Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Hershey Co., FCFE calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 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).
The financial performance between 2018 and 2022 is characterized by a steady increase in operational cash generation contrasted with significant volatility in the cash available to equity holders.
- Operating Cash Flow Trajectory
- Net cash provided by operating activities exhibited a consistent upward trend over the five-year period. Starting at $1.59 billion in 2018, the figure grew to $2.33 billion by 2022. Aside from a marginal decline in 2020, the growth indicates a strengthening of the core operational capacity to generate liquidity.
- Free Cash Flow to Equity (FCFE) Volatility
- FCFE demonstrated substantial fluctuations, lacking the linear growth seen in operating cash flows. A peak of $2.21 billion was recorded in 2018, followed by a sharp decline to $1.26 billion in 2019. Although a recovery phase occurred between 2020 and 2021, peaking again at $2.02 billion, a subsequent decrease to $1.56 billion occurred in 2022.
- Analysis of Cash Flow Divergence
- The relationship between operating cash flow and FCFE reveals shifts in capital allocation and financing. In 2018, FCFE exceeded operating cash flow, suggesting an inflow from net borrowing or asset divestitures. Conversely, in 2022, a significant divergence is observed: while operating cash flow reached its period high of $2.33 billion, FCFE dropped to $1.56 billion. This gap indicates a substantial increase in capital expenditures or debt repayments during the 2022 fiscal year.
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Price to FCFE Ratio, Current
Hershey Co., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 204,467,895 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in thousands) | 1,557,982) |
| FCFE per share | 7.62 |
| Current share price (P) | 233.56 |
| Valuation Ratio | |
| P/FCFE | 30.65 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Coca-Cola Co. | 74.38 |
| Mondelēz International Inc. | 15.01 |
| PepsiCo Inc. | 14.64 |
| Philip Morris International Inc. | 25.19 |
| P/FCFE, Sector | |
| Food, Beverage & Tobacco | 21.90 |
| P/FCFE, Industry | |
| Consumer Staples | 38.78 |
Based on: 10-K (reporting date: 2022-12-31).
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
Hershey Co., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 204,035,956 | 205,241,853 | 207,165,543 | 209,749,611 | 208,519,794 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in thousands)2 | 1,557,982) | 2,016,593) | 1,585,199) | 1,260,943) | 2,206,198) | |
| FCFE per share3 | 7.64 | 9.83 | 7.65 | 6.01 | 10.58 | |
| Share price1, 4 | 240.69 | 202.59 | 151.29 | 160.11 | 110.22 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 31.52 | 20.62 | 19.77 | 26.63 | 10.42 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Coca-Cola Co. | 29.91 | 23.29 | — | — | — | |
| Mondelēz International Inc. | 14.10 | 30.57 | — | — | — | |
| PepsiCo Inc. | 47.17 | 77.00 | — | — | — | |
| Philip Morris International Inc. | 6.64 | 20.46 | — | — | — | |
| P/FCFE, Sector | ||||||
| Food, Beverage & Tobacco | 16.95 | 29.54 | — | — | — | |
| P/FCFE, Industry | ||||||
| Consumer Staples | 25.27 | 24.83 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Data adjusted for splits and stock dividends.
3 2022 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,557,982,000 ÷ 204,035,956 = 7.64
4 Closing price as at the filing date of Hershey Co. Annual Report.
5 2022 Calculation
P/FCFE = Share price ÷ FCFE per share
= 240.69 ÷ 7.64 = 31.52
6 Click competitor name to see calculations.
The valuation of the company through the Price to Free Cash Flow to Equity (P/FCFE) metric demonstrates a significant expansion between 2018 and 2022. While the share price exhibited a strong upward trajectory, the FCFE per share remained volatile, leading to a substantial increase in the multiple investors were willing to pay for each dollar of free cash flow.
- Share Price Performance
- A consistent upward trend in the share price is observed, rising from 110.22 US$ in 2018 to 240.69 US$ by 2022. This represents a total increase of approximately 118% over the five-year period, with the most significant gains occurring between 2018 and 2019, and again between 2020 and 2022.
- Free Cash Flow to Equity (FCFE) per Share
- FCFE per share exhibited considerable volatility. After a peak of 10.58 US$ in 2018, a sharp decline to 6.01 US$ occurred in 2019. Although a recovery trend followed, peaking at 9.83 US$ in 2021, the value retreated to 7.64 US$ in 2022. This instability indicates that cash flow available to shareholders did not grow in tandem with the equity valuation.
- P/FCFE Ratio Dynamics
- The P/FCFE ratio experienced a dramatic expansion, increasing from 10.42 in 2018 to 31.52 in 2022. The ratio spiked in 2019 due to the simultaneous increase in share price and decrease in FCFE per share. A period of relative stabilization occurred between 2020 and 2021, hovering around 20.0, before reaching a five-year peak in 2022. This trajectory suggests an increasing premium placed on the company's cash flow generation or heightened market expectations for future growth.
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