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Thermo Fisher Scientific Inc. (TMO)

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate

Thermo Fisher Scientific Inc., FCFF calculation

USD $ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Net income
	Net noncash charges
	Changes in assets and liabilities, excluding the effects of acquisitions and dispositions
	Net cash provided by operating activities
	Cash paid for interest, net of tax¹
	Purchase of property, plant and equipment
	Proceeds from sale of property, plant and equipment
	Free cash flow to the firm (FCFF)

Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Thermo Fisher Scientific Inc.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Thermo Fisher Scientific Inc.’s FCFF increased from 2016 to 2017 and from 2017 to 2018.

Thermo Fisher Scientific Inc., interest paid, net of tax calculation

USD $ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Earnings before tax (EBT)
	Net income
	Less: Loss from discontinued operations, net of income tax
	Add: Income tax expense
	EBT
	Effective Income Tax Rate (EITR)
	EITR¹
	Interest Paid, Net of Tax
	Cash paid for interest, before tax
	Less: Cash paid for interest, tax²
	Cash paid for interest, net of tax

2018 Calculations

¹ EITR = 100 × Income tax expense ÷ EBT
= 100 × hidden ÷ hidden = hidden

² Cash paid for interest, tax = Cash paid for interest × EITR
= hidden × hidden = hidden

Thermo Fisher Scientific Inc., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (USD $ in millions)
Enterprise value (EV)
Free cash flow to the firm (FCFF)
Ratio
EV/FCFF
Benchmarks
EV/FCFF, Competitors
Becton, Dickinson & Co.
Intuitive Surgical Inc.
Medtronic PLC
Stryker Corp.
UnitedHealth Group Inc.
EV/FCFF, Sector
Health Care Equipment & Services
EV/FCFF, Industry
Health Care

If company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.

Otherwise, if company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Thermo Fisher Scientific Inc., historical EV/FCFF calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Enterprise value (EV)¹
	Free cash flow to the firm (FCFF)²
	Ratio
	EV/FCFF³
	Benchmarks
	EV/FCFF, Competitors
	Becton, Dickinson & Co.
	Intuitive Surgical Inc.
	Medtronic PLC
	Stryker Corp.
	UnitedHealth Group Inc.
	EV/FCFF, Sector
	Health Care Equipment & Services
	EV/FCFF, Industry
	Health Care

2018 Calculations

³ EV/FCFF = EV ÷ FCFF
= hidden ÷ hidden = hidden

Ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	Thermo Fisher Scientific Inc.’s EV/FCFF ratio increased from 2016 to 2017 and from 2017 to 2018.

	Thermo Fisher Scientific Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Long-term Trends
Analysis
Financial Reporting Quality

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Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Long-term Trends
Analysis
Financial Reporting Quality