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).
- Net cash provided by operating activities
- The net cash provided by operating activities exhibited a generally upward trend over the five-year period. Starting at $282.8 million in 2018, it increased significantly to $504.0 million in 2019. A decline was observed in 2020, with cash flow decreasing to $260.1 million, representing a notable reduction from the previous year. However, this was followed by a strong recovery in 2021, with operating cash flow surging to $1.74 billion, and an even more substantial increase in 2022, reaching approximately $3.60 billion. Overall, despite the dip in 2020, the operating cash generation capacity showed substantial growth, especially in the last two years.
- Free cash flow to the firm (FCFF)
- Free cash flow to the firm followed a pattern similar to that of operating cash flow. Beginning at $270.9 million in 2018, it rose to $476.4 million in 2019, before declining to $241.4 million in 2020. Subsequently, there was a pronounced increase to $1.61 billion in 2021, followed by a further rise to $3.40 billion in 2022. This trend indicates a strong improvement in the company's ability to generate free cash flow after covering capital expenditures, particularly in the most recent years, highlighting enhanced financial flexibility and potential for reinvestment or debt reduction.
Interest Paid, Net of Tax
Builders FirstSource Inc., interest paid, net of tax calculation
US$ 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
The financial data reveals notable trends regarding the effective income tax rate (EITR) and cash paid for interest, net of tax, over a five-year period.
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibited a gradual upward trend from 2018 through 2021, starting at 21.3% in 2018 and reaching 23.4% in 2021. By 2022, the rate slightly decreased to 23.0%. This pattern suggests a relatively stable but marginally increasing tax burden prior to a minor reduction in the latest year. The fluctuation between years appears moderate, with the peak occurring in 2021 before a modest decline.
- Cash Paid for Interest, Net of Tax
- Cash paid for interest, net of tax, showed some variability across the reported years. Initially, a decline was observed from $84,735 thousand in 2018 to $78,678 thousand in 2019. This was followed by an increase in 2020 to $84,941 thousand, then a decrease to $80,867 thousand in 2021. A significant rise occurred in 2022, with cash interest payments increasing sharply to $130,430 thousand. The substantial jump in 2022 indicates increased interest expenses or debt servicing costs, which could be attributed to greater borrowings or higher interest rates during that period.
Enterprise Value to FCFF Ratio, Current
Builders FirstSource Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ 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. | — |
| Caterpillar Inc. | 20.76 |
| Eaton Corp. plc | 37.61 |
| GE Aerospace | 50.63 |
| Honeywell International Inc. | 28.31 |
| Lockheed Martin Corp. | 19.65 |
| RTX Corp. | 40.14 |
| EV/FCFF, Sector | |
| Capital Goods | 37.87 |
| EV/FCFF, Industry | |
| Industrials | 32.73 |
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 | 23.83 | — | — | |
| Eaton Corp. plc | 33.44 | 38.16 | 21.94 | — | — | |
| GE Aerospace | 17.29 | 56.53 | 32.34 | — | — | |
| Honeywell International Inc. | 29.82 | 25.22 | 26.49 | — | — | |
| Lockheed Martin Corp. | 19.69 | 13.92 | 14.64 | — | — | |
| RTX Corp. | 28.45 | 27.29 | 35.26 | — | — | |
| EV/FCFF, Sector | ||||||
| Capital Goods | 25.87 | 32.16 | 74.97 | — | — | |
| EV/FCFF, Industry | ||||||
| Industrials | 24.30 | 28.80 | 189.49 | — | — | |
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.
- Enterprise Value (EV) Trend
- The enterprise value experienced a consistent and substantial increase from 2018 through 2021, growing from approximately $3.17 billion to $15.8 billion. However, in 2022, the value showed a slight decline to about $14.6 billion, indicating a potential stabilization or a minor contraction following the rapid growth.
- Free Cash Flow to the Firm (FCFF) Trend
- Free cash flow exhibited significant volatility over the period. It nearly doubled from 2018 ($271 million) to 2019 ($476 million), then decreased sharply in 2020 to around $241 million. Subsequently, there was a marked increase in 2021, reaching over $1.6 billion, followed by a further increase in 2022 to approximately $3.4 billion. This suggests improving cash generation capacity in the later years despite earlier fluctuations.
- EV to FCFF Ratio Analysis
- The EV/FCFF ratio began at 11.7 in 2018, indicating moderate valuation relative to free cash flow. It decreased in 2019 to 9.19, suggesting improved valuation or cash flow strength. In 2020, the ratio surged dramatically to nearly 42, reflecting either a sharp drop in free cash flow or a spike in enterprise value, indicating a potentially overvalued position or operational challenges that year. By 2021, the ratio normalized to 9.81 and improved further in 2022 to 4.3, signaling enhanced free cash flow performance relative to enterprise value and possibly a more attractive valuation.
- Overall Observations
- The data indicates a company undergoing significant growth in enterprise value and cash flow generation capacity over five years, with a notable setback in cash flow during 2020. The subsequent recovery and strong improvements in free cash flow in 2021 and 2022 suggest operational improvements or strategic initiatives that positively impacted cash generation. The decreasing EV/FCFF ratio towards 2022 reflects better alignment between valuation and cash flow performance, which may be indicative of enhanced financial health or market perception.