Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Emerson Electric Co., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
The financial performance from 2014 to 2019 is characterized by a steady recovery in operating cash flows contrasted with significant volatility in free cash flow to equity (FCFE). While operating activities maintained a relatively stable baseline after an initial decline, FCFE experienced a severe contraction reaching a trough in 2017 before rebounding strongly in the subsequent two years.
- Operating Cash Flow Trends
- Cash provided by operating activities decreased from 3,692 million US$ in 2014 to a low of 2,499 million US$ in 2016. Following this period, a consistent upward trajectory is observed, with values increasing annually to reach 3,006 million US$ by September 30, 2019. This suggests a gradual stabilization and strengthening of core operational cash generation.
- FCFE Volatility and Recovery
- Free cash flow to equity exhibited a sharp downward trend between 2014 and 2017, falling from 3,219 million US$ to 235 million US$. This represents a substantial reduction in the cash available to shareholders during this window. However, a rapid recovery occurred in 2018, with FCFE jumping to 2,377 million US$, and continuing to climb to 3,441 million US$ in 2019, surpassing the 2014 peak.
- Analysis of Cash Flow Divergence
- A significant divergence between operating cash flow and FCFE is most evident in 2017, where FCFE was only 235 million US$ despite operating cash flows of 2,690 million US$. This disparity indicates a period of intensive capital expenditure or significant debt repayment. Conversely, by 2019, FCFE exceeded operating cash flow, suggesting a shift toward net borrowing or a marked reduction in capital investments relative to operational yields.
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Price to FCFE Ratio, Current
Emerson Electric Co., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 597,475,300 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 3,441) |
| FCFE per share | 5.76 |
| Current share price (P) | 53.82 |
| Valuation Ratio | |
| P/FCFE | 9.34 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 28.90 |
| Eaton Corp. plc | 41.85 |
| GE Aerospace | 42.04 |
| Honeywell International Inc. | 8.50 |
| Lockheed Martin Corp. | 14.10 |
| RTX Corp. | 54.68 |
Based on: 10-K (reporting date: 2019-09-30).
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
Emerson Electric Co., historical P/FCFE calculation, comparison to benchmarks
| Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 609,153,835 | 626,158,598 | 641,819,838 | 642,776,971 | 654,557,141 | 693,634,810 | |
| Selected Financial Data (US$) | |||||||
| Free cash flow to equity (FCFE) (in millions)2 | 3,441) | 2,377) | 235) | 1,854) | 2,685) | 3,219) | |
| FCFE per share3 | 5.65 | 3.80 | 0.37 | 2.88 | 4.10 | 4.64 | |
| Share price1, 4 | 73.07 | 68.46 | 60.26 | 54.97 | 50.01 | 64.15 | |
| Valuation Ratio | |||||||
| P/FCFE5 | 12.94 | 18.03 | 164.58 | 19.06 | 12.19 | 13.82 | |
| Benchmarks | |||||||
| P/FCFE, Competitors6 | |||||||
| Boeing Co. | — | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).
1 Data adjusted for splits and stock dividends.
3 2019 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 3,441,000,000 ÷ 609,153,835 = 5.65
4 Closing price as at the filing date of Emerson Electric Co. Annual Report.
5 2019 Calculation
P/FCFE = Share price ÷ FCFE per share
= 73.07 ÷ 5.65 = 12.94
6 Click competitor name to see calculations.
The analysis of the financial period from 2014 to 2019 reveals a volatile relationship between share price and Free Cash Flow to Equity (FCFE) per share, resulting in significant fluctuations in the P/FCFE valuation multiple. While the share price followed a general upward trajectory after 2015, the underlying cash flow exhibited substantial instability, most notably a severe contraction in 2017.
- Share Price Performance
- The share price experienced an initial decline from $64.15 in 2014 to a low of $50.01 in 2015. Following this trough, a consistent year-over-year increase was observed, with the price climbing to $73.07 by September 30, 2019.
- FCFE per Share Dynamics
- Cash flow available to equity holders showed a downward trend from 2014 ($4.64) through 2017, where it reached a critical low of $0.37. This precipitous drop suggests a period of intense capital expenditure or operational headwinds. However, a strong recovery followed, with FCFE per share rising to $3.80 in 2018 and peaking at $5.65 in 2019.
- P/FCFE Ratio Interpretation
- The P/FCFE ratio remained relatively stable between 12.19 and 19.06 for most of the period, indicating a consistent valuation baseline. A significant anomaly occurred in 2017, where the ratio spiked to 164.58. This outlier was not driven by an exponential increase in share price, but rather by the collapse of the FCFE denominator. The subsequent drop in the ratio to 18.03 in 2018 and 12.94 in 2019 confirms that the 2017 event was a temporary disruption rather than a fundamental shift in market valuation.
- Overall Valuation Trend
- By the end of the observed period in 2019, the company achieved its strongest FCFE per share ($5.65) alongside its highest share price ($73.07). This combination resulted in a P/FCFE ratio of 12.94, suggesting a more favorable valuation and improved cash flow efficiency compared to the preceding five years.
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