Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Time Warner Cable Inc., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
Cash provided by operating activities demonstrates a consistent upward trajectory over the five-year period, reflecting stable operational cash generation. In contrast, Free Cash Flow to Equity (FCFE) experienced a severe contraction following 2011, transitioning into a phase of gradual, incremental recovery through 2015.
- Operating Cash Flow Trends
- Cash provided by operating activities remained resilient, increasing from US$ 5,688 million in 2011 to US$ 6,539 million by 2015. Aside from a slight dip in 2012, the trend shows a steady expansion of the core business's capacity to generate cash from its primary operations.
- FCFE Volatility and Recovery
- A sharp decline in FCFE is observed between December 31, 2011, and December 31, 2012, where values dropped from US$ 5,862 million to US$ 795 million. Following this decline, FCFE entered a period of modest growth, rising to US$ 877 million in 2013, US$ 971 million in 2014, and reaching US$ 1,035 million by the end of 2015.
- Analysis of Cash Flow Divergence
- A significant divergence emerged between operating cash flow and FCFE starting in 2012. While FCFE in 2011 was nearly equivalent to operating cash flow, it became a small fraction of those figures in subsequent years. This suggests a substantial increase in capital expenditures or a strategic shift toward significant debt repayment beginning in 2012, which constrained the cash available to equity holders despite the growth in operational cash inflows.
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Price to FCFE Ratio, Current
Time Warner Cable Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 284,701,320 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 1,035) |
| FCFE per share | 3.64 |
| Current share price (P) | 210.79 |
| Valuation Ratio | |
| P/FCFE | 57.98 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Alphabet Inc. | 33.12 |
| Comcast Corp. | 5.10 |
| Meta Platforms Inc. | 21.22 |
| Netflix Inc. | 34.14 |
| Walt Disney Co. | 31.23 |
Based on: 10-K (reporting date: 2015-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Time Warner Cable Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 283,270,372 | 280,900,337 | 277,451,193 | 295,513,813 | 314,086,417 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 1,035) | 971) | 877) | 795) | 5,862) | |
| FCFE per share3 | 3.65 | 3.46 | 3.16 | 2.69 | 18.66 | |
| Share price1, 4 | 184.99 | 149.74 | 144.98 | 86.94 | 77.66 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 50.63 | 43.32 | 45.87 | 32.32 | 4.16 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 Data adjusted for splits and stock dividends.
3 2015 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,035,000,000 ÷ 283,270,372 = 3.65
4 Closing price as at the filing date of Time Warner Cable Inc. Annual Report.
5 2015 Calculation
P/FCFE = Share price ÷ FCFE per share
= 184.99 ÷ 3.65 = 50.63
6 Click competitor name to see calculations.
Between 2011 and 2015, a significant expansion in the Price to Free Cash Flow to Equity (P/FCFE) multiple occurred, reflecting a decoupling between the market valuation and the company's cash flow generation capacity.
- Share Price Performance
- The share price exhibited a consistent upward trajectory throughout the period, increasing from 77.66 US$ in 2011 to 184.99 US$ by 2015. The most substantial growth occurred between 2012 and 2013, where the price rose from 86.94 US$ to 144.98 US$, representing a significant increase in market value.
- Free Cash Flow to Equity (FCFE) per Share
- A sharp contraction in FCFE per share is observed between 2011 and 2012, falling from 18.66 US$ to 2.69 US$. Following this precipitous decline, FCFE per share remained relatively stagnant, demonstrating only marginal incremental growth to reach 3.65 US$ by the end of 2015.
- P/FCFE Ratio Dynamics
- The P/FCFE ratio rose dramatically from 4.16 in 2011 to 50.63 in 2015. This expansion was primarily triggered by the collapse of FCFE per share in 2012, which caused the ratio to spike to 32.32. Subsequent increases in the share price, not matched by proportional growth in FCFE, continued to inflate the multiple, indicating that the market was pricing the equity at a significantly higher premium relative to its available cash flows for shareholders.
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