Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Air Products & Chemicals Inc., FCFE calculation
US$ in thousands
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
The financial data indicates a divergence between the stability of operating cash flows and the significant volatility of free cash flow to equity (FCFE) over the six-year period ending September 30, 2020.
- Operating Cash Flow Trends
- Cash provided by operating activities exhibited a consistent upward trajectory, increasing from US$ 2,437.8 million in 2015 to US$ 3,264.7 million in 2020. Despite a slight contraction in 2017, the overall trend reflects steady growth in the capacity to generate cash from core business operations.
- Free Cash Flow to Equity (FCFE) Volatility
- FCFE demonstrated extreme fluctuations throughout the analyzed period. A peak of US$ 1,971.1 million in 2016 was followed by a sharp decline to US$ 214.3 million in 2017. While the figures remained relatively low and stable between 2018 and 2019, a massive surge occurred in 2020, with FCFE reaching US$ 5,190.0 million.
- Comparative Analysis of Cash Flow Components
- The disparity between the stable growth of operating cash flows and the erratic nature of FCFE suggests that capital expenditures and financing activities were the primary drivers of equity cash flow. Notably, in 2020, FCFE significantly exceeded operating cash flow, indicating that the increase was not driven by operational performance but likely by substantial net borrowing or the sale of assets.
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Price to FCFE Ratio, Current
Air Products & Chemicals Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 221,364,660 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in thousands) | 5,190,000) |
| FCFE per share | 23.45 |
| Current share price (P) | 275.75 |
| Valuation Ratio | |
| P/FCFE | 11.76 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Linde plc | 27.63 |
| Sherwin-Williams Co. | 21.38 |
Based on: 10-K (reporting date: 2020-09-30).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Air Products & Chemicals Inc., historical P/FCFE calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 221,026,592 | 220,433,925 | 219,533,532 | 218,618,346 | 217,375,097 | 215,426,569 | |
| Selected Financial Data (US$) | |||||||
| Free cash flow to equity (FCFE) (in thousands)2 | 5,190,000) | 555,500) | 489,600) | 214,300) | 1,971,100) | 737,100) | |
| FCFE per share3 | 23.48 | 2.52 | 2.23 | 0.98 | 9.07 | 3.42 | |
| Share price1, 4 | 270.36 | 234.40 | 157.56 | 161.18 | 139.74 | 139.47 | |
| Valuation Ratio | |||||||
| P/FCFE5 | 11.51 | 93.01 | 70.65 | 164.43 | 15.41 | 40.76 | |
| Benchmarks | |||||||
| P/FCFE, Competitors6 | |||||||
| Linde plc | — | — | — | — | — | — | |
| Sherwin-Williams Co. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 Data adjusted for splits and stock dividends.
3 2020 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 5,190,000,000 ÷ 221,026,592 = 23.48
4 Closing price as at the filing date of Air Products & Chemicals Inc. Annual Report.
5 2020 Calculation
P/FCFE = Share price ÷ FCFE per share
= 270.36 ÷ 23.48 = 11.51
6 Click competitor name to see calculations.
An analysis of the valuation metrics from 2015 to 2020 reveals a significant divergence between the steady appreciation of the share price and the extreme volatility of the Free Cash Flow to Equity (FCFE) per share. This instability in cash flow generation has resulted in highly erratic P/FCFE ratios over the observed period.
- Share Price Trend
- The share price demonstrated a consistent long-term upward trajectory, increasing from 139.47 US$ in 2015 to 270.36 US$ in 2020. A notable acceleration in value occurred between 2018 and 2019, where the price rose from 157.56 US$ to 234.40 US$.
- FCFE per Share Dynamics
- FCFE per share exhibited severe fluctuations, indicating an inconsistent cash flow profile. After a peak of 9.07 US$ in 2016, a sharp contraction occurred in 2017, with the value dropping to 0.98 US$. Following a period of modest recovery between 2018 and 2019, a substantial surge was recorded in 2020, reaching 23.48 US$, the highest value in the analyzed timeframe.
- P/FCFE Ratio Interpretation
- The P/FCFE ratio remained highly sensitive to the volatility of the denominator. In 2017, the collapse in FCFE per share drove the ratio to an extreme peak of 164.43, suggesting an unsustainable valuation relative to immediate cash flow. However, by 2020, the ratio compressed to its lowest level of 11.51, as the growth in FCFE per share significantly outperformed the growth in the share price.
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