Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Allergan Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
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A consistent upward trajectory is observed in both net cash provided by operating activities and free cash flow to the firm (FCFF) between 2010 and 2014. Both metrics exhibit significant growth, particularly during the 2011-2012 period, indicating a strengthening capacity to generate cash from core operations and a robust ability to convert those earnings into free cash flow.
- Operating Cash Flow Trends
- Net cash provided by operating activities increased from 463.9 million USD in 2010 to 1.93 billion USD in 2014. The most substantial expansion occurred between 2010 and 2011, where the figure more than doubled, followed by continued strong growth through 2012. Growth rates moderated in 2013 and 2014, though the overall trend remained positive.
- FCFF Growth Analysis
- FCFF mirrored the operating cash flow trend, rising from 308.7 million USD in 2010 to 1.72 billion USD in 2014. The rapid increase between 2010 and 2011 represents the most significant percentage gain in the analyzed period. The close alignment between operating cash flow and FCFF suggests that capital expenditures were managed efficiently relative to the scale of cash generation.
- Cash Flow Conversion and Stability
- The narrow variance between operating cash flow and FCFF throughout the five-year period indicates a high conversion rate of operational liquidity into free cash. After the initial surge observed between 2010 and 2012, the growth patterns stabilized, suggesting a transition from a phase of rapid acceleration to a period of steady, incremental expansion.
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Interest Paid, Net of Tax
Allergan Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
2 2014 Calculation
Cash paid for interest, net of amount capitalized, tax = Cash paid for interest, net of amount capitalized × EITR
= 83,400 × 23.00% = 19,182
3 2014 Calculation
Interest capitalized, tax = Interest capitalized × EITR
= 5,600 × 23.00% = 1,288
The financial data indicates a significant increase in interest-related expenditures and a general reduction in the effective income tax rate over the five-year period ending December 31, 2014.
- Effective Income Tax Rate (EITR)
- A notable volatility is observed in the EITR, which began at an anomalous 97.10% in 2010 before dropping sharply to 27.80% in 2011. Following this adjustment, a gradual downward trend is evident, with the rate steadily declining to 23.00% by December 31, 2014.
- Cash Paid for Interest, Net of Tax
- Cash outflows for interest experienced a substantial surge between 2010 and 2011, rising from 1,392 thousand to 46,569 thousand US dollars. After remaining relatively stable in 2012, the payments increased further in 2013 and 2014, concluding the period at 64,218 thousand US dollars. This trajectory suggests a significant increase in the company's debt burden or interest obligations starting in 2011.
- Interest Capitalized, Net of Tax
- Interest capitalization remained negligible in 2010 at 14 thousand US dollars but grew consistently throughout the period. A marked acceleration in capitalization occurred between 2013 and 2014, where the value rose from 1,323 thousand to 4,312 thousand US dollars, indicating an increase in capital-intensive projects or asset acquisitions during the final year of the analysis.
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Enterprise Value to FCFF Ratio, Current
Allergan Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 66,591,934) |
| Free cash flow to the firm (FCFF) | 1,718,930) |
| Valuation Ratio | |
| EV/FCFF | 38.74 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| AbbVie Inc. | 26.68 |
| Amgen Inc. | 24.87 |
| Bristol-Myers Squibb Co. | 11.04 |
| Danaher Corp. | 29.47 |
| Eli Lilly & Co. | 117.21 |
| Gilead Sciences Inc. | 18.99 |
| Johnson & Johnson | 30.24 |
| Merck & Co. Inc. | 28.98 |
| Pfizer Inc. | 18.47 |
| Regeneron Pharmaceuticals Inc. | 18.36 |
| Thermo Fisher Scientific Inc. | 34.67 |
| Vertex Pharmaceuticals Inc. | 37.90 |
Based on: 10-K (reporting date: 2014-12-31).
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
Allergan Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 66,591,936) | 35,980,729) | 30,534,136) | 26,076,707) | 21,771,762) | |
| Free cash flow to the firm (FCFF)2 | 1,718,930) | 1,574,449) | 1,487,207) | 1,000,291) | 308,707) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 38.74 | 22.85 | 20.53 | 26.07 | 70.53 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
3 2014 Calculation
EV/FCFF = EV ÷ FCFF
= 66,591,936 ÷ 1,718,930 = 38.74
4 Click competitor name to see calculations.
Between 2010 and 2014, a significant expansion in Enterprise Value was accompanied by a consistent increase in Free Cash Flow to the Firm (FCFF), resulting in a fluctuating valuation multiple. While operational cash flow generation improved steadily, the valuation multiple experienced a sharp decline initially before rising again toward the end of the period.
- Enterprise Value Trends
- Enterprise Value exhibited continuous growth, rising from 21.77 billion USD in 2010 to 66.59 billion USD by 2014. The most notable acceleration occurred between 2013 and 2014, where the value nearly doubled, suggesting a substantial increase in the market valuation of the firm or a significant capital event.
- Free Cash Flow to the Firm Performance
- FCFF demonstrated a strong upward trajectory, starting at 308.7 million USD in 2010 and reaching 1.72 billion USD in 2014. A significant surge was recorded between 2010 and 2011, after which growth remained positive but more moderate, indicating a scaling of operational efficiency and cash generation capabilities.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio showed high volatility over the five-year period. The ratio decreased sharply from 70.53 in 2010 to a low of 20.53 in 2012, reflecting a period where FCFF growth significantly outpaced the growth in Enterprise Value. However, the ratio increased to 38.74 by 2014, driven by the disproportionate surge in Enterprise Value relative to the more linear growth of FCFF.
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