Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Generac Holdings Inc., FCFE calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2017-12-31).
A general upward trajectory is observed in both net cash provided by operating activities and free cash flow to equity (FCFE) over the five-year period ending December 31, 2021, despite a slight contraction in the final year.
- Operating Cash Flow Trends
- Net cash provided by operating activities remained relatively stable between 2017 and 2018, followed by a period of significant expansion. A peak was reached in 2020 with US$ 486,533 thousand, representing an 86% increase from 2018 levels. In 2021, a moderate decline to US$ 411,156 thousand was recorded, though this figure remains substantially higher than the levels seen prior to 2020.
- Free Cash Flow to Equity (FCFE) Performance
- FCFE exhibited more aggressive growth than operating cash flow throughout the analyzed period. From 2017 to 2020, FCFE grew consistently, rising from US$ 96,747 thousand to a peak of US$ 399,977 thousand. This indicates a strong capacity to generate cash available for distribution to shareholders or for debt reduction. A slight reduction to US$ 375,475 thousand occurred in 2021, mirroring the trend seen in operating cash flows.
- FCFE Conversion and Efficiency
- A notable increase in the conversion rate of operating cash flow to FCFE is evident. In 2017, FCFE represented approximately 37% of net cash provided by operating activities. By 2021, this proportion increased to approximately 91%. This trend suggests a reduction in capital expenditures relative to operating cash flow or an increase in net debt issuance over the five-year period, resulting in a higher percentage of operating cash remaining available for equity holders.
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Price to FCFE Ratio, Current
Generac Holdings Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 63,830,918 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in thousands) | 375,475) |
| FCFE per share | 5.88 |
| Current share price (P) | 252.06 |
| Valuation Ratio | |
| P/FCFE | 42.85 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 22.11 |
| Eaton Corp. plc | 34.51 |
| GE Aerospace | 44.84 |
| Honeywell International Inc. | 9.38 |
| Lockheed Martin Corp. | 16.66 |
| RTX Corp. | 59.36 |
Based on: 10-K (reporting date: 2021-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Generac Holdings Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 63,783,651 | 62,861,442 | 62,567,525 | 62,129,621 | 62,325,716 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in thousands)2 | 375,475) | 399,977) | 209,140) | 173,821) | 96,747) | |
| FCFE per share3 | 5.89 | 6.36 | 3.34 | 2.80 | 1.55 | |
| Share price1, 4 | 282.47 | 333.04 | 107.31 | 51.97 | 46.20 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 47.98 | 52.34 | 32.10 | 18.58 | 29.76 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 16.36 | — | — | — | — | |
| Eaton Corp. plc | 24.43 | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | 46.23 | — | — | — | — | |
| Lockheed Martin Corp. | 14.65 | — | — | — | — | |
| RTX Corp. | 35.07 | — | — | — | — | |
| P/FCFE, Sector | ||||||
| Capital Goods | — | — | — | — | — | |
| P/FCFE, Industry | ||||||
| Industrials | — | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
3 2021 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 375,475,000 ÷ 63,783,651 = 5.89
4 Closing price as at the filing date of Generac Holdings Inc. Annual Report.
5 2021 Calculation
P/FCFE = Share price ÷ FCFE per share
= 282.47 ÷ 5.89 = 47.98
6 Click competitor name to see calculations.
Between 2017 and 2021, the valuation of the equity relative to its free cash flow experienced significant volatility and a general upward trend in the multiple, peaking in 2020.
- Share Price Evolution
- The share price exhibited aggressive growth, rising from 46.20 USD in 2017 to a peak of 333.04 USD in 2020, before correcting to 282.47 USD in 2021.
- Free Cash Flow to Equity (FCFE) per Share
- FCFE per share demonstrated a consistent upward trajectory for the majority of the period, increasing from 1.55 USD in 2017 to 6.36 USD in 2020, followed by a moderate decline to 5.89 USD in 2021.
- P/FCFE Ratio Trends
- The P/FCFE ratio fluctuated significantly, starting at 29.76 in 2017 and dropping to a period low of 18.58 in 2018. A substantial expansion occurred thereafter, reaching a high of 52.34 in 2020 and concluding the period at 47.98 in 2021.
The analysis indicates that while FCFE per share grew steadily, the share price increased at a disproportionately faster rate, particularly between 2019 and 2020. This divergence led to a marked expansion of the P/FCFE multiple, suggesting that market expectations and valuation premiums grew significantly faster than the actual cash flow generated for equity holders during this period.
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