Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
RTX Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
- Net Cash Flows Provided by Operating Activities
- The net cash flows from operating activities demonstrated a significant increase from 2020 to 2021, rising from 4,334 million US dollars to 7,142 million US dollars. This upward trend stabilized in 2022, with a marginal increase to 7,168 million US dollars. The cash flows continued to grow in 2023, reaching 7,883 million US dollars, marking the highest value within the observed period. However, in 2024, there was a decline to 7,159 million US dollars, indicating a reduction in operating cash inflows compared to the previous year.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm showed a similar upward trend from 2020 through 2021, increasing from 3,825 million US dollars to 6,134 million US dollars. In 2022, FCFF slightly decreased to 5,996 million US dollars. The metric rebounded in 2023 to 6,758 million US dollars, a notable recovery. However, by 2024, the free cash flow dropped again to 6,105 million US dollars, suggesting variability in the company’s ability to generate free cash after capital expenditures.
- Overall Trends and Insights
- Both net cash flows from operating activities and free cash flow to the firm exhibited strong growth from 2020 through 2021, reflecting potentially improved operational performance or cash collection efficiency. The period from 2022 onwards presented fluctuations, with peaks in 2023 followed by declines in 2024. The data suggests that while the company maintained a relatively high level of cash generation capacity, there were challenges in sustaining the peak cash flows consistently year over year. The decreases observed in 2024 may warrant closer examination of operational factors or capital expenditure planning impacting cash flow.
Interest Paid, Net of Tax
RTX Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
2 2024 Calculation
Interest paid, net of amounts capitalized, tax = Interest paid, net of amounts capitalized × EITR
= 1,942 × 19.10% = 371
The analysis of the financial data reveals notable trends in the effective income tax rate (EITR) and net interest paid over the five-year period ending December 31, 2024.
- Effective Income Tax Rate (EITR)
- The EITR demonstrated a declining trend from 21% in 2020 to a low of 11.6% in 2022, indicating a reduction in the company's tax burden during these years. This reduction could be attributed to changes in tax policies, tax planning strategies, or alterations in the geographic allocation of taxable income. In 2023, the rate remained relatively stable at 11.9%, suggesting consistency in tax management. However, in 2024, the EITR increased to 19.1%, reflecting a significant rise that may indicate higher taxable income, less favorable tax conditions, or the expiration of previous tax benefits.
- Interest Paid, Net of Amounts Capitalized, Net of Tax (US$ in millions)
- The net interest paid showed a fluctuating but generally upward trajectory. From US$1,286 million in 2020, the interest expense declined to US$1,126 million in 2021 and slightly decreased further to US$1,116 million in 2022. This decline could reflect lower borrowing costs, reduced debt levels, or improved capital structure. However, in 2023, net interest paid increased to US$1,290 million, reversing the previous decline. This upward movement continued into 2024, reaching US$1,571 million, representing the highest figure in the observed period. The increase in interest expense in the latter years might be attributable to higher interest rates, increased debt financing, or changes in capital expenditure requiring more borrowing.
Overall, the data suggest that the company experienced a favorable tax environment in the early years, which eased its tax burden considerably, followed by a return towards more typical tax rates. Concurrently, interest expenses initially declined but have risen sharply in recent years, potentially reflecting shifts in the company's financing strategy or external economic factors affecting the cost of debt.
Enterprise Value to FCFF Ratio, Current
RTX Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 233,662) |
| Free cash flow to the firm (FCFF) | 6,105) |
| Valuation Ratio | |
| EV/FCFF | 38.27 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 20.36 |
| Eaton Corp. plc | 38.35 |
| GE Aerospace | 48.26 |
| Honeywell International Inc. | 30.63 |
| Lockheed Martin Corp. | 20.87 |
| EV/FCFF, Sector | |
| Capital Goods | 53.73 |
| EV/FCFF, Industry | |
| Industrials | 34.57 |
Based on: 10-K (reporting date: 2024-12-31).
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
RTX Corp., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 210,519) | 161,239) | 170,615) | 167,423) | 134,857) | |
| Free cash flow to the firm (FCFF)2 | 6,105) | 6,758) | 5,996) | 6,134) | 3,825) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 34.48 | 23.86 | 28.45 | 27.29 | 35.26 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Boeing Co. | — | 25.63 | 37.53 | — | — | |
| Caterpillar Inc. | 18.32 | 16.08 | 23.54 | 20.50 | 23.83 | |
| Eaton Corp. plc | 31.29 | 38.49 | 33.44 | 38.16 | 21.94 | |
| GE Aerospace | 38.98 | 29.56 | 17.29 | 56.53 | 32.34 | |
| Honeywell International Inc. | 27.10 | 29.13 | 29.82 | 25.22 | 26.49 | |
| Lockheed Martin Corp. | 20.56 | 17.62 | 19.69 | 13.92 | 14.64 | |
| EV/FCFF, Sector | ||||||
| Capital Goods | 46.45 | 23.34 | 25.87 | 32.16 | 74.97 | |
| EV/FCFF, Industry | ||||||
| Industrials | 31.37 | 25.93 | 24.30 | 28.80 | 189.49 | |
Based on: 10-K (reporting date: 2024-12-31), 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).
3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 210,519 ÷ 6,105 = 34.48
4 Click competitor name to see calculations.
- Enterprise value (EV)
- There was a consistent increase in enterprise value from 2020 through 2022, moving from 134,857 million US dollars to 170,615 million US dollars. However, in 2023, EV declined to 161,239 million US dollars before rising sharply again in 2024 to 210,519 million US dollars, marking the highest value in the period analyzed.
- Free cash flow to the firm (FCFF)
- FCFF exhibited growth from 3,825 million US dollars in 2020 to a peak of 6,758 million in 2023, representing a steady upward trajectory with only a minor dip in the final period. The value decreased slightly to 6,105 million US dollars in 2024 but remained substantially higher than in the initial years.
- EV/FCFF ratio
- The valuation multiple based on enterprise value and free cash flow showed a downward trend from 35.26 in 2020 to 23.86 in 2023, indicating improving relative valuation or possibly stronger FCFF growth relative to EV. However, this ratio increased significantly to 34.48 in 2024, suggesting that enterprise value grew at a faster pace than free cash flow in that year.
- Overall trends and insights
- The data reveals overall growth in both enterprise value and free cash flow over the analyzed period, with notable volatility in EV particularly between 2022 and 2024. The EV/FCFF ratio indicates that the firm's valuation became more favorable through 2023, but the sharp rise in 2024 may reflect increased market expectations or valuation pressures not fully supported by FCFF growth. The slight decrease in FCFF in 2024 alongside a substantial EV increase suggests a divergence between market valuation and operational cash flow generation in the most recent year.