Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Boston Scientific Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of cash flow performance between 2018 and 2022 reveals a period of substantial growth followed by cyclical fluctuations. A primary characteristic of this period is the sharp increase in cash generation occurring between 2018 and 2019, after which a higher baseline of liquidity was maintained despite year-over-year variability.
- Cash Provided by Operating Activities
- Cash flow from operations experienced a dramatic ascent from 310 million US dollars in 2018 to 1,836 million US dollars in 2019. While a contraction occurred in 2020, the metric reached its five-year peak of 1,870 million US dollars in 2021 before retreating to 1,526 million US dollars by the end of 2022.
- Free Cash Flow to the Firm (FCFF)
- FCFF followed a trajectory closely aligned with operating cash flows, rising from 215 million US dollars in 2018 to 1,737 million US dollars in 2019. A volatile pattern emerged thereafter, with a dip in 2020, a recovery in 2021, and a subsequent decline to 1,225 million US dollars in 2022.
- Capital Expenditure and Cash Conversion
- The divergence between operating cash flow and FCFF indicates an increasing trend in capital allocations. In 2019, the difference between these two metrics was relatively small, with FCFF representing approximately 94.6% of operating cash. By 2022, this conversion rate decreased to approximately 80.2%, indicating that a larger portion of operating cash was utilized for capital expenditures in the latter part of the period.
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Interest Paid, Net of Tax
Boston Scientific Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2 2022 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 450 × 38.90% = 175
The analysis of net cash outflows for interest and the effective income tax rate (EITR) between 2018 and 2022 reveals a period of initial stability followed by significant volatility in tax obligations and resulting net interest costs.
- Cash Paid for Interest, Net of Tax
- Net interest payments exhibited inconsistent fluctuations throughout the five-year period. A notable increase occurred between 2018 and 2019, with payments rising from 207 million USD to 355 million USD. This peak was followed by a decline to 284 million USD in 2020, a subsequent increase to 327 million USD in 2021, and a final reduction to 275 million USD by the end of 2022.
- Effective Income Tax Rate (EITR) Volatility
- The EITR remained stagnant at 21.00% from 2018 through 2020. A sharp deviation occurred in 2021, when the rate dropped precipitously to 3.30%. This was followed by a substantial increase in 2022, reaching a period high of 38.90%.
- Impact of Tax Shield on Net Interest Outflows
- An inverse correlation is observed between the EITR and the net cash paid for interest during the latter part of the period. The significant reduction of the EITR to 3.30% in 2021 corresponds with an increase in net interest payments to 327 million USD, as a lower tax rate diminishes the tax shield benefit of interest expenses. Conversely, the surge in the EITR to 38.90% in 2022 aligns with a decrease in net cash paid for interest to 275 million USD, indicating a higher tax offset on interest expenditures.
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Enterprise Value to FCFF Ratio, Current
Boston Scientific Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 82,681) |
| Free cash flow to the firm (FCFF) | 1,225) |
| Valuation Ratio | |
| EV/FCFF | 67.50 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Abbott Laboratories | 25.06 |
| Elevance Health Inc. | 19.81 |
| Intuitive Surgical Inc. | 61.76 |
| Medtronic PLC | 24.99 |
| UnitedHealth Group Inc. | 21.06 |
| EV/FCFF, Sector | |
| Health Care Equipment & Services | 19.87 |
| EV/FCFF, Industry | |
| Health Care | 28.03 |
Based on: 10-K (reporting date: 2022-12-31).
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
Boston Scientific Corp., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 75,700) | 69,502) | 62,324) | 65,513) | 62,154) | |
| Free cash flow to the firm (FCFF)2 | 1,225) | 1,657) | 1,428) | 1,737) | 215) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 61.80 | 41.95 | 43.66 | 37.72 | 289.12 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Abbott Laboratories | 23.24 | 23.47 | — | — | — | |
| Elevance Health Inc. | 13.32 | 12.74 | — | — | — | |
| Intuitive Surgical Inc. | 85.45 | 56.01 | — | — | — | |
| Medtronic PLC | 20.32 | 33.84 | — | — | — | |
| UnitedHealth Group Inc. | 19.30 | 22.21 | — | — | — | |
| EV/FCFF, Sector | ||||||
| Health Care Equipment & Services | 20.44 | 23.51 | — | — | — | |
| EV/FCFF, Industry | ||||||
| Health Care | 18.66 | 17.80 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
3 2022 Calculation
EV/FCFF = EV ÷ FCFF
= 75,700 ÷ 1,225 = 61.80
4 Click competitor name to see calculations.
Analysis of the enterprise value and free cash flow to the firm reveals a general expansion in valuation coupled with significant volatility in cash flow generation over the five-year period.
- Enterprise Value Trend
- The enterprise value demonstrated a long-term upward trajectory, rising from 62,154 million USD in 2018 to 75,700 million USD by 2022. Although a slight contraction was noted in 2020, the overall trend indicates a consistent increase in the total market value of the firm's operations.
- Free Cash Flow to the Firm (FCFF) Dynamics
- A substantial increase in FCFF occurred between 2018 and 2019, shifting from 215 million USD to 1,737 million USD. Following this surge, FCFF remained significantly higher than the 2018 level but experienced fluctuations, ending the period at 1,225 million USD in 2022.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio exhibited an extreme outlier in 2018 at 289.12, a result of the disproportionately low FCFF relative to the enterprise value. From 2019 to 2021, the ratio stabilized within a range of 37.72 to 43.66. In 2022, the ratio climbed to 61.80, driven by the combination of the highest recorded enterprise value and a decline in free cash flow.
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