Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Newmont Corp., 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).
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Analysis of the cash flow dynamics from 2019 to 2023 reveals a significant peak in liquidity during 2020, followed by a sustained downward trajectory in both operating cash flow and free cash flow to the firm (FCFF).
- Operating Cash Flow Trends
- Net cash provided by operating activities experienced a sharp increase between 2019 and 2020, rising from US$ 2,876 million to a peak of US$ 4,890 million. Following this peak, a consistent decline was observed over the subsequent three years, with the value falling to US$ 2,754 million by December 31, 2023. This final figure represents a slight contraction compared to the 2019 starting position.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF exhibited more pronounced volatility than operating cash flow. After ascending to a peak of US$ 3,794 million in 2020, FCFF entered a period of steep decline. The value decreased to US$ 2,575 million in 2021, US$ 1,237 million in 2022, and reached a period low of US$ 285 million in 2023. This represents a total reduction of approximately 92.5% from the 2020 high.
- Cash Flow Conversion and Capital Intensity
- A widening divergence is observable between operating cash flow and FCFF. In 2020, FCFF constituted approximately 77.6% of net cash provided by operating activities. By 2023, this conversion ratio fell to approximately 10.4%. The increasing gap suggests that a larger proportion of operating cash was utilized for capital expenditures or other investments in the later years of the period, significantly reducing the residual cash available to the firm's capital providers.
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Interest Paid, Net of Tax
Newmont Corp., 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, net of amounts capitalized, tax = Interest paid, net of amounts capitalized × EITR
= 228 × 21.00% = 48
3 2023 Calculation
Capitalized interest, tax = Capitalized interest × EITR
= 89 × 21.00% = 19
An analysis of the net interest expenditures reveals significant volatility between 2019 and 2023, characterized by a severe contraction in 2021 followed by a recovery and subsequent increase in both expensed and capitalized interest.
- Interest Paid, Net of Tax
- Interest payments net of tax remained relatively stable between 2019 and 2020, hovering around 200 million USD. A precipitous decline occurred in 2021, where the value dropped to 2 million USD, before rebounding to 136 million USD in 2022 and further increasing to 180 million USD by the end of 2023.
- Capitalized Interest, Net of Tax
- Capitalized interest followed a similar trajectory of decline and recovery. After maintaining low levels of approximately 20 million USD in 2019 and 2020, the value fell to zero in 2021. However, a marked upward trend emerged in the following two years, with capitalized interest rising to 55 million USD in 2022 and reaching 70 million USD in 2023, suggesting an increase in capital-intensive investments.
- Impact of Effective Income Tax Rate (EITR)
- The fluctuations in net interest values correlate strongly with the Effective Income Tax Rate. The anomalous spike in the EITR to 99.00% in 2021 effectively neutralized the net-of-tax values for both paid and capitalized interest. Following this period, the EITR stabilized at 21.00% for 2022 and 2023, allowing for a more normalized representation of net interest costs.
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Enterprise Value to FCFF Ratio, Current
Newmont Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 55,321) |
| Free cash flow to the firm (FCFF) | 285) |
| Valuation Ratio | |
| EV/FCFF | 193.82 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Freeport-McMoRan Inc. | 80.18 |
| EV/FCFF, Industry | |
| Materials | 45.10 |
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
Newmont Corp., 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 | 42,606) | 37,687) | 53,895) | 47,615) | 44,149) | |
| Free cash flow to the firm (FCFF)2 | 285) | 1,237) | 2,575) | 3,794) | 912) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 149.27 | 30.46 | 20.93 | 12.55 | 48.40 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Freeport-McMoRan Inc. | 79.26 | 35.32 | 12.13 | — | — | |
| EV/FCFF, Industry | ||||||
| Materials | 40.02 | 34.36 | 20.85 | — | — | |
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
= 42,606 ÷ 285 = 149.27
4 Click competitor name to see calculations.
The financial trajectory between 2019 and 2023 is characterized by a widening disconnect between the company's enterprise value and its ability to generate free cash flow to the firm. While enterprise value experienced fluctuations, free cash flow demonstrated extreme volatility followed by a steep decline, resulting in a substantial expansion of the valuation multiple by the end of the period.
- Enterprise Value Trends
- Enterprise value exhibited an upward trend from US$ 44,149 million in 2019 to a peak of US$ 53,895 million in 2021. A sharp contraction followed in 2022, where the value decreased to US$ 37,687 million, before recovering slightly to US$ 42,606 million by December 31, 2023.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF showed a significant spike in 2020, reaching US$ 3,794 million from a 2019 level of US$ 912 million. Following this peak, a consistent and accelerating downward trend is observed, with values falling to US$ 2,575 million in 2021, US$ 1,237 million in 2022, and reaching a period low of US$ 285 million in 2023.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio reflects a volatile valuation environment. The ratio dropped to a low of 12.55 in 2020 due to the surge in cash flow. However, the ratio climbed steadily to 20.93 in 2021 and 30.46 in 2022. By 2023, the ratio escalated sharply to 149.27, a development driven primarily by the collapse in FCFF rather than an increase in enterprise value, indicating a significant deterioration in cash flow coverage relative to the company's total value.
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