Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Kellanova, FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).
The cash flow profile from 2019 to 2023 is characterized by a significant surge in liquidity during 2020, followed by a period of gradual moderation and stabilization. Both operating cash flow and free cash flow to the firm exhibit highly correlated movements, indicating that the primary drivers of firm value are closely linked to core operational efficiency.
- Net Cash Provided by Operating Activities
- A substantial increase in operating cash flow occurred between 2019 and 2020, rising from 1,176 million to 1,986 million. Following this peak, a downward trajectory was observed, with values declining to 1,701 million in 2021 and further easing to 1,645 million by 2023. Despite this late-period decline, the operating cash flow remained consistently higher than the 2019 baseline.
- Free Cash Flow to the Firm (FCFF)
- FCFF mirrored the operational trend, experiencing a sharp ascent to 1,680 million in 2020 from 804 million in 2019. A subsequent contraction occurred in 2021, bringing FCFF down to 1,310 million. While a minor recovery was noted in 2022 at 1,338 million, the metric declined again to 1,187 million in 2023, representing a reduction of approximately 29% from its 2020 peak.
- Operational Efficiency and Capital Allocation
- The variance between net cash from operating activities and FCFF suggests fluctuations in capital expenditures. The tightest margin between these two figures occurred in 2020, implying a higher conversion rate of operating cash into free cash flow. By 2023, the widening gap between operating cash flow (1,645 million) and FCFF (1,187 million) indicates an increase in capital outflows or investment requirements relative to the 2020 levels.
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Interest Paid, Net of Tax
Kellanova, interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).
2 2023 Calculation
Interest paid, tax = Interest paid × EITR
= 291 × 24.80% = 72
The analysis of interest expenditures net of tax reveals a U-shaped trajectory over the five-year period ending December 30, 2023. After a period of contraction, the net interest costs have returned to and slightly exceeded the levels recorded at the start of the analyzed timeframe.
- Interest Expenditure Trends
- Interest paid, net of tax, decreased from US$ 214 million in 2019 to a period low of US$ 162 million in 2021, marking a reduction of approximately 24.3%. Following this trough, expenditures trended upward, increasing to US$ 175 million in 2022 and further rising to US$ 219 million by the end of 2023.
- Effective Income Tax Rate (EITR) Dynamics
- The effective income tax rate exhibited a fluctuating pattern without a sustained linear trend, oscillating between a minimum of 20.2% in 2020 and a maximum of 24.8% in 2023. These fluctuations influence the net-of-tax valuation of interest payments, though the primary variance in the final figures is driven by the underlying interest obligations.
- Comparative Analysis of Period Extremes
- The 2023 interest payment of US$ 219 million represents a marginal increase of 2.3% compared to the 2019 figure of US$ 214 million. The reversal of the downward trend observed between 2019 and 2021 indicates an increase in the net cost of debt service during the 2022-2023 period.
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Enterprise Value to FCFF Ratio, Current
Kellanova, current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 27,032) |
| Free cash flow to the firm (FCFF) | 1,187) |
| Valuation Ratio | |
| EV/FCFF | 22.78 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Coca-Cola Co. | 64.05 |
| Mondelēz International Inc. | 29.52 |
| PepsiCo Inc. | 23.38 |
| Philip Morris International Inc. | 29.69 |
| EV/FCFF, Sector | |
| Food, Beverage & Tobacco | 33.44 |
| EV/FCFF, Industry | |
| Consumer Staples | 45.47 |
Based on: 10-K (reporting date: 2023-12-30).
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
Kellanova, historical EV/FCFF calculation, comparison to benchmarks
| Dec 30, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 28, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 24,915) | 30,255) | 29,912) | 27,946) | 30,155) | |
| Free cash flow to the firm (FCFF)2 | 1,187) | 1,338) | 1,310) | 1,680) | 804) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 20.99 | 22.61 | 22.84 | 16.64 | 37.50 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Coca-Cola Co. | 26.54 | 27.95 | 25.28 | — | — | |
| Mondelēz International Inc. | 31.39 | 34.05 | 31.98 | — | — | |
| PepsiCo Inc. | 28.63 | 40.39 | 33.08 | — | — | |
| Philip Morris International Inc. | 20.71 | 19.53 | 16.35 | — | — | |
| EV/FCFF, Sector | ||||||
| Food, Beverage & Tobacco | 26.10 | 28.47 | 24.71 | — | — | |
| EV/FCFF, Industry | ||||||
| Consumer Staples | 30.22 | 30.06 | 20.91 | — | — | |
Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).
3 2023 Calculation
EV/FCFF = EV ÷ FCFF
= 24,915 ÷ 1,187 = 20.99
4 Click competitor name to see calculations.
The financial trajectory between 2019 and 2023 is characterized by a significant correction in valuation multiples and a notable shift in cash flow generation. Enterprise value remained relatively stable between 2019 and 2022, fluctuating around the $30 billion mark, before experiencing a contraction to $24.9 billion in 2023.
- Free Cash Flow to the Firm (FCFF) Dynamics
- A substantial increase in FCFF was observed between 2019 and 2020, with values rising from $804 million to $1,680 million. Following this peak, cash flow generation entered a period of moderate decline, ending at $1,187 million in 2023. Despite this subsequent attrition, FCFF levels from 2020 through 2023 remained consistently and significantly higher than the 2019 baseline.
- EV/FCFF Ratio Trends
- The EV/FCFF ratio underwent a sharp compression after 2019, falling from a peak of 37.50 to 16.64 in 2020. This reduction was primarily driven by the rapid expansion of free cash flow. From 2021 to 2023, the ratio stabilized, maintaining a range between 20.99 and 22.84, indicating a more normalized valuation relative to the firm's cash-generating capacity.
- Valuation Drivers in the Final Period
- The decline in the EV/FCFF ratio to 20.99 in 2023 was driven by a reduction in Enterprise Value rather than an improvement in cash flow, as FCFF actually decreased during the same interval. The contraction in Enterprise Value outweighed the decline in FCFF, resulting in a lower overall multiple for the period ending December 30, 2023.
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