Microsoft Excel LibreOffice Calc

Boeing Co. (BA)


Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate


Free Cash Flow to The Firm (FCFF)

Boeing Co., FCFF calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net earnings related to parent 10,460  8,197  4,895  5,176  5,446 
Net (earnings) losses related to noncontrolling interests (21) (2) (1) (3) 10 
Net noncash charges 2,599  2,654  2,560  2,395  2,505 
Changes in assets and liabilities 2,284  2,495  3,045  1,795  897 
Net cash provided by operating activities 15,322  13,344  10,499  9,363  8,858 
Interest payments, net of tax1 549  375  460  353  390 
Interest capitalized, net of tax2 72  78  149  114  78 
Property, plant and equipment additions (1,722) (1,739) (2,613) (2,450) (2,236)
Property, plant and equipment reductions 120  92  38  42  34 
Purchase of distribution rights (69) (131) –  –  – 
Free cash flow to the firm (FCFF) 14,272  12,019  8,533  7,422  7,124 

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-12), 10-K (filing date: 2017-02-08), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-12).

Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Boeing Co.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Boeing Co.’s FCFF increased from 2016 to 2017 and from 2017 to 2018.

Interest Paid, Net of Tax

Boeing Co., interest paid, net of tax calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Effective Income Tax Rate (EITR)
EITR1 10.90% 28.90% 12.10% 27.70% 23.70%
Interest Paid, Net of Tax
Interest payments, before tax 616  527  523  488  511 
Less: Interest payments, tax2 67  152  63  135  121 
Interest payments, net of tax 549  375  460  353  390 
Interest Costs Capitalized, Net of Tax
Interest capitalized, before tax 81  110  170  158  102 
Less: Interest capitalized, tax3 32  21  44  24 
Interest capitalized, net of tax 72  78  149  114  78 

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-12), 10-K (filing date: 2017-02-08), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-12).

2018 Calculations

2 Interest payments, tax = Interest payments × EITR
= 616 × 10.90% = 67

3 Interest capitalized, tax = Interest capitalized × EITR
= 81 × 10.90% = 9


Enterprise Value to FCFF Ratio, Current

Boeing Co., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 215,924 
Free cash flow to the firm (FCFF) 14,272 
Ratio
EV/FCFF 15.13
Benchmarks
EV/FCFF, Competitors
General Dynamics Corp. 22.25
Lockheed Martin Corp. 40.71
Northrop Grumman Corp. 19.88
Raytheon Co. 18.95
United Technologies Corp. 28.94
EV/FCFF, Sector
Aerospace & Defense 20.99
EV/FCFF, Industry
Industrials 22.90

Based on: 10-K (filing date: 2019-02-08).

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

Boeing Co., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 234,122  203,505  100,313  75,063  100,416 
Free cash flow to the firm (FCFF)2 14,272  12,019  8,533  7,422  7,124 
Ratio
EV/FCFF3 16.40 16.93 11.76 10.11 14.10
Benchmarks
EV/FCFF, Competitors
General Dynamics Corp. 22.64 17.96 30.53 20.94 13.73
Lockheed Martin Corp. 41.00 18.99 19.08 17.92 20.21
Northrop Grumman Corp. 20.05 33.74 21.05 20.20 15.09
Raytheon Co. 18.84 27.15 19.14 18.96 18.27
United Technologies Corp. 27.92 27.84 19.13 14.87 19.43
EV/FCFF, Sector
Aerospace & Defense 21.48 20.98 17.65 15.25 16.71
EV/FCFF, Industry
Industrials 22.69 24.75 23.33 19.95 19.32

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-12), 10-K (filing date: 2017-02-08), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-12).

2018 Calculations

3 EV/FCFF = EV ÷ FCFF
= 234,122 ÷ 14,272 = 16.40

Ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Boeing Co.’s EV/FCFF ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018.