Enterprise Value to FCFF (EV/FCFF)
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- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Solvency Ratios
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Net Profit Margin since 2015
- Price to Book Value (P/BV) since 2015
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Free Cash Flow to The Firm (FCFF)
Hewlett Packard Enterprise Co., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
- Net Cash Provided by Operating Activities
- The net cash provided by operating activities exhibited notable fluctuations over the analyzed six-year period. Starting at $2,964 million in 2018, this figure increased substantially to $3,997 million in 2019. However, a significant decline followed, dropping to $2,240 million in 2020. A strong recovery occurred in 2021 with net cash rising sharply to $5,871 million, representing the highest point in the period. Subsequently, there was a gradual decline to $4,593 million in 2022 and a further slight decrease to $4,428 million in 2023. Overall, the trend shows considerable volatility with a pronounced peak in 2021 before declining yet remaining above the initial years' levels.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm followed a somewhat similar pattern to operating cash flow but with more pronounced variability. The FCFF started at $1,569 million in 2018, increasing to $2,138 million in 2019. A marked decrease occurred in 2020, where FCFF dropped sharply to $978 million, the lowest in the series. The year 2021 saw a dramatic rebound to $4,187 million, the peak observed during this period. This sharp rise was followed by a decline to $2,522 million in 2022, before increasing again to $2,817 million in 2023. The FCFF trend reflects significant sensitivity to operational and capital expenditure dynamics, with a notable recovery post-2020 but values not sustaining the peak reached in 2021.
- Overall Observations
- The financial data indicate significant variability in both operating cash flows and free cash flow to the firm within the six-year timeframe. Both metrics reached their highest levels in 2021, indicating a period of strong cash generation. Following the peak, there was a correction phase with declines in 2022. While operating cash flow slightly decreased in 2023, FCFF showed a modest recovery, suggesting some improvement in capital efficiency or investment activities. The sharp drops in 2020 may reflect extraordinary events or operational challenges, while the rebound in 2021 suggests successful recovery efforts. The data imply a need to monitor the sustainability of cash flows and underlying factors influencing these fluctuations.
Interest Paid, Net of Tax
Hewlett Packard Enterprise Co., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
2 2023 Calculation
Interest expense paid, tax = Interest expense paid × EITR
= × =
- Effective Income Tax Rate (EITR)
-
The effective income tax rate showed considerable variability over the six-year period. Starting at 23.3% in 2018, it increased significantly to 32.5% in 2019, indicating higher tax burdens that year. This was followed by a decline to 27.1% in 2020. Subsequently, the rate dropped dramatically in 2021 to 4.5%, reaching its lowest point during this timeframe. The downward trend continued with a minimal rate of 0.9% in 2022, suggesting near tax neutrality or significant tax benefits. In 2023, the rate rose again to 9.2%, reflecting a moderate increase but still remaining substantially below the earlier years of 2018 through 2020. Overall, the trend points to a marked reduction in the company's tax rate starting from 2021 onward, after a peak in 2019.
- Interest Expense Paid, Net of Tax
-
The interest expense paid, net of tax, fluctuated within a relatively narrow range from 2018 to 2022 before jumping sharply in 2023. Initially, the expense decreased from $467 million in 2018 to $400 million in 2019, representing a significant reduction. In 2020 and 2021, it rose modestly to $418 million and $464 million respectively, showing a return toward earlier levels. The expense slightly decreased again to $449 million in 2022 but then increased substantially to $615 million in 2023, marking the highest interest expense in the observed period. This sharp increase may indicate higher borrowing costs or increased debt levels in the latest year. Overall, the interest expense remained relatively stable through most years, with a notable spike in the final year reported.
Enterprise Value to FCFF Ratio, Current
Hewlett Packard Enterprise Co., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Apple Inc. | |
| Arista Networks Inc. | |
| Cisco Systems Inc. | |
| Dell Technologies Inc. | |
| Super Micro Computer Inc. | |
| EV/FCFF, Sector | |
| Technology Hardware & Equipment | |
| EV/FCFF, Industry | |
| Information Technology | |
Based on: 10-K (reporting date: 2023-10-31).
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
Hewlett Packard Enterprise Co., historical EV/FCFF calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| 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 | |||||||
| Apple Inc. | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Dell Technologies Inc. | |||||||
| Super Micro Computer Inc. | |||||||
| EV/FCFF, Sector | |||||||
| Technology Hardware & Equipment | |||||||
| EV/FCFF, Industry | |||||||
| Information Technology | |||||||
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
3 2023 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited a fluctuating pattern over the analyzed periods, starting at $27,773 million in 2018, rising to a peak of $30,844 million in 2019, then declining to its lowest point of $27,432 million in 2020. Subsequently, it experienced a moderate recovery and stabilization ranging between approximately $29,171 million and $30,358 million through 2021 to 2023. This suggests some volatility with a general trend toward recovery after a notable dip in 2020.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow demonstrated significant variability throughout the years. An initial increase was observed from $1,569 million in 2018 to $2,138 million in 2019. However, this was followed by a sharp decline in 2020 to $978 million, the lowest point in the series. A strong rebound occurred in 2021, with FCFF climbing sharply to $4,187 million, the highest value recorded. The figure then decreased in 2022 to $2,522 million but improved slightly again in 2023 to $2,817 million. This reflects both sensitivity to external factors and efforts toward cash flow recovery and sustainability.
- EV/FCFF Ratio
- The EV to FCFF ratio varied significantly, indicating changes in valuation relative to free cash flow generation. The ratio decreased from 17.7 in 2018 to 14.42 in 2019, implying improved cash flow relative to enterprise value. Thereafter, the ratio spiked dramatically to 28.04 in 2020, consistent with the sharp decline in FCFF. This elevated multiple suggested the firm was less efficiently generating cash compared to its valuation at that time. In subsequent periods, the ratio steadily declined to 6.97 in 2021, reflecting strong cash flow growth, before leveling off between 10.78 and 11.59 in 2022 and 2023. These movements highlight fluctuating performance and valuation adjustments in response to changes in cash flow levels.
- Overall Insights
- The data reveals a company experiencing considerable fluctuations in both valuation and cash flow performance from 2018 to 2023. The pronounced dip in free cash flow and spike in valuation multiples in 2020 may indicate operational challenges or external disruptions during that period. Encouragingly, the subsequent years show a recovery in cash flow and a normalization of valuation metrics, although not fully returning to earlier multiples. This pattern underscores the importance of closely monitoring cash flow generation in relation to enterprise value to assess the firm's operational health and market perception over time.