8,274 million in 2022. A sharper decline occurs in 2023, dropping to $5,628 million, followed by a moderate recovery to $6,828 million in 2024. These fluctuations may reflect changes in operational efficiency, investment activities, or cash management strategies.
- EV/FCFF Ratio
- This valuation ratio declines markedly from 36.94 in 2020 to around 23.24 in 2022, indicating that, relative to free cash flow, the enterprise value became lower during this period, which might imply the firm was considered more attractive or undervalued. However, from 2022 onward, the ratio rises sharply, reaching 36.51 in 2023 and slightly decreasing to 35.21 in 2024. The increase in this ratio corresponds with the rise in enterprise value and the decline in free cash flow, suggesting increased market valuation relative to the cash flow generated.
Overall, the data portrays a period of initial contraction in enterprise value coupled with a strengthening free cash flow until 2021, followed by a reversal where enterprise value grows and free cash flow diminishes, leading to a significant rise in the EV/FCFF ratio. These dynamics highlight shifts in both market valuation and operational cash performance that could warrant further examination to understand underlying causes such as market conditions, business strategy changes, or external economic factors.