Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Raytheon Co., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
An analysis of the cash flow metrics from 2015 to 2019 reveals a consistent upward trajectory in both operational efficiency and equity-available cash. The period is characterized by a significant expansion in liquidity, culminating in a peak for both metrics in the final year of the sequence.
- Net Cash Provided by Operating Activities
- Operating cash flow exhibited a strong growth trend, increasing from US$ 2,346 million in 2015 to US$ 4,482 million in 2019. While a marginal decrease was noted in 2017, the subsequent recovery was aggressive, with a particularly sharp rise between 2018 and 2019, representing a substantial improvement in the ability to generate cash from core business operations.
- Free Cash Flow to Equity (FCFE)
- FCFE followed a generally positive growth pattern, starting at US$ 1,948 million in 2015 and reaching US$ 3,200 million by 2019. A notable contraction occurred in 2017, where FCFE dropped to US$ 1,853 million, falling below 2015 levels. However, this was followed by a strong rebound, with 2019 seeing the highest FCFE value in the analyzed period.
- Cash Flow Conversion and Trends
- The correlation between net cash provided by operating activities and FCFE remained positive throughout the five-year period. The narrowing of FCFE relative to operating cash in 2017 suggests a temporary increase in capital expenditures or debt repayments. By 2019, the acceleration in both metrics indicates a strengthened financial position and an increased capacity to fund dividends, share repurchases, or further strategic investments.
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Price to FCFE Ratio, Current
Raytheon Co., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 278,441,000 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 3,200) |
| FCFE per share | 11.49 |
| Current share price (P) | 229.76 |
| Valuation Ratio | |
| P/FCFE | 19.99 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 30.32 |
| Eaton Corp. plc | 41.99 |
| GE Aerospace | 42.68 |
| Honeywell International Inc. | 8.65 |
| Lockheed Martin Corp. | 14.24 |
| RTX Corp. | 55.47 |
Based on: 10-K (reporting date: 2019-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Raytheon Co., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 278,441,000 | 282,239,000 | 288,506,000 | 292,880,000 | 298,998,000 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 3,200) | 2,609) | 1,853) | 2,261) | 1,948) | |
| FCFE per share3 | 11.49 | 9.24 | 6.42 | 7.72 | 6.52 | |
| Share price1, 4 | 229.76 | 180.94 | 212.58 | 151.96 | 126.57 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 19.99 | 19.57 | 33.10 | 19.68 | 19.43 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 Data adjusted for splits and stock dividends.
3 2019 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 3,200,000,000 ÷ 278,441,000 = 11.49
4 Closing price as at the filing date of Raytheon Co. Annual Report.
5 2019 Calculation
P/FCFE = Share price ÷ FCFE per share
= 229.76 ÷ 11.49 = 19.99
6 Click competitor name to see calculations.
The financial performance from 2015 to 2019 is characterized by a general increase in both equity value and cash flow generation, with the valuation multiple remaining largely stable despite a notable anomaly in 2017.
- Share Price and FCFE Trends
- An upward trajectory is observed in the share price, which climbed from 126.57 USD in 2015 to 229.76 USD by 2019. Concurrently, FCFE per share demonstrated a growth trend, rising from 6.52 USD to 11.49 USD over the five-year period, indicating an improved capacity to generate cash available to equity holders.
- P/FCFE Ratio Consistency
- Excluding the 2017 fiscal year, the P/FCFE ratio exhibited remarkable stability, maintaining a tight range between 19.43 and 19.99. This consistency suggests that the market valuation of the company remained closely aligned with its free cash flow growth for the majority of the period.
- Analysis of the 2017 Divergence
- A significant spike in the P/FCFE ratio to 33.10 occurred in 2017. This outlier was driven by a convergence of two factors: a sharp increase in the share price to 212.58 USD and a temporary decline in FCFE per share to 6.42 USD. The ratio returned to historical norms in 2018 as cash flow recovered and the share price corrected.
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