Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Time Warner Inc., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
An analysis of the financial metrics between 2013 and 2017 reveals a divergence between operational cash generation and the cash available to equity holders.
- Cash Provided by Operations
- A consistent upward trajectory is observed in cash provided by operations. Following a marginal decline in 2014, the value increased steadily from 3,681 million US$ to 5,094 million US$ by the end of 2017, indicating a strengthening of the entity's ability to generate liquidity from its core business activities.
- Free Cash Flow to Equity (FCFE)
- FCFE exhibited significant volatility during the analyzed period. A sharp increase occurred in 2014, reaching a peak of 5,533 million US$. However, this peak was followed by a sustained downward trend, with values declining to 3,668 million US$ by December 31, 2017.
- Operational and Equity Cash Flow Divergence
- A notable inverse relationship emerged between 2014 and 2017. While cash provided by operations grew by approximately 38% during this interval, FCFE decreased by approximately 33%. This divergence indicates that the growth in operational cash was offset by other factors, such as increased capital expenditures or net debt repayments, which reduced the final cash flow available to shareholders.
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Price to FCFE Ratio, Current
Time Warner Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 782,319,431 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 3,668) |
| FCFE per share | 4.69 |
| Current share price (P) | 93.67 |
| Valuation Ratio | |
| P/FCFE | 19.98 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Alphabet Inc. | 39.58 |
| Comcast Corp. | 4.58 |
| Meta Platforms Inc. | 26.06 |
| Netflix Inc. | 38.84 |
| Walt Disney Co. | 28.39 |
Based on: 10-K (reporting date: 2017-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Time Warner Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 779,851,623 | 774,334,281 | 790,154,346 | 830,521,982 | 892,661,216 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 3,668) | 4,763) | 4,841) | 5,533) | 3,371) | |
| FCFE per share3 | 4.70 | 6.15 | 6.13 | 6.66 | 3.78 | |
| Share price1, 4 | 94.37 | 97.06 | 66.66 | 82.42 | 64.69 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 20.06 | 15.78 | 10.88 | 12.37 | 17.13 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 Data adjusted for splits and stock dividends.
3 2017 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 3,668,000,000 ÷ 779,851,623 = 4.70
4 Closing price as at the filing date of Time Warner Inc. Annual Report.
5 2017 Calculation
P/FCFE = Share price ÷ FCFE per share
= 94.37 ÷ 4.70 = 20.06
6 Click competitor name to see calculations.
An analysis of the financial data from 2013 to 2017 reveals a non-linear trend in the Price to Free Cash Flow to Equity (P/FCFE) ratio, characterized by an initial compression followed by a significant expansion.
- Share Price Volatility
- The share price experienced notable fluctuations throughout the period, increasing from 64.69 US$ in 2013 to a peak of 97.06 US$ in 2016, before slightly retreating to 94.37 US$ in 2017.
- FCFE per Share Performance
- Free Cash Flow to Equity per share demonstrated significant growth in the early part of the period, rising from 3.78 US$ in 2013 to 6.66 US$ in 2014. After maintaining a range between 6.13 US$ and 6.15 US$ during 2015 and 2016, a notable decrease to 4.70 US$ occurred in 2017.
- P/FCFE Ratio Dynamics
- The P/FCFE ratio followed a U-shaped trajectory. It declined from 17.13 in 2013 to a minimum of 10.88 in 2015, a trend driven by the growth in FCFE per share outpacing share price movements. Conversely, the ratio rose sharply to 15.78 in 2016 and reached a five-year high of 20.06 in 2017. This expansion was fueled by the confluence of a high share price and a declining FCFE per share in the final year.
The widening of the P/FCFE ratio toward the end of the observed period indicates that the market valuation reached a premium relative to the company's cash flow generation. This suggests either an increase in investor expectations for future growth or a reduction in the efficiency of the company in generating cash available to equity holders.
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