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).
An analysis of the financial performance between 2018 and 2022 reveals a significant increase in cash generation capacity followed by a period of moderate volatility. After a relatively low baseline in 2018, both operating cash flow and free cash flow to the firm experienced a substantial surge in 2019, maintaining elevated levels relative to the initial period despite subsequent year-over-year fluctuations.
- Operating Cash Flow Trends
- Cash provided by operating activities grew sharply from 310 million US dollars in 2018 to 1,836 million US dollars in 2019. While a decline occurred in 2020 to 1,508 million US dollars, the metric recovered to a 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) Performance
- FCFF exhibited a trajectory closely aligned with operating cash flows. A dramatic increase is observed from 215 million US dollars in 2018 to 1,737 million US dollars in 2019. Subsequent years showed a pattern of contraction and recovery, with FCFF dipping to 1,428 million US dollars in 2020, rising to 1,657 million US dollars in 2021, and ending the period at 1,225 million US dollars in 2022.
- Cash Conversion and Investment Analysis
- The variance between operating cash flow and FCFF indicates a shift in capital allocation. From 2018 to 2020, the gap remained relatively narrow, suggesting stable capital expenditures. However, a widening divergence is observed in 2021 and 2022; specifically, the difference increased from approximately 99 million US dollars in 2019 to 301 million US dollars in 2022. This trend suggests an increase in capital investments or other firm-level expenditures that reduced the proportion of operating cash converted into free cash flow during the final two years of the analyzed 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
An analysis of the cash outflows for interest, net of tax, reveals a period of volatility between 2018 and 2022. While the net payments fluctuated, the most significant movements correlate with extreme shifts in the effective income tax rate during the latter part of the observed period.
- Net Interest Cash Outflow Trends
- Cash paid for interest, net of tax, experienced a sharp increase from 207 million USD in 2018 to a peak of 355 million USD in 2019. This was followed by a reduction to 284 million USD in 2020. A subsequent increase to 327 million USD occurred in 2021 before the outflow declined again to 275 million USD by the end of 2022.
- Effective Income Tax Rate (EITR) Volatility
- The effective income tax rate remained stable at 21.00% from 2018 through 2020. However, a significant deviation occurred in 2021, where the rate dropped precipitously to 3.30%. This was followed by a sharp reversal in 2022, with the rate climbing to 38.90%, marking the highest rate in the five-year sequence.
- Correlation Between Tax Rates and Net Outflows
- A clear relationship is observed between the EITR and the net cash paid for interest. In 2021, the collapse of the EITR to 3.30% coincided with an increase in net interest outflows to 327 million USD, as a lower tax rate reduces the value of the tax shield provided by interest expenses. Conversely, the surge in the EITR to 38.90% in 2022 coincided with a decrease in net interest outflows to 275 million USD, suggesting that a higher tax rate enhanced the tax deductibility of interest, thereby reducing the net cash burden.
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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 | 23.02 |
| Elevance Health Inc. | 18.78 |
| Intuitive Surgical Inc. | 55.13 |
| Medtronic PLC | 21.99 |
| UnitedHealth Group Inc. | 20.13 |
| EV/FCFF, Sector | |
| Health Care Equipment & Services | 18.36 |
| EV/FCFF, Industry | |
| Health Care | 25.67 |
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.
The financial trajectory from 2018 to 2022 is characterized by a steady increase in Enterprise Value contrasted with significant volatility in Free Cash Flow to the Firm (FCFF), leading to substantial fluctuations in the valuation multiple.
- Enterprise Value (EV)
- A general upward trend is observed in Enterprise Value, which rose from 62,154 million USD in 2018 to 75,700 million USD in 2022. Despite a marginal decline in 2020 to 62,324 million USD, the overall trend indicates a consistent growth in the total market value of the company's operations over the analyzed period.
- Free Cash Flow to the Firm (FCFF)
- FCFF exhibited high volatility. A significant low was recorded in 2018 at 215 million USD, followed by a sharp increase to 1,737 million USD in 2019. The subsequent years showed inconsistent movement, peaking again in 2021 at 1,657 million USD before declining to 1,225 million USD in 2022.
- EV/FCFF Ratio
- The EV/FCFF ratio began with an extreme outlier of 289.12 in 2018, primarily driven by the suppressed FCFF for that year. A sharp correction occurred in 2019, bringing the ratio down to 37.72. The multiple remained relatively stable between 2019 and 2021, oscillating between 37.72 and 43.66. However, by 2022, the ratio increased to 61.80, reflecting the combined impact of a rising Enterprise Value and a reduction in Free Cash Flow to the Firm.
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