Enterprise Value to FCFF (EV/FCFF)
Difficulty: Intermediate
Free Cash Flow to The Firm (FCFF)
Allergan PLC, FCFF calculation
USD $ in thousands
| 12 months ended | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|---|
| | Net income (loss) attributable to shareholders | (4,125,500) | 14,973,400 | 3,915,200 | (1,630,500) | (750,400) |
| | (Income) loss attributable to noncontrolling interest | 6,600 | 6,100 | 4,200 | 300 | (700) |
| | Net noncash charges | 9,058,400 | (12,827,700) | 1,882,800 | 4,305,100 | 2,128,200 |
| | Changes in assets and liabilities, net of effects of acquisitions | 933,900 | (726,500) | (1,272,200) | (431,900) | (163,600) |
| | Net cash provided by operating activities | 5,873,400 | 1,425,300 | 4,530,000 | 2,243,000 | 1,213,500 |
| | Cash paid during the year for interest, net of tax1 | 409,695 | 421,707 | 446,365 | 301,594 | 266,591 |
| | Additions to property, plant and equipment | (349,900) | (331,400) | (454,900) | (238,600) | (177,900) |
| | Additions to product rights and other intangibles | (614,300) | (2,000) | (154,700) | (36,100) | (130,000) |
| | Proceeds from sales of property, plant and equipment | 7,100 | 33,300 | 140,100 | 13,700 | 7,100 |
| | Free cash flow to the firm (FCFF) | 5,325,995 | 1,546,907 | 4,506,865 | 2,283,594 | 1,179,291 |
| Item | Description | The company |
|---|---|---|
| FCFF | Free cash flow to the firm is the cash flow available to the Allergan PLC's suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. | Allergan PLC's FCFF declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level. |
Interest Paid, Net of Tax
Allergan PLC, interest paid, net of tax calculation
USD $ in thousands
| 12 months ended | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|---|
| Effective Income Tax Rate (EITR) | ||||||
| | EITR1 | 64.20% | 67.00% | 35.30% | 4.80% | -17.70% |
| Interest Paid, Net of Tax | ||||||
| | Cash paid during the year for interest, before tax | 1,144,400 | 1,277,900 | 689,900 | 316,800 | 226,500 |
| | Less: Cash paid during the year for interest, tax2 | 734,705 | 856,193 | 243,535 | 15,206 | (40,091) |
| | Cash paid during the year for interest, net of tax | 409,695 | 421,707 | 446,365 | 301,594 | 266,591 |
2017 Calculations
2 Cash paid during the year for interest, tax = Cash paid during the year for interest × EITR
= 1,144,400 × 64.20% = 734,705
Enterprise Value to FCFF Ratio, Current
Allergan PLC, current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (USD $ in thousands) | |
| Enterprise value (EV) | 88,636,822 |
| Free cash flow to the firm (FCFF) | 5,325,995 |
| Ratio | |
| EV/FCFF | 16.64 |
| Benchmarks | |
| EV/FCFF, Competitors | |
| Abbott Laboratories | 28.18 |
| AbbVie Inc. | 17.76 |
| Amgen Inc. | 11.43 |
| Biogen Inc. | 26.39 |
| Bristol-Myers Squibb Co. | 22.11 |
| Celgene Corp. | 12.35 |
| Eli Lilly & Co. | 22.59 |
| Gilead Sciences Inc. | 9.32 |
| Johnson & Johnson | 19.84 |
| Merck & Co. Inc. | 38.39 |
| Pfizer Inc. | 14.31 |
| Regeneron Pharmaceuticals Inc. | 37.26 |
| EV/FCFF, Sector | |
| Pharmaceuticals & Biotechnology | 17.91 |
| EV/FCFF, Industry | |
| Health Care | 18.74 |
If company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Allergan PLC, historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in thousands) | ||||||
| | Enterprise value (EV)1 | 82,757,462 | 106,734,788 | 164,192,969 | 90,912,752 | 47,920,442 |
| | Free cash flow to the firm (FCFF)2 | 5,325,995 | 1,546,907 | 4,506,865 | 2,283,594 | 1,179,291 |
| Ratio | ||||||
| | EV/FCFF3 | 15.54 | 69.00 | 36.43 | 39.81 | 40.63 |
| Benchmarks | ||||||
| EV/FCFF, Competitors | ||||||
| Abbott Laboratories | 26.99 | 36.35 | 30.00 | 27.54 | 25.21 | |
| AbbVie Inc. | 21.20 | 17.64 | 14.93 | 32.10 | 14.33 | |
| Amgen Inc. | 11.16 | 11.23 | 11.51 | 13.76 | 16.49 | |
| Biogen Inc. | 26.28 | 14.61 | 20.11 | 34.00 | 32.88 | |
| Bristol-Myers Squibb Co. | 24.77 | 51.76 | 87.88 | 35.51 | 28.83 | |
| Celgene Corp. | 14.13 | 23.00 | 35.79 | 34.75 | 30.18 | |
| Eli Lilly & Co. | 19.87 | 23.22 | 43.88 | 24.69 | 12.89 | |
| Gilead Sciences Inc. | 9.72 | 6.44 | 6.51 | 12.63 | 43.41 | |
| Johnson & Johnson | 20.44 | 19.65 | 16.62 | 17.44 | 17.27 | |
| Merck & Co. Inc. | 33.91 | 20.51 | 13.16 | 24.11 | 16.28 | |
| Pfizer Inc. | 13.91 | 14.94 | 14.19 | 12.81 | 11.91 | |
| Regeneron Pharmaceuticals Inc. | 32.57 | 38.99 | 57.44 | 97.24 | 73.58 | |
| EV/FCFF, Sector | ||||||
| Pharmaceuticals & Biotechnology | 18.02 | 17.50 | 16.56 | 20.04 | 18.65 | |
| EV/FCFF, Industry | ||||||
| Health Care | 18.52 | 18.16 | 16.97 | 19.42 | 17.84 | |
2017 Calculations
3 EV/FCFF = EV ÷ FCFF
= 82,757,462 ÷ 5,325,995 = 15.54
| Ratio | Description | The company |
|---|---|---|
| EV/FCFF | Enterprise value to free cash flow to the firm is whole company valuation indicator. | Allergan PLC's EV/FCFF ratio increased from 2015 to 2016 but then declined significantly from 2016 to 2017. |