Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
McKesson Corp., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).
Operating cash flow exhibited a general upward trajectory between March 31, 2011, and March 31, 2016. Starting at 2,338 million US$, net cash provided by operating activities increased to 3,672 million US$ by the end of the period, indicating a sustained and growing capacity to generate liquidity from core business operations.
The relationship between operating cash flow and free cash flow to equity (FCFE) reveals significant volatility and a shifting financial profile, particularly in the latter half of the period analyzed.
- Operating Cash Flow Trends
- Cash provided by operating activities grew from 2,338 million US$ in 2011 to 3,672 million US$ in 2016. Although a moderate contraction was observed in 2013, the overall trend remained positive, with a notable acceleration in cash generation during the 2016 fiscal year.
- FCFE Volatility and the 2014 Anomaly
- Free cash flow to equity displayed substantial fluctuations. After modest growth in 2012 and a slight dip in 2013, FCFE surged to 6,498 million US$ in 2014. This figure represents a significant outlier, as it more than doubled the net cash provided by operating activities for that year, suggesting a substantial influx of cash from financing activities or the sale of assets.
- Divergence Between OCF and FCFE
- A marked divergence is observed from 2015 to 2016. While operating cash flow remained strong and continued to grow, FCFE declined sharply to 2,165 million US$ in 2015 and further to 1,270 million US$ in 2016. This downward trend in FCFE, occurring alongside rising operating cash flows, indicates a significant increase in cash outflows, likely attributed to higher capital expenditures or aggressive debt repayment schedules.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Price to FCFE Ratio, Current
McKesson Corp., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 226,086,960 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 1,270) |
| FCFE per share | 5.62 |
| Current share price (P) | 160.50 |
| Valuation Ratio | |
| P/FCFE | 28.57 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Abbott Laboratories | 34.00 |
| Elevance Health Inc. | 24.54 |
| Intuitive Surgical Inc. | 65.21 |
| Medtronic PLC | 31.54 |
| UnitedHealth Group Inc. | 21.10 |
Based on: 10-K (reporting date: 2016-03-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
McKesson Corp., historical P/FCFE calculation, comparison to benchmarks
| Mar 31, 2016 | Mar 31, 2015 | Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2012 | Mar 31, 2011 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 225,020,523 | 231,553,531 | 230,576,753 | 226,611,092 | 235,397,188 | 252,120,037 | |
| Selected Financial Data (US$) | |||||||
| Free cash flow to equity (FCFE) (in millions)2 | 1,270) | 2,165) | 6,498) | 2,332) | 2,517) | 1,909) | |
| FCFE per share3 | 5.64 | 9.35 | 28.18 | 10.29 | 10.69 | 7.57 | |
| Share price1, 4 | 172.70 | 229.55 | 178.20 | 108.63 | 90.17 | 82.84 | |
| Valuation Ratio | |||||||
| P/FCFE5 | 30.60 | 24.55 | 6.32 | 10.56 | 8.43 | 10.94 | |
| Benchmarks | |||||||
| P/FCFE, Competitors6 | |||||||
| Abbott Laboratories | — | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).
1 Data adjusted for splits and stock dividends.
3 2016 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,270,000,000 ÷ 225,020,523 = 5.64
4 Closing price as at the filing date of McKesson Corp. Annual Report.
5 2016 Calculation
P/FCFE = Share price ÷ FCFE per share
= 172.70 ÷ 5.64 = 30.60
6 Click competitor name to see calculations.
The financial performance from 2011 to 2016 demonstrates a significant divergence between equity valuation and free cash flow to equity (FCFE) generation.
- Share Price Evolution
- The share price experienced a consistent upward trajectory from March 31, 2011, through March 31, 2015, rising from 82.84 USD to a peak of 229.55 USD. This growth period was followed by a correction in 2016, where the price declined to 172.70 USD.
- FCFE per Share Volatility
- Free cash flow to equity per share exhibited substantial volatility over the period. After remaining relatively stable between 2011 and 2013, a significant spike occurred in 2014, reaching 28.18 USD. This peak was followed by a sharp contraction to 9.35 USD in 2015 and a further decline to 5.64 USD by March 31, 2016.
- P/FCFE Ratio Analysis
- The P/FCFE ratio shifted from a range of 6.32 to 10.94 between 2011 and 2014 to a much higher valuation multiple in the subsequent years. The ratio reached its minimum of 6.32 in 2014, coinciding with the peak in FCFE per share. Conversely, the ratio expanded rapidly to 24.55 in 2015 and peaked at 30.60 in 2016. This expansion was primarily driven by the collapse in FCFE per share, which outweighed the decrease in share price observed in the final year of the analysis.
Overall, the observed period is characterized by an initial phase of valuation alignment with cash flow growth, followed by a phase of valuation expansion relative to a diminishing cash flow base, resulting in a significantly higher P/FCFE multiple by 2016.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?