Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
United Rentals Inc., FCFF calculation
US$ in millions
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).
The financial data reveals several key trends in the cash flow activities over the five-year period analyzed.
- Net cash provided by operating activities
- This metric shows a generally positive and increasing trend. Starting at $2,853 million in 2018, there was a modest increase to $3,024 million in 2019, followed by a decrease in 2020 to $2,658 million, likely reflecting some operational challenges or external factors impacting cash flow during that year. However, the company rebounded strongly in 2021 with a significant increase to $3,689 million, and this upward momentum continued into 2022, reaching $4,433 million. The overall trajectory indicates improving operational efficiency and cash generation capacity in the latter years.
- Free cash flow to the firm (FCFF)
- Unlike operating cash flow, the free cash flow to the firm exhibits more variability, reflecting fluctuations in investment and financing activities. Starting from $1,587 million in 2018, FCFF increased notably to $1,938 million in 2019 and further surged to $2,713 million in 2020, suggesting a period of effective capital management or reduced capital expenditures. However, there was a substantial decline in 2021 to $1,717 million, indicating possible increased investments or other uses of cash that year. The figure rose again in 2022 to $1,990 million, showing recovery but not quite reaching the 2020 peak. This pattern suggests the company experienced varying levels of free cash generation possibly tied to strategic investment cycles or changes in working capital requirements.
Interest Paid, Net of Tax
United Rentals Inc., interest paid, net of tax calculation
US$ in millions
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 for interest, tax = Cash paid for interest × EITR
= 406 × 24.88% = 101
- Effective Income Tax Rate (EITR)
- The effective income tax rate demonstrates a general decline from 25.75% in 2018 to 21.86% in 2020, indicating a reduction in the overall tax burden during this period. However, in 2021, the rate increased to 24.92%, nearly reversing the previous downward trend, and remained relatively stable in 2022 at 24.88%. This pattern suggests some fluctuation in tax strategy or tax regulations impacting the company through the years, with a notable dip in 2020 followed by a return to rates similar to those seen in 2018.
- Cash Paid for Interest, Net of Tax
- The cash paid for interest, net of tax, shows fluctuations over the years without a clear linear trend. In 2018, the amount was $338 million, rising significantly to $451 million in 2019. This was followed by a decrease to $377 million in 2020 and a further reduction to $294 million in 2021. In 2022, the figure slightly increased again to $305 million. These changes could reflect varying debt levels, shifting interest rates, or alterations in the company's financing structure. The peak in 2019 aligns with the highest observed cost of interest payments, whereas the subsequent decrease through 2021 indicates improved interest expense management or reduced borrowing costs before a mild uptick in 2022.
Enterprise Value to FCFF Ratio, Current
United Rentals Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 38,486) |
| Free cash flow to the firm (FCFF) | 1,990) |
| Valuation Ratio | |
| EV/FCFF | 19.34 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 21.75 |
| Eaton Corp. plc | 40.79 |
| GE Aerospace | 50.88 |
| Honeywell International Inc. | 28.77 |
| Lockheed Martin Corp. | 19.02 |
| RTX Corp. | 40.68 |
| EV/FCFF, Sector | |
| Capital Goods | 38.36 |
| EV/FCFF, Industry | |
| Industrials | 32.80 |
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
United Rentals Inc., 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 millions) | ||||||
| Enterprise value (EV)1 | 38,486) | 31,830) | 26,539) | 22,700) | 20,938) | |
| Free cash flow to the firm (FCFF)2 | 1,990) | 1,717) | 2,713) | 1,938) | 1,587) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 19.34 | 18.54 | 9.78 | 11.72 | 13.19 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Boeing Co. | 37.53 | — | — | — | — | |
| Caterpillar Inc. | 23.54 | 20.50 | 23.83 | — | — | |
| Eaton Corp. plc | 33.44 | 38.16 | 21.94 | — | — | |
| GE Aerospace | 17.29 | 56.53 | 32.34 | — | — | |
| Honeywell International Inc. | 29.82 | 25.22 | 26.49 | — | — | |
| Lockheed Martin Corp. | 19.69 | 13.92 | 14.64 | — | — | |
| RTX Corp. | 28.45 | 27.29 | 35.26 | — | — | |
| EV/FCFF, Sector | ||||||
| Capital Goods | 25.87 | 32.16 | 74.97 | — | — | |
| EV/FCFF, Industry | ||||||
| Industrials | 24.30 | 28.80 | 189.49 | — | — | |
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
= 38,486 ÷ 1,990 = 19.34
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value demonstrated a consistent upward trajectory from 2018 to 2022. Starting at $20,938 million in 2018, it increased steadily each year, reaching $38,486 million by the end of 2022. This represents a notable expansion in the company's market valuation over the five-year period.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm experienced growth from 2018 through 2020, rising from $1,587 million to $2,713 million, indicating an improving capacity to generate cash from operations. However, this trend reversed in 2021 with a decline to $1,717 million, followed by a mild recovery to $1,990 million in 2022. This fluctuation suggests some operational or investment challenges during the latter years.
- EV/FCFF Ratio
- The ratio of enterprise value to free cash flow to the firm (EV/FCFF) declined from 13.19 in 2018 to a low of 9.78 in 2020, implying increased attractiveness or value relative to cash flow during that period. From 2021 onward, the ratio rose sharply to 18.54 and then 19.34 in 2022, indicating the enterprise value grew at a faster pace than free cash flow. This elevation in valuation multiple could reflect heightened market expectations, reduced cash flow efficiency, or a combination of both.