Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
CVS Health Corp., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The financial data indicates a decoupling between the company's operational cash generation and the free cash flow available to equity holders over the period from 2020 to 2024.
- Operating Cash Flow Performance
- Net cash provided by operating activities peaked in 2021 at US$ 18,265 million before entering a sustained period of decline. The most significant contraction occurred between 2023 and 2024, with cash flow from operations falling from US$ 13,426 million to US$ 9,107 million. This downward trajectory suggests a systematic reduction in the cash generated from core business activities, with 2024 levels representing a decrease of approximately 50% from the 2021 peak.
- FCFE Trends and Volatility
- Free cash flow to equity demonstrated a non-linear trend, experiencing a decline in 2021 followed by a sharp escalation that peaked in 2023 at US$ 18,327 million. Although FCFE retreated to US$ 11,385 million in 2024, the value remained elevated relative to the 2020-2022 baseline, despite the concurrent decline in operating cash flows.
- Analysis of Cash Flow Divergence
- A significant divergence is observed in the 2023 and 2024 fiscal years, where FCFE exceeded net cash provided by operating activities. In 2023, FCFE was approximately 36% higher than operating cash flow, and in 2024, it remained approximately 25% higher. This pattern indicates that the cash available to equity holders was not driven by operational performance, but rather by other financial mechanisms, such as increased net debt issuance or a substantial decrease in capital expenditures.
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Price to FCFE Ratio, Current
CVS Health Corp., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 1,265,019,429 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 11,385) |
| FCFE per share | 9.00 |
| Current share price (P) | 69.45 |
| Valuation Ratio | |
| P/FCFE | 7.72 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Abbott Laboratories | 34.00 |
| Elevance Health Inc. | 24.54 |
| Intuitive Surgical Inc. | 65.21 |
| Medtronic PLC | 31.54 |
| UnitedHealth Group Inc. | 21.10 |
| P/FCFE, Sector | |
| Health Care Equipment & Services | 15.81 |
| P/FCFE, Industry | |
| Health Care | 25.31 |
Based on: 10-K (reporting date: 2024-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
CVS Health Corp., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 1,260,795,063 | 1,258,449,553 | 1,284,111,667 | 1,312,510,426 | 1,311,354,926 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 11,385) | 18,327) | 9,239) | 6,478) | 7,755) | |
| FCFE per share3 | 9.03 | 14.56 | 7.19 | 4.94 | 5.91 | |
| Share price1, 4 | 63.22 | 76.05 | 88.96 | 104.79 | 70.53 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 7.00 | 5.22 | 12.36 | 21.23 | 11.93 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Abbott Laboratories | 40.25 | 76.56 | 26.11 | 24.52 | — | |
| Elevance Health Inc. | 8.26 | 16.04 | 14.26 | 11.07 | — | |
| Intuitive Surgical Inc. | 156.44 | 177.77 | 89.67 | 58.39 | — | |
| Medtronic PLC | 16.39 | 29.20 | 19.71 | 38.91 | — | |
| UnitedHealth Group Inc. | 12.12 | 15.33 | 12.57 | 20.11 | — | |
| P/FCFE, Sector | ||||||
| Health Care Equipment & Services | 17.78 | 22.95 | 16.47 | 22.14 | — | |
| P/FCFE, Industry | ||||||
| Health Care | 19.36 | 18.20 | 18.50 | 17.94 | — | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Data adjusted for splits and stock dividends.
3 2024 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 11,385,000,000 ÷ 1,260,795,063 = 9.03
4 Closing price as at the filing date of CVS Health Corp. Annual Report.
5 2024 Calculation
P/FCFE = Share price ÷ FCFE per share
= 63.22 ÷ 9.03 = 7.00
6 Click competitor name to see calculations.
An analysis of the financial metrics from 2020 to 2024 reveals a significant divergence between the equity valuation and the generation of free cash flow to equity (FCFE).
- Share Price Trajectory
- The share price experienced a peak in December 2021 at 104.79 US$, followed by a consistent four-year decline. By December 2024, the price reached 63.22 US$, representing a substantial reduction in market capitalization per share from its 2021 high.
- FCFE per Share Performance
- Free cash flow to equity per share exhibited volatility with an overall upward shift toward the end of the period. After a slight dip in 2021, FCFE grew steadily, peaking at 14.56 US$ in 2023. Although there was a contraction to 9.03 US$ in 2024, the figure remains higher than the levels observed between 2020 and 2022.
- P/FCFE Ratio Interpretation
- The P/FCFE ratio underwent a dramatic compression. In 2021, the ratio reached a maximum of 21.23, indicating a premium valuation relative to cash flow. This multiple contracted sharply to 5.22 by 2023, driven by the simultaneous decline in share price and the surge in FCFE per share. A slight recovery to 7.00 in 2024 suggests a stabilization of the valuation multiple at a significantly lower level than the 2020-2022 average.
The observed data indicates a transition from a high-multiple valuation environment to one where the market assigns a much lower value to each dollar of free cash flow generated. The sharp decline in the P/FCFE ratio suggests that the market's perception of value or risk shifted significantly between 2021 and 2023, regardless of the company's improved ability to generate cash for equity holders during that same window.
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