Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Motorola Solutions Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 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).
The financial performance from 2019 to 2023 demonstrates a resilient cash flow profile characterized by a temporary contraction in 2020 followed by a consistent recovery. Both net cash provided by operating activities and free cash flow to the firm (FCFF) reached their five-year peak in 2023, indicating strengthened liquidity and operational efficiency.
- Net Cash Provided by Operating Activities
- A fluctuating but upward trend is observed, starting at 1,823 million US$ in 2019 and declining to 1,613 million US$ in 2020. A recovery phase began in 2021, with values stabilizing around 1,823 to 1,837 million US$ through 2022, before increasing significantly to 2,044 million US$ by December 31, 2023.
- Free Cash Flow to the Firm (FCFF)
- FCFF closely mirrors the trajectory of operating cash flows. After a slight dip to 1,628 million US$ in 2020, the metric remained stable between 1,767 million US$ and 1,771 million US$ during the 2021-2022 period. A notable expansion occurred in 2023, with FCFF rising to 1,978 million US$, representing a total increase of approximately 11.5% compared to the 2019 baseline.
- Cash Flow Conversion and Capital Expenditure
- The narrow variance between net cash provided by operating activities and FCFF across the five-year period suggests a consistent and disciplined approach to capital expenditures. The high conversion rate of operating cash into FCFF indicates that the entity maintains its operational growth without requiring disproportionate capital investments.
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Interest Paid, Net of Tax
Motorola Solutions Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 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).
2 2023 Calculation
Interest paid, tax = Interest paid × EITR
= 234 × 20.10% = 47
The net interest expense exhibits a fluctuating trajectory over the five-year period from 2019 to 2023. Following a steady decline from 2019 through 2021, a significant peak occurred in 2022, followed by a moderate reduction in 2023.
- Interest Expenditure Trends
- Net interest payments decreased from US$ 192 million in 2019 to a period low of US$ 167 million in 2021. A sharp reversal occurred in 2022, with payments rising to US$ 204 million, before receding to US$ 187 million by the end of 2023.
- Correlation with Effective Income Tax Rate (EITR)
- The effective income tax rate demonstrates substantial volatility, shifting from 13.00% in 2019 to a peak of 20.10% in 2023. A notable inverse relationship is observed in 2022, where the EITR dropped to its lowest point of 9.80%. This decrease in the tax rate corresponds with the highest net interest cost of US$ 204 million, indicating that a diminished tax shield increased the after-tax cost of debt servicing during that fiscal year.
- Analysis of Recent Fiscal Shift
- Between 2022 and 2023, the net interest paid decreased by approximately 8.3%, moving from US$ 204 million to US$ 187 million. This decline coincided with a sharp increase in the EITR, which rose from 9.80% to 20.10%, thereby enhancing the tax deductibility of interest expenses and lowering the net cash outflow.
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Enterprise Value to FCFF Ratio, Current
Motorola Solutions Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 70,827) |
| Free cash flow to the firm (FCFF) | 1,978) |
| Valuation Ratio | |
| EV/FCFF | 35.81 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Apple Inc. | 37.51 |
| Arista Networks Inc. | 50.41 |
| Cisco Systems Inc. | 30.31 |
| Dell Technologies Inc. | 26.58 |
| Lumentum Holdings Inc. | 155.84 |
| Super Micro Computer Inc. | — |
| EV/FCFF, Sector | |
| Technology Hardware & Equipment | 48.06 |
| EV/FCFF, Industry | |
| Information Technology | 77.65 |
Based on: 10-K (reporting date: 2023-12-31).
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
Motorola Solutions Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 58,138) | 49,420) | 41,010) | 34,544) | 35,601) | |
| Free cash flow to the firm (FCFF)2 | 1,978) | 1,771) | 1,767) | 1,628) | 1,774) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 29.39 | 27.91 | 23.21 | 21.22 | 20.07 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Apple Inc. | 27.21 | 22.40 | 26.45 | — | — | |
| Arista Networks Inc. | 39.01 | 89.98 | 38.47 | — | — | |
| Cisco Systems Inc. | 10.98 | 13.55 | 15.50 | — | — | |
| Dell Technologies Inc. | 34.88 | 6.45 | 9.28 | — | — | |
| Lumentum Holdings Inc. | 72.26 | 14.52 | 8.11 | — | — | |
| Super Micro Computer Inc. | 21.06 | — | 25.04 | — | — | |
| EV/FCFF, Sector | ||||||
| Technology Hardware & Equipment | 24.97 | 20.80 | 23.54 | — | — | |
| EV/FCFF, Industry | ||||||
| Information Technology | 33.99 | 26.47 | 27.37 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
3 2023 Calculation
EV/FCFF = EV ÷ FCFF
= 58,138 ÷ 1,978 = 29.39
4 Click competitor name to see calculations.
The analysis of the company's financial metrics from 2019 to 2023 reveals a significant expansion in valuation multiples, driven by a substantial increase in Enterprise Value (EV) that has far outpaced the growth of Free Cash Flow to the Firm (FCFF).
- Enterprise Value Trends
- A strong upward trajectory is observed in the Enterprise Value, which grew from 35,601 million US$ in 2019 to 58,138 million US$ by the end of 2023. This represents a total increase of approximately 63% over the five-year period, with the most pronounced growth occurring between 2021 and 2023.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF remained relatively stagnant during the observed period. After a slight decline to 1,628 million US$ in 2020, the figure recovered and grew modestly to 1,978 million US$ in 2023. The growth rate of cash generation is significantly lower than the rate of increase in the overall enterprise value.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio increased steadily every year, rising from 20.07 in 2019 to 29.39 in 2023. This persistent increase indicates that the market is attributing a higher premium to the company's valuation relative to its actual cash flow generation. The expansion of this ratio suggests that investors may be pricing in expectations for future growth or strategic advantages that are not yet fully reflected in the current annual FCFF figures.
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