Microsoft Excel LibreOffice Calc

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate


Free Cash Flow to The Firm (FCFF)

Honeywell International Inc., FCFF calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income attributable to Honeywell 6,765  1,655  4,809  4,768  4,239 
Net income attributable to the noncontrolling interest 63  43  37  79  90 
Net noncash charges (680) 4,831  836  770  459 
Changes in assets and liabilities, net of the effects of acquisitions and divestitures 286  (563) (184) (163) 236 
Net cash provided by operating activities 6,434  5,966  5,498  5,454  5,024 
Interest paid, net of amounts capitalized, net of tax1 301  242  247  228  232 
Expenditures for property, plant and equipment (828) (1,031) (1,095) (1,073) (1,094)
Proceeds from disposals of property, plant and equipment 15  86  21  15  18 
Free cash flow to the firm (FCFF) 5,922  5,263  4,671  4,624  4,180 

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Honeywell International Inc.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Honeywell International Inc.’s FCFF increased from 2016 to 2017 and from 2017 to 2018.

Interest Paid, Net of Tax

Honeywell International Inc., interest paid, net of tax calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Effective Income Tax Rate (EITR)
EITR1 14.60% 21.00% 24.80% 26.40% 25.60%
Interest Paid, Net of Tax
Interest paid, net of amounts capitalized, before tax 353  306  329  310  312 
Less: Interest paid, net of amounts capitalized, tax2 52  64  82  82  80 
Interest paid, net of amounts capitalized, net of tax 301  242  247  228  232 

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

2018 Calculations

2 Interest paid, net of amounts capitalized, tax = Interest paid, net of amounts capitalized × EITR
= 353 × 14.60% = 52


Enterprise Value to FCFF Ratio, Current

Honeywell International Inc., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in millions)
Enterprise value (EV) 118,184 
Free cash flow to the firm (FCFF) 5,922 
Ratio
EV/FCFF 19.96
Benchmarks
EV/FCFF, Competitors
3M Co. 25.73
Danaher Corp. 29.51
General Electric Co. 12.63
EV/FCFF, Sector
General Industrials 20.54
EV/FCFF, Industry
Industrials 24.84

Based on: 10-K (filing date: 2019-02-08).

If company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.

Otherwise, if company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.


Enterprise Value to FCFF Ratio, Historical

Honeywell International Inc., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Enterprise value (EV)1 113,831  118,449  99,342  86,358  83,545 
Free cash flow to the firm (FCFF)2 5,922  5,263  4,671  4,624  4,180 
Ratio
EV/FCFF3 19.22 22.51 21.27 18.68 19.99
Benchmarks
EV/FCFF, Competitors
3M Co. 24.76 28.46 21.40 19.78 20.82
Danaher Corp. 25.94 26.16 21.88 19.11
General Electric Co. 15.66 35.71 42.38 17.37
EV/FCFF, Sector
General Industrials 22.13 29.18 25.19 18.53
EV/FCFF, Industry
Industrials 24.75 23.33 19.95 19.32

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

2018 Calculations

3 EV/FCFF = EV ÷ FCFF
= 113,831 ÷ 5,922 = 19.22

Ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Honeywell International Inc.’s EV/FCFF ratio increased from 2016 to 2017 but then declined significantly from 2017 to 2018.