Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Estée Lauder Cos. Inc., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).
An analysis of the cash flow performance between June 30, 2018, and June 30, 2023, reveals a period of significant volatility characterized by a peak in liquidity during the middle of the period followed by a pronounced contraction. While operating cash flows showed resilience and a spike in 2021, the free cash flow to equity exhibited more extreme fluctuations, ending the period at its lowest observed level.
- Operating Cash Flow Trends
- Net cash flows provided by operating activities remained relatively stable between 2018 and 2020, hovering between US$ 2,280 million and US$ 2,573 million. A substantial increase occurred in 2021, reaching a peak of US$ 3,631 million, before entering a sharp downward trajectory. By June 30, 2023, operating cash flow declined to US$ 1,731 million, representing the lowest value in the six-year sequence.
- Free Cash Flow to Equity (FCFE) Volatility
- FCFE demonstrated significant instability, most notably in 2020 when it surged to US$ 4,362 million. This figure notably exceeded the net cash provided by operating activities for that year, suggesting a significant influx of cash from financing activities or a substantial reduction in capital expenditures and debt repayments. Following this peak, FCFE declined consistently over the next three years, falling to US$ 1,140 million by June 30, 2023.
- Comparative Analysis of Cash Flow Metrics
- A divergence is observed between operating cash flows and FCFE during 2020, where FCFE spiked while operating cash flow dipped. In contrast, from 2021 through 2023, both metrics moved in a synchronized downward direction. The reduction in FCFE from its 2020 peak to its 2023 low represents a decrease of approximately 73.8%, indicating a tightening of the cash available for distribution to equity holders or for debt reduction.
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Price to FCFE Ratio, Current
Estée Lauder Cos. Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 357,690,815 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 1,140) |
| FCFE per share | 3.19 |
| Current share price (P) | 156.69 |
| Valuation Ratio | |
| P/FCFE | 49.16 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Procter & Gamble Co. | 23.68 |
| P/FCFE, Industry | |
| Consumer Staples | 36.24 |
Based on: 10-K (reporting date: 2023-06-30).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Estée Lauder Cos. Inc., historical P/FCFE calculation, comparison to benchmarks
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 357,690,815 | 356,903,600 | 361,287,242 | 360,804,641 | 360,756,333 | 367,194,210 | |
| Selected Financial Data (US$) | |||||||
| Free cash flow to equity (FCFE) (in millions)2 | 1,140) | 1,977) | 2,383) | 4,362) | 1,603) | 1,934) | |
| FCFE per share3 | 3.19 | 5.54 | 6.60 | 12.09 | 4.44 | 5.27 | |
| Share price1, 4 | 156.69 | 265.43 | 340.82 | 222.93 | 197.15 | 135.59 | |
| Valuation Ratio | |||||||
| P/FCFE5 | 49.16 | 47.92 | 51.67 | 18.44 | 44.37 | 25.74 | |
| Benchmarks | |||||||
| P/FCFE, Competitors6 | |||||||
| Procter & Gamble Co. | 21.89 | 22.37 | 29.39 | — | — | — | |
| P/FCFE, Industry | |||||||
| Consumer Staples | 24.17 | 25.27 | 24.83 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).
1 Data adjusted for splits and stock dividends.
3 2023 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,140,000,000 ÷ 357,690,815 = 3.19
4 Closing price as at the filing date of Estée Lauder Cos. Inc. Annual Report.
5 2023 Calculation
P/FCFE = Share price ÷ FCFE per share
= 156.69 ÷ 3.19 = 49.16
6 Click competitor name to see calculations.
The valuation of the company as measured by the Price to Free Cash Flow to Equity (P/FCFE) ratio exhibits significant volatility between 2018 and 2023, characterized by a general shift toward higher valuation multiples despite fluctuating underlying cash flows.
- Share Price Trajectory
- The share price followed a growth trend from 2018, ascending from 135.59 US$ to a peak of 340.82 US$ in 2021. This peak was followed by a substantial correction, with the price declining to 156.69 US$ by June 30, 2023.
- Free Cash Flow to Equity (FCFE) Performance
- FCFE per share displayed high instability throughout the period. A notable surge occurred in 2020, where the value reached 12.09 US$. Following this peak, a consistent downward trend is observed, with FCFE per share decreasing annually to reach a period low of 3.19 US$ in 2023.
- P/FCFE Ratio Interpretation
- The P/FCFE ratio transitioned from a moderate 25.74 in 2018 to a higher valuation regime. A temporary compression to 18.44 occurred in 2020, driven primarily by the spike in FCFE per share. However, the ratio surged to 51.67 in 2021 and remained elevated in the subsequent years, closing at 49.16 in 2023. The persistence of a high P/FCFE ratio from 2021 to 2023, despite the simultaneous decline in share price and cash flow per share, suggests that the market's valuation premium remained high relative to the actual cash generated for equity holders.
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