Enterprise Value to FCFF (EV/FCFF)
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Trane Technologies plc pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Analysis of Revenues
- Analysis of Debt
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Free Cash Flow to The Firm (FCFF)
Trane Technologies plc, FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Net Cash Provided by Operating Activities
- From 2018 to 2019, the net cash provided by operating activities increased significantly, rising from approximately $1.47 billion to $1.96 billion. This upward trend reversed somewhat in 2020 and 2021, with a decrease to about $1.77 billion and further down to $1.59 billion, respectively. However, there was a slight recovery in 2022, with cash flow increasing to around $1.70 billion.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm followed a similar pattern to operating cash flow. It grew from approximately $1.30 billion in 2018 to $1.88 billion in 2019, indicating improved cash generation capacity. Subsequently, FCFF showed a decline in 2020 and 2021, dropping to roughly $1.81 billion and $1.58 billion, respectively. In 2022, free cash flow stabilized slightly with a small increase to around $1.60 billion.
- Overall Trend and Insights
- The data reveals a peak in cash flow generation in 2019, after which both operating cash flow and free cash flow experienced a moderate decline through 2021. The decline may suggest increased operational challenges or higher capital expenditures during that period. However, 2022 suggests a modest recovery or stabilization in cash generation capabilities. Overall, while cash flows remain strong, the downward trend following 2019 indicates potential areas for management attention to sustain and improve firm liquidity.
Interest Paid, Net of Tax
Trane Technologies plc, interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2 2022 Calculation
Cash paid during the year for interest, tax = Cash paid during the year for interest × EITR
= × =
- Effective income tax rate (EITR)
-
The effective income tax rate increased from 16.9% in 2018 to a peak of 23% in 2020. Following this peak, the rate declined to 18.6% in 2021 and further decreased to 17.3% in 2022. This pattern indicates a rising tax burden until 2020, followed by a gradual reduction in subsequent years.
- Cash paid during the year for interest, net of tax
-
Cash paid for interest, net of tax, exhibited a steady increase from approximately $166.7 million in 2018 to about $191.2 million in 2021. However, there was a slight decline to $180.3 million in 2022. Overall, the data reflects a trend of rising interest-related cash outflows until 2021, with a modest reduction thereafter.
Enterprise Value to FCFF Ratio, Current
Trane Technologies plc, current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Boeing Co. | |
| Caterpillar Inc. | |
| Eaton Corp. plc | |
| GE Aerospace | |
| Honeywell International Inc. | |
| Lockheed Martin Corp. | |
| RTX Corp. | |
| EV/FCFF, Sector | |
| Capital Goods | |
| EV/FCFF, Industry | |
| Industrials | |
Based on: 10-K (reporting date: 2022-12-31).
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
Trane Technologies plc, historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| EV/FCFF, Sector | ||||||
| Capital Goods | ||||||
| EV/FCFF, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
3 2022 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited an overall upward trajectory from 2018 through 2022. Beginning at approximately 28.35 billion USD in 2018, it increased substantially in 2019 to nearly 38.88 billion USD. Despite a slight decline to around 36.74 billion USD in 2020, the value resumed growth over the subsequent years, reaching approximately 45.59 billion USD by the end of 2022. This pattern suggests persistent expansion in market valuation or debt-adjusted capitalization over the period analyzed.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm rose significantly from 2018 to 2019, increasing from around 1.30 billion USD to over 1.88 billion USD. However, between 2019 and 2020, there was a modest decline to nearly 1.81 billion USD, followed by a further decrease in 2021 to approximately 1.58 billion USD. In 2022, FCFF stabilized slightly, recording a comparable figure of around 1.60 billion USD. These movements indicate some volatility in operational cash generation capacity, with a peak in 2019, followed by a gradual contraction and subsequent stabilization.
- EV/FCFF Ratio
- The enterprise value to free cash flow to the firm ratio decreased marginally from 21.85 in 2018 to 20.33 in 2020, reflecting a relative increase in free cash flow compared to enterprise value during that timeframe. Notably, this trend reversed sharply from 2020 onward, with the ratio climbing to 24.95 in 2021 and further to 28.55 in 2022. This rising ratio suggests that enterprise value grew at a faster pace than free cash flow during the last two years, potentially indicating an increased market valuation relative to cash-generating capability or a compression in cash flow yields.