Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Halliburton Co., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
The financial period between 2014 and 2018 was characterized by extreme volatility in both operational cash generation and the cash available to equity holders. A significant contraction in liquidity occurred mid-period, followed by a steady recovery in operational efficiency.
- Operating Cash Flow Trends
- Cash flows from operating activities showed a marked decline from 4,062 million US$ in 2014 to a deficit of 1,703 million US$ in 2016. This decline highlights a period of severe operational stress. A recovery trend followed, with cash flows returning to a positive 2,468 million US$ in 2017 and climbing further to 3,157 million US$ by 2018, although levels remained below the 2014 baseline.
- Free Cash Flow to Equity (FCFE) Volatility
- FCFE exhibited greater fluctuations than operating cash flows. A substantial spike to 8,322 million US$ in 2015 occurred despite a decline in operating cash, indicating that FCFE was likely bolstered by net borrowing or asset sales. This was followed by a sharp reversal to negative 5,376 million US$ in 2016. The metric improved to negative 378 million US$ in 2017 before returning to positive territory at 904 million US$ in 2018.
- Correlation and Synthesis
- A divergence is observed in 2015, where FCFE rose sharply while operating cash flow declined, suggesting that non-operational cash inflows drove equity value during that year. Conversely, from 2016 through 2018, FCFE and operating cash flows moved in synchronization, indicating that the eventual return to positive FCFE was driven primarily by the recovery of core business operations.
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Price to FCFE Ratio, Current
Halliburton Co., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 872,542,842 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 904) |
| FCFE per share | 1.04 |
| Current share price (P) | 31.40 |
| Valuation Ratio | |
| P/FCFE | 30.31 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| SLB N.V. | 29.32 |
Based on: 10-K (reporting date: 2018-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Halliburton Co., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 872,542,842 | 874,909,834 | 866,933,212 | 858,342,017 | 849,671,830 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 904) | (378) | (5,376) | 8,322) | 1,113) | |
| FCFE per share3 | 1.04 | -0.43 | -6.20 | 9.70 | 1.31 | |
| Share price1, 4 | 31.40 | 46.70 | 54.88 | 31.35 | 43.12 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 30.31 | — | — | 3.23 | 32.92 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| SLB N.V. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Data adjusted for splits and stock dividends.
3 2018 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 904,000,000 ÷ 872,542,842 = 1.04
4 Closing price as at the filing date of Halliburton Co. Annual Report.
5 2018 Calculation
P/FCFE = Share price ÷ FCFE per share
= 31.40 ÷ 1.04 = 30.31
6 Click competitor name to see calculations.
The analysis of financial data from 2014 to 2018 reveals significant volatility in cash flow generation and valuation multiples. The period is characterized by inconsistent Free Cash Flow to Equity (FCFE) per share, which directly impacted the stability and calculability of the Price to FCFE (P/FCFE) ratio.
- FCFE per Share Trends
- FCFE per share exhibited extreme fluctuations, peaking in 2015 at 9.70 US$. This was followed by a sharp decline into negative territory in 2016 (-6.20 US$) and 2017 (-0.43 US$), indicating a period where equity cash outflows exceeded inflows. A modest recovery was observed in 2018, with FCFE returning to a positive value of 1.04 US$.
- P/FCFE Ratio Volatility
- The P/FCFE ratio shifted drastically over the five-year period. In 2014, the ratio stood at 32.92, suggesting a high valuation relative to cash flows. This dropped precipitously to 3.23 in 2015, driven by the surge in FCFE per share. The ratio became non-calculable in 2016 and 2017 due to negative FCFE values. By 2018, the ratio returned to 30.31, mirroring the high valuation levels seen at the start of the period.
- Share Price and Cash Flow Divergence
- A notable divergence occurred in 2016, where the share price reached its period peak of 54.88 US$ despite the lowest recorded FCFE per share (-6.20 US$). This suggests that market pricing during this interval was driven by factors other than immediate equity cash flow. Conversely, the share price in 2018 (31.40 US$) was nearly identical to the 2015 level (31.35 US$), yet the valuation multiple differed significantly due to the change in underlying cash flow performance.
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