Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Builders FirstSource Inc., FCFF calculation
US$ in thousands
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).
Between 2018 and 2022, a significant acceleration in cash generation is evident, characterized by exponential growth in the latter two years of the analyzed period.
- Operating Cash Flow Trajectory
- Net cash provided by operating activities exhibited volatility in the early period, rising from 282.8 million in 2018 to 504.0 million in 2019, before contracting to 260.1 million in 2020. A substantial shift occurred in 2021, where cash flow surged to 1.74 billion, subsequently increasing to 3.60 billion by the end of 2022.
- Free Cash Flow to the Firm (FCFF) Performance
- The FCFF followed a trajectory closely aligned with operating cash flows. After an initial increase in 2019 and a subsequent dip in 2020 to 241.4 million, the figure rose sharply to 1.61 billion in 2021 and 3.40 billion in 2022. This suggests a robust and rapidly expanding capacity to generate cash available to all capital providers.
- Capital Expenditure Relationship
- The variance between net cash provided by operating activities and FCFF remained relatively narrow and consistent throughout the five-year window. This indicates that capital expenditures were managed at a stable proportion relative to total cash flow, allowing the vast majority of operational cash increases to translate directly into free cash flow for the firm.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Interest Paid, Net of Tax
Builders FirstSource Inc., interest paid, net of tax calculation
US$ in thousands
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
= 169,390 × 23.00% = 38,960
An analysis of the financial outflows related to interest payments net of tax between 2018 and 2022 reveals a period of relative stability followed by a significant escalation in the final year. While the effective income tax rate remained within a narrow band, the cash expenditures for interest experienced a sharp surge in 2022.
- Effective Income Tax Rate Stability
- The effective income tax rate exhibited a gradual upward trend from 21.30% in 2018 to a peak of 23.40% in 2021, before slightly declining to 23.00% in 2022. This limited variance suggests a consistent tax environment that did not significantly influence the fluctuations in net interest payments.
- Interest Payment Trends (2018-2021)
- From 2018 through 2021, cash paid for interest, net of tax, remained relatively constant, oscillating between a low of 78,678 thousand US dollars in 2019 and a high of 84,941 thousand US dollars in 2020. This period is characterized by stable debt service obligations.
- Fiscal Year 2022 Expansion
- A substantial increase in net interest payments is observed in 2022, where the figure rose to 130,430 thousand US dollars. This represents an increase of approximately 61.2% over the 2021 value of 80,867 thousand US dollars, indicating a significant expansion in gross interest expenses or a shift in the company's leverage profile.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Enterprise Value to FCFF Ratio, Current
Builders FirstSource Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 17,393,298) |
| Free cash flow to the firm (FCFF) | 3,400,196) |
| Valuation Ratio | |
| EV/FCFF | 5.12 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Boeing Co. | 275.47 |
| Caterpillar Inc. | 30.11 |
| Eaton Corp. plc | 34.76 |
| GE Aerospace | 40.92 |
| Honeywell International Inc. | 14.76 |
| Lockheed Martin Corp. | 19.43 |
| RTX Corp. | 30.84 |
| EV/FCFF, Sector | |
| Capital Goods | 39.50 |
| EV/FCFF, Industry | |
| Industrials | 34.43 |
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
Builders FirstSource Inc., 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 thousands) | ||||||
| Enterprise value (EV)1 | 14,604,435) | 15,800,413) | 10,132,733) | 4,376,694) | 3,169,662) | |
| Free cash flow to the firm (FCFF)2 | 3,400,196) | 1,610,085) | 241,426) | 476,399) | 270,907) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 4.30 | 9.81 | 41.97 | 9.19 | 11.70 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Boeing Co. | 37.53 | — | — | — | — | |
| Caterpillar Inc. | 23.54 | 20.50 | — | — | — | |
| Eaton Corp. plc | 33.44 | 38.16 | — | — | — | |
| GE Aerospace | 17.29 | 56.53 | — | — | — | |
| Honeywell International Inc. | 29.82 | 25.22 | — | — | — | |
| Lockheed Martin Corp. | 19.69 | 13.92 | — | — | — | |
| RTX Corp. | 28.45 | 27.29 | — | — | — | |
| EV/FCFF, Sector | ||||||
| Capital Goods | 25.87 | 32.16 | — | — | — | |
| EV/FCFF, Industry | ||||||
| Industrials | 24.33 | 28.81 | — | — | — | |
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
= 14,604,435 ÷ 3,400,196 = 4.30
4 Click competitor name to see calculations.
The period between 2018 and 2022 is characterized by a substantial expansion in Enterprise Value (EV) accompanied by an eventual surge in Free Cash Flow to the Firm (FCFF), resulting in a significant compression of the EV/FCFF valuation multiple.
- Enterprise Value Growth
- EV exhibited a strong upward trajectory, increasing from 3,169,662 thousand US$ in 2018 to a peak of 15,800,413 thousand US$ in 2021. A moderate contraction was observed in 2022, with the value adjusting to 14,604,435 thousand US$, representing a stabilization after a period of rapid growth.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF demonstrated initial volatility, with a decline to 241,426 thousand US$ in 2020. This was followed by an exponential increase, rising to 1,610,085 thousand US$ in 2021 and further accelerating to 3,400,196 thousand US$ by 2022. The cash flow generation in the final year of the period represents a more than twelve-fold increase compared to the 2020 trough.
- EV/FCFF Ratio Dynamics
- The EV/FCFF ratio experienced a sharp anomaly in 2020, spiking to 41.97 due to the simultaneous increase in EV and decrease in FCFF. Following this peak, the ratio declined aggressively to 9.81 in 2021 and reached a period low of 4.30 in 2022. This downward trend indicates that the growth in cash flow efficiency has significantly outpaced the growth of the total enterprise valuation, suggesting a lower valuation multiple relative to the firm's cash-generating capacity.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?