Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Builders FirstSource Inc., FCFE 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).
The analysis of cash flow metrics from 2018 to 2022 reveals a substantial expansion in liquidity and a significant upward trajectory in the company's ability to generate cash for equity holders. While the initial period was marked by volatility, the latter years demonstrate exponential growth in both operational efficiency and available free cash flow.
- Operating Cash Flow Trends
- Net cash provided by operating activities exhibited inconsistent growth between 2018 and 2020, peaking at 504,046 thousand USD in 2019 before declining to 260,067 thousand USD in 2020. However, a period of rapid acceleration began in 2021, with operating cash flows surging to 1,743,549 thousand USD, and further increasing to 3,599,231 thousand USD by the end of 2022. This represents a more than thirteen-fold increase in operating cash generation from the 2020 trough to the 2022 peak.
- Free Cash Flow to Equity (FCFE) Performance
- FCFE transitioned from a negative position of -46,456 thousand USD in 2018 to a highly positive position of 3,293,575 thousand USD by 2022. The recovery began in 2019, followed by a steady increase in 2020 to 445,082 thousand USD. Similar to the operating cash flow, FCFE experienced an aggressive expansion in 2021 and 2022, reflecting a massive increase in the residual cash available to shareholders after accounting for capital expenditures and debt repayments.
- Cash Flow Correlation and Insights
- A notable divergence is observed in 2018, where positive operating cash flow did not translate into positive FCFE, suggesting significant capital expenditures or debt repayments during that period. Conversely, from 2021 onward, FCFE has tracked closely with the surge in operating activities, indicating that the company has successfully scaled its operations while maintaining a capital structure that allows the majority of operational gains to flow through to equity holders.
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Price to FCFE Ratio, Current
Builders FirstSource Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 123,346,775 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in thousands) | 3,293,575) |
| FCFE per share | 26.70 |
| Current share price (P) | 117.47 |
| Valuation Ratio | |
| P/FCFE | 4.40 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 20.71 |
| Eaton Corp. plc | 31.96 |
| GE Aerospace | 42.84 |
| Honeywell International Inc. | 8.86 |
| Lockheed Martin Corp. | 16.13 |
| RTX Corp. | 57.40 |
| P/FCFE, Sector | |
| Capital Goods | 41.93 |
| P/FCFE, Industry | |
| Industrials | 37.32 |
Based on: 10-K (reporting date: 2022-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Builders FirstSource Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 138,012,302 | 176,772,541 | 206,431,681 | 116,130,284 | 115,359,616 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in thousands)2 | 3,293,575) | 2,463,141) | 445,082) | 102,343) | (46,456) | |
| FCFE per share3 | 23.86 | 13.93 | 2.16 | 0.88 | -0.40 | |
| Share price1, 4 | 84.78 | 73.05 | 43.27 | 26.69 | 14.03 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 3.55 | 5.24 | 20.07 | 30.29 | — | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Boeing Co. | 120.43 | — | — | — | — | |
| Caterpillar Inc. | 24.03 | 16.36 | — | — | — | |
| Eaton Corp. plc | 28.68 | 24.43 | — | — | — | |
| GE Aerospace | 44.45 | — | — | — | — | |
| Honeywell International Inc. | 27.59 | 46.23 | — | — | — | |
| Lockheed Martin Corp. | 11.63 | 14.65 | — | — | — | |
| RTX Corp. | 26.71 | 35.07 | — | — | — | |
| P/FCFE, Sector | ||||||
| Capital Goods | 25.94 | — | — | — | — | |
| P/FCFE, Industry | ||||||
| Industrials | 25.07 | — | — | — | — | |
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).
1 Data adjusted for splits and stock dividends.
3 2022 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 3,293,575,000 ÷ 138,012,302 = 23.86
4 Closing price as at the filing date of Builders FirstSource Inc. Annual Report.
5 2022 Calculation
P/FCFE = Share price ÷ FCFE per share
= 84.78 ÷ 23.86 = 3.55
6 Click competitor name to see calculations.
An analysis of the financial metrics from 2018 to 2022 reveals a significant divergence between share price appreciation and the growth of Free Cash Flow to Equity (FCFE). While the share price experienced consistent year-over-year growth, the rate of expansion in FCFE per share was substantially more aggressive, resulting in a consistent compression of the valuation multiple.
- Share Price Appreciation
- The share price demonstrated a strong upward trajectory, rising from 14.03 in 2018 to 84.78 in 2022. This indicates a steady increase in market valuation over the five-year period.
- FCFE per Share Evolution
- Free Cash Flow to Equity per share transitioned from a negative value of -0.40 in 2018 to 23.86 in 2022. The acceleration became particularly pronounced after 2020, moving from 2.16 to 13.93 in 2021 and reaching 23.86 in 2022, signifying a rapid increase in the cash available to shareholders.
- P/FCFE Ratio Compression
- The P/FCFE ratio underwent a significant contraction, falling from 30.29 in 2019 to 3.55 in 2022. Because the growth in FCFE per share far exceeded the growth in the share price, the resulting ratio declined sharply, suggesting that the company's cash flow generation capacity increased much faster than the market's pricing of the equity.
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