Enterprise Value to FCFF (EV/FCFF)
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- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
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Free Cash Flow to The Firm (FCFF)
Devon Energy Corp., FCFF 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), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Net Cash from Operating Activities
-
The net cash generated from operating activities exhibits a notable upward trajectory over the observed period. Starting at $2,228 million in 2018, it experienced a moderate decline to $2,043 million in 2019, followed by a more significant decrease to $1,464 million in 2020. However, from 2020 onwards, the cash flow from operations rebounded considerably, increasing to $4,899 million in 2021 and further surging to $8,530 million by the end of 2022. This pattern suggests a recovery and strengthening of core operational cash generation capability after the downturn observed in 2019 and 2020.
- Free Cash Flow to the Firm (FCFF)
-
The free cash flow to the firm shows substantial improvement throughout the period under review. Initially low at $70 million in 2018, FCFF increased steadily to $355 million in 2019 and $523 million in 2020. The subsequent years show a dramatic rise, with FCFF reaching $3,306 million in 2021 and nearly doubling again to $6,277 million in 2022. This strong growth in FCFF indicates enhanced capability to generate cash after capital expenditures, implying improved financial flexibility and potential for shareholder returns or debt servicing. The marked acceleration from 2020 onwards aligns with the observed recovery in operating cash flows.
Interest Paid, Net of Tax
Devon Energy Corp., interest paid, net of tax calculation
US$ 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), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2 2022 Calculation
Interest paid, tax = Interest paid × EITR
= × =
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibited notable fluctuations across the analyzed periods. Starting at 24% in 2018, it increased to 28% in 2019, then dropped significantly to 18% in 2020. The rate further declined sharply to a low of 2% in 2021, followed by a substantial rebound to 22% in 2022. This pattern indicates considerable variability in tax expense relative to income, which may reflect changes in profitability, tax planning strategies, or shifts in jurisdictional tax rates over the years.
- Interest Paid, Net of Tax
- The net interest paid demonstrated a general trend of fluctuation without a clear directional pattern. Interest payments decreased from $293 million in 2018 to $222 million in 2019 and further to $212 million in 2020, suggesting a reduction in interest expense or debt levels during this period. However, in 2021, the interest paid sharply increased to $396 million, the highest in the timeframe, before declining again to $289 million in 2022. The volatility in interest expense could point to changing debt management strategies, refinancing activities, or shifts in interest rates impacting the cost of debt.
Enterprise Value to FCFF Ratio, Current
Devon Energy Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Chevron Corp. | |
| ConocoPhillips | |
| Exxon Mobil Corp. | |
| Occidental Petroleum Corp. | |
| EV/FCFF, Sector | |
| Oil, Gas & Consumable Fuels | |
| EV/FCFF, Industry | |
| Energy | |
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
Devon Energy Corp., 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 millions) | ||||||
| Enterprise value (EV)1 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
| EV/FCFF, Sector | ||||||
| Oil, Gas & Consumable Fuels | ||||||
| EV/FCFF, Industry | ||||||
| Energy | ||||||
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
= ÷ =
4 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals significant trends in the enterprise value (EV), free cash flow to the firm (FCFF), and their valuation relationship as expressed by the EV/FCFF ratio.
- Enterprise Value (EV)
- The enterprise value exhibits considerable fluctuation throughout the period. Beginning at $16.8 billion at the end of 2018, it declines to approximately $11.5 billion by the end of 2019. Subsequently, the value rebounded to $17.1 billion in 2020 and experienced a pronounced increase in 2021, reaching $40.4 billion. This upward trend continued into 2022, culminating at $42.8 billion. Overall, EV more than doubled from 2020 to 2022, reflecting a strengthening market valuation or operational scale.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm demonstrates substantial growth over the analyzed timeframe. Starting at $70 million in 2018, FCFF rose moderately to $355 million in 2019 and further increased to $523 million in 2020. A dramatic escalation occurs in 2021, with FCFF rising to $3.3 billion, followed by a near doubling to $6.3 billion in 2022. This indicates a marked improvement in cash generating ability and operational efficiency within the later years.
- EV/FCFF Ratio
- The EV/FCFF ratio shows a distinct downward trend, signifying increasing cash flow relative to enterprise value. Exceptionally high at 241.38 in 2018, the ratio sharply decreases to the low 30s in 2019 and 2020 (32.46 and 32.62, respectively). The ratio declined further to 12.21 in 2021 and reached its lowest point of 6.82 in 2022. This trend suggests that the company’s valuation became more efficient or favorable relative to the cash flows generated, possibly indicating increased profitability, reduced perceived risk, or improved capital market conditions.
In summary, the data points to a period of volatility in enterprise value initially, followed by a strong upward trend. Concurrently, free cash flow to the firm improved significantly, particularly after 2020. The declining EV/FCFF ratio further supports the interpretation of enhanced financial performance and valuation efficiency in recent years.