Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
GE Aerospace, FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The financial data reveals notable fluctuations in cash flow metrics over the five-year period ending in 2024. Both operating cash flow and free cash flow to the firm (FCFF) exhibit varying trends that suggest changing operational efficiency and capital expenditure dynamics.
- Cash from Operating Activities (US$ in millions)
- Starting at 3,597 million in 2020, cash from operating activities experienced a significant decline in 2021, dropping sharply to 888 million. This decrease indicates potential challenges in core operational performance during that year. However, a strong recovery follows, with cash flow rising substantially to 5,864 million in 2022. In subsequent years, the figures stabilize somewhat, with 5,570 million in 2023 and 5,817 million in 2024, maintaining a robust operating cash flow level substantially higher than the 2020 baseline.
- Free Cash Flow to the Firm (FCFF) (US$ in millions)
- FCFF follows a somewhat parallel pattern but starts at a higher level of 4,189 million in 2020. It similarly decreases in 2021 to 2,032 million, reflecting tightened free cash generation, potentially due to increased capital expenditures or lower cash from operations. The recovery in 2022 is pronounced, with FCFF reaching 5,624 million, again indicating better cash conversion and possibly improved management of investments. In 2023, FCFF sees a slight reduction to 5,009 million but rises again to 5,746 million in 2024, suggesting restoration of free cash flow strength and overall financial health.
Overall, the data points to a period of volatility in 2021, followed by steady improvements in both operating and free cash flows. The substantial rebound in operating cash flow after 2021 implies enhanced operational efficiency or revenue growth. Meanwhile, the strong FCFF performance in the later years demonstrates effective control over capital expenditures relative to operating cash. This trend suggests a solid cash-generating capacity and financial flexibility heading into 2024.
Interest Paid, Net of Tax
GE Aerospace, interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2 2024 Calculation
Cash paid during the year for interest, tax = Cash paid during the year for interest × EITR
= 969 × 12.60% = 122
- Effective income tax rate (EITR)
- The effective income tax rate exhibited notable fluctuations over the observed five-year period. Starting at 21% in 2020, there was a significant decline to 7.8% in 2021. However, the rate sharply increased to a peak of 33.7% in 2022, followed by a subsequent decrease to 11.4% in 2023. In 2024, the rate rose slightly to 12.6%, remaining considerably lower than the 2020 and 2022 peaks. This pattern suggests intermittent changes in tax strategy, profitability, or legislative impacts affecting the effective tax burden.
- Cash paid during the year for interest, net of tax
- The cash outflow for interest payments, net of tax benefit, demonstrated a consistent downward trend across the period. Beginning at approximately $2,351 million in 2020, payments remained relatively stable into 2021 at $2,338 million. From 2022 onward, there was a marked reduction year-over-year: dropping to $1,035 million in 2022, then declining further to $945 million in 2023, and finally reaching $847 million in 2024. This steady decrease could reflect successful debt reduction efforts, refinancing at lower rates, or improved interest expense management.
Enterprise Value to FCFF Ratio, Current
GE Aerospace, current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 279,371) |
| Free cash flow to the firm (FCFF) | 5,746) |
| Valuation Ratio | |
| EV/FCFF | 48.62 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 19.60 |
| Eaton Corp. plc | 37.99 |
| Honeywell International Inc. | 30.29 |
| Lockheed Martin Corp. | 20.70 |
| RTX Corp. | 38.09 |
| EV/FCFF, Sector | |
| Capital Goods | 52.76 |
| EV/FCFF, Industry | |
| Industrials | 33.92 |
Based on: 10-K (reporting date: 2024-12-31).
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
GE Aerospace, historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 223,963) | 148,093) | 97,249) | 114,873) | 135,492) | |
| Free cash flow to the firm (FCFF)2 | 5,746) | 5,009) | 5,624) | 2,032) | 4,189) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 38.98 | 29.56 | 17.29 | 56.53 | 32.34 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Boeing Co. | — | 25.63 | 37.53 | — | — | |
| Caterpillar Inc. | 18.32 | 16.08 | 23.54 | 20.50 | 23.83 | |
| Eaton Corp. plc | 31.29 | 38.49 | 33.44 | 38.16 | 21.94 | |
| Honeywell International Inc. | 27.10 | 29.13 | 29.82 | 25.22 | 26.49 | |
| Lockheed Martin Corp. | 20.56 | 17.62 | 19.69 | 13.92 | 14.64 | |
| RTX Corp. | 34.48 | 23.86 | 28.45 | 27.29 | 35.26 | |
| EV/FCFF, Sector | ||||||
| Capital Goods | 46.45 | 23.34 | 25.87 | 32.16 | 74.97 | |
| EV/FCFF, Industry | ||||||
| Industrials | 31.37 | 25.93 | 24.30 | 28.80 | 189.49 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 223,963 ÷ 5,746 = 38.98
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited notable fluctuations over the five-year period. Starting at $135,492 million in 2020, it decreased consistently through 2022 to reach a low of $97,249 million. However, a strong upward reversal was observed in 2023 and 2024, culminating at $223,963 million. This reversal suggests significant growth in market valuation or debt adjustments in the latter years of the period.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm showed variability, beginning at $4,189 million in 2020, then declining sharply to $2,032 million in 2021. In 2022, FCFF surged to $5,624 million, followed by a slight decline in 2023 to $5,009 million, and a recovery to $5,746 million in 2024. The overall trend indicates some volatility but an increasing ability to generate cash flow after the initial drop in 2021.
- EV/FCFF Ratio
- The EV/FCFF ratio experienced significant swings across the timeline. Starting at 32.34 in 2020, it increased sharply to 56.53 in 2021, reflecting a disparity between enterprise value and free cash flow. In 2022, the ratio dropped considerably to 17.29, aligning with the improved cash flow and reduced enterprise value. Following this, the ratio rose again to 29.56 in 2023 and further to 38.98 in 2024, indicating that enterprise value growth outpaced free cash flow increases during these years.
- Summary of Trends
- The data reveals a complex relationship between market valuation and operational cash generation. The initial decline in enterprise value and cash flow in 2021 was followed by recovery signs in 2022. However, the sharp rise in enterprise value in 2023 and 2024, outstripping FCFF growth, led to higher EV/FCFF multiples. This suggests increasing market expectations or changes in capital structure, which could imply higher valuation premiums or elevated leverage in recent years. The volatility in these metrics warrants further investigation into underlying business operations, capital expenditures, or market conditions driving these changes.