Enterprise Value to FCFF (EV/FCFF)
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2011
- Return on Assets (ROA) since 2011
- Total Asset Turnover since 2011
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Free Cash Flow to The Firm (FCFF)
HCA Healthcare Inc., FCFF calculation
US$ in millions
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).
- Operating Cash Flow
- The net cash provided by operating activities has demonstrated a positive and consistent upward trend from 2017 to 2020, increasing from 5,426 million US dollars in 2017 to a peak of 9,232 million US dollars in 2020. This represents a substantial growth in cash generation from core operations over the four-year period. However, in 2021, there was a slight decline to 8,959 million US dollars, suggesting a minor reduction in operating cash inflows compared to the prior year.
- Free Cash Flow to the Firm (FCFF)
- The FCFF also shows a generally increasing trajectory from 2017 through 2020, climbing from 3,608 million US dollars in 2017 to a significant peak of 7,695 million US dollars in 2020. This growth indicates enhanced availability of cash after capital expenditures, representing strengthened financial flexibility and capacity to fund distributions or pay down debt. Nevertheless, in 2021, FCFF declined markedly to 6,561 million US dollars, which aligns with the reduction seen in operating cash flow but is comparatively more pronounced.
- Overall Analysis
- The data reflects strong operational cash generation and free cash flow growth through 2020, illustrating effective cash management and potentially improving profitability or working capital efficiency during this period. The peak in 2020 could be attributed to exceptional operational performance or cost controls. The subsequent decreases in 2021 may warrant further investigation as they could indicate early signs of operational challenges, increased capital expenditures, or changing market conditions impacting liquidity and cash flow generation.
Interest Paid, Net of Tax
HCA Healthcare Inc., interest paid, net of tax calculation
US$ in millions
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).
2 2021 Calculation
Interest payments, tax = Interest payments × EITR
= × =
The analysis of the data over the five-year period reveals several notable trends related to the effective income tax rate and net interest payments.
- Effective Income Tax Rate (EITR)
- The effective income tax rate experienced a significant decrease from 29.6% in 2017 to 19.3% in 2018. Following this sharp decline, the rate stabilized somewhat, fluctuating between 19.2% and 21.5% from 2018 through 2021. The lowest recorded rate was 19.2% in 2020, while the highest within this period after 2017 was 21.5% in 2021. Overall, the trend indicates a downward shift from the initial rate in 2017, with moderate variations thereafter.
- Interest Payments, Net of Tax
- Net interest payments increased consistently from 2017 through 2019, starting at $1,197 million in 2017 and reaching a peak of $1,512 million in 2019. In 2020, there was a notable decrease to $1,298 million, and this downward trend continued into 2021 where the amount dropped further to $1,179 million, which is the lowest figure in the period analyzed since 2017. The pattern shows a growth phase followed by a decline, suggesting possible changes in debt structure, interest rates, or capital management strategies during the latter years.
Enterprise Value to FCFF Ratio, Current
HCA Healthcare Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Abbott Laboratories | |
| CVS Health Corp. | |
| Elevance Health Inc. | |
| Intuitive Surgical Inc. | |
| Medtronic PLC | |
| UnitedHealth Group Inc. | |
| EV/FCFF, Sector | |
| Health Care Equipment & Services | |
| EV/FCFF, Industry | |
| Health Care | |
Based on: 10-K (reporting date: 2021-12-31).
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
HCA Healthcare Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| EV/FCFF, Sector | ||||||
| Health Care Equipment & Services | ||||||
| EV/FCFF, Industry | ||||||
| Health Care | ||||||
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).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV) Trend
- The enterprise value exhibits a consistent upward trend over the five-year period. Starting at approximately $69.4 billion at the end of 2017, it increased steadily each year to reach about $109.7 billion by the end of 2021. This represents a significant growth in the firm's market valuation, with the most noticeable increase occurring between 2020 and 2021.
- Free Cash Flow to the Firm (FCFF) Trend
- The free cash flow to the firm shows growth over the period but with some fluctuations. FCFF increased from around $3.6 billion in 2017 to a peak of approximately $7.7 billion in 2020, reflecting strong cash generation capability during this timeframe. However, there was a decline in 2021, with FCFF decreasing to about $6.6 billion, indicating some reduction in operational cash flow available to capital providers compared to the previous year.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio, which measures the enterprise value relative to the free cash flow, declined steadily from 19.24 in 2017 to a low of 11.93 in 2020. This downward trend suggests improving cash flow generation efficiency relative to the company's valuation. Nevertheless, in 2021, the ratio rose again to 16.71, signifying that either the enterprise value grew disproportionately compared to FCFF or cash flow generation weakened relative to the valuation. This reversal aligns with the decline observed in FCFF for the year 2021.
- Overall Insights
- The data indicate a company experiencing overall growth in enterprise value over the five years, demonstrating increasing market confidence or expansion. The cash flow performance improved up to 2020, enhancing firm valuation relative to cash flow. However, the dip in free cash flow combined with an increased EV/FCFF ratio in 2021 signals a potential concern about cash flow sustainability or valuation pressures that may warrant further investigation.