Microsoft Excel LibreOffice Calc

Raytheon Technologies Corp. (NYSE:RTX)

Enterprise Value to FCFF (EV/FCFF)

Intermediate level

Free Cash Flow to The Firm (FCFF)

Raytheon Technologies Corp., FCFF calculation

US$ in millions

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12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income attributable to common shareowners 5,537  5,269  4,552  5,055  7,608 
Noncontrolling interest in subsidiaries’ earnings 411  385  368  371  358 
Net noncash charges 3,166  1,618  (816) 2,147  (421)
Change in operating capital (231) (950) 1,527  (1,161) (847)
Net cash flows provided by operating activities 8,883  6,322  5,631  6,412  6,698 
Interest paid, net of amounts capitalized, net of tax1 1,300  794  704  882  712 
Capital expenditures (2,256) (1,902) (2,014) (1,699) (1,652)
Free cash flow to the firm (FCFF) 7,927  5,214  4,321  5,595  5,758 

Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).

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Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Raytheon Technologies Corp.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Raytheon Technologies Corp.’s FCFF increased from 2017 to 2018 and from 2018 to 2019.

Interest Paid, Net of Tax

Raytheon Technologies Corp., interest paid, net of tax calculation

US$ in millions

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12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Effective Income Tax Rate (EITR)
EITR1 27.80% 22.70% 27.70% 23.80% 32.60%
Interest Paid, Net of Tax
Interest paid, net of amounts capitalized, before tax 1,801  1,027  974  1,157  1,057 
Less: Interest paid, net of amounts capitalized, tax2 501  233  270  275  345 
Interest paid, net of amounts capitalized, net of tax 1,300  794  704  882  712 

Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).

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2 2019 Calculation
Interest paid, net of amounts capitalized, tax = Interest paid, net of amounts capitalized × EITR
= 1,801 × 27.80% = 501

Enterprise Value to FCFF Ratio, Current

Raytheon Technologies Corp., current EV/FCFF calculation, comparison to benchmarks

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Selected Financial Data (US$ in millions)
Enterprise value (EV) 94,265 
Free cash flow to the firm (FCFF) 7,927 
Valuation Ratio
EV/FCFF 11.89
Benchmarks
EV/FCFF, Competitors1
Boeing Co. —
General Dynamics Corp. 22.63
Lockheed Martin Corp. 18.90
Northrop Grumman Corp. 19.11
EV/FCFF, Sector
Aerospace & Defense 25.38
EV/FCFF, Industry
Industrials 19.61

Based on: 10-K (filing date: 2020-02-06).

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

Raytheon Technologies Corp., historical EV/FCFF calculation, comparison to benchmarks

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 173,888  145,579  120,307  107,051  85,648 
Free cash flow to the firm (FCFF)2 7,927  5,214  4,321  5,595  5,758 
Valuation Ratio
EV/FCFF3 21.94 27.92 27.84 19.13 14.87
Benchmarks
EV/FCFF, Competitors4
Boeing Co. — 16.40 16.93 11.76 10.11
General Dynamics Corp. 27.60 22.64 17.96 30.53 20.94
Lockheed Martin Corp. 21.21 41.00 18.99 19.08 17.92
Northrop Grumman Corp. 21.80 20.12 33.26 21.05 20.20
EV/FCFF, Sector
Aerospace & Defense 37.51 21.75 20.45 17.48 14.89
EV/FCFF, Industry
Industrials 24.02 21.77 23.72 23.00 19.52

Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).

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2 See details »

3 2019 Calculation
EV/FCFF = EV ÷ FCFF
= 173,888 ÷ 7,927 = 21.94

4 Click competitor name to see calculations.

Valuation ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Raytheon Technologies Corp.’s EV/FCFF ratio increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.