Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Carrier Global Corp., FCFE 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).
A comprehensive review of the cash flow metrics reveals a stark contrast between operating performance and the cash available to equity holders. While net cash flows provided by operating activities exhibited moderate volatility, free cash flow to equity (FCFE) underwent a severe contraction over the period ending December 31, 2022.
- Operating Cash Flow Trends
- Net cash flows from operating activities showed an initial increase from 1,692 million US$ in 2020 to 2,237 million US$ in 2021, followed by a retraction to 1,743 million US$ in 2022. This indicates a relatively stable core operational capacity to generate cash, despite a decrease in the final year of the observed period.
- Free Cash Flow to Equity (FCFE) Volatility
- FCFE demonstrates a significant downward trend, falling from a peak of 11,230 million US$ in 2020 to 1,342 million US$ in 2021, and further decreasing to 407 million US$ in 2022. The extraordinary spike in 2020, which far exceeded operating cash flows, suggests the influence of substantial non-operating cash inflows, such as asset divestitures or significant new debt issuance.
- Relationship between Operating Cash and FCFE
- A growing disconnect is observed between these two metrics. In 2020, FCFE was disproportionately high relative to operating cash flow. However, by 2022, FCFE represented only a small fraction of the cash generated from operations. This pattern implies a transition toward higher capital expenditures or a shift toward net debt repayment, which reduced the residual cash available to shareholders.
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Price to FCFE Ratio, Current
Carrier Global Corp., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 834,838,102 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 407) |
| FCFE per share | 0.49 |
| Current share price (P) | 40.65 |
| Valuation Ratio | |
| P/FCFE | 83.38 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 20.71 |
| Eaton Corp. plc | 31.96 |
| GE Aerospace | 42.84 |
| Honeywell International Inc. | 8.86 |
| Lockheed Martin Corp. | 16.13 |
| RTX Corp. | 57.40 |
| P/FCFE, Sector | |
| Capital Goods | 41.93 |
| P/FCFE, Industry | |
| Industrials | 37.32 |
Based on: 10-K (reporting date: 2022-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Carrier Global Corp., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| No. shares of common stock outstanding1 | 834,187,942 | 855,514,035 | 869,213,146 | |
| Selected Financial Data (US$) | ||||
| Free cash flow to equity (FCFE) (in millions)2 | 407) | 1,342) | 11,230) | |
| FCFE per share3 | 0.49 | 1.57 | 12.92 | |
| Share price1, 4 | 44.39 | 46.06 | 37.25 | |
| Valuation Ratio | ||||
| P/FCFE5 | 90.98 | 29.36 | 2.88 | |
| 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).
1 Data adjusted for splits and stock dividends.
3 2022 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 407,000,000 ÷ 834,187,942 = 0.49
4 Closing price as at the filing date of Carrier Global Corp. Annual Report.
5 2022 Calculation
P/FCFE = Share price ÷ FCFE per share
= 44.39 ÷ 0.49 = 90.98
6 Click competitor name to see calculations.
An analysis of the financial metrics between 2020 and 2022 reveals a significant expansion in the Price to Free Cash Flow to Equity (P/FCFE) ratio. This trend is characterized by a sharp increase in the valuation multiple, moving from 2.88 in 2020 to 90.98 in 2022, driven primarily by a substantial decline in cash flow generation rather than volatile movements in share price.
- Share Price Performance
- The share price exhibited moderate growth and subsequent stability, increasing from 37.25 in 2020 to 46.06 in 2021, followed by a slight decrease to 44.39 by the end of 2022.
- FCFE per Share Contraction
- A precipitous downward trend is observed in the FCFE per share, which fell from 12.92 in 2020 to 1.57 in 2021, and further declined to 0.49 in 2022. This represents a severe reduction in the cash available to equity holders over the three-year period.
- P/FCFE Ratio Divergence
- The P/FCFE ratio experienced an exponential increase, rising from 2.88 to 29.36 in 2021, and reaching 90.98 in 2022. The divergence between a relatively stable share price and rapidly diminishing FCFE per share indicates a significant inflation of the valuation multiple, suggesting that the market price became increasingly decoupled from the company's free cash flow generation capacity.
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