Free Cash Flow to Equity (FCFE)
Based on: 10-K (reporting date: 2023-12-31), 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).
The financial performance between 2019 and 2023 is characterized by significant volatility in operating cash flows and a subsequent stabilization of free cash flow to equity at elevated levels.
- Operating Cash Flow Trends
- Net cash provided by operating activities experienced a severe contraction in 2020, falling to 948 million US dollars from 5,531 million US dollars in 2019. A robust recovery followed in 2021, reaching a peak of 12,574 million US dollars in 2022, before moderating to 9,229 million US dollars in 2023.
- Free Cash Flow to Equity (FCFE) Dynamics
- FCFE exhibited a different trajectory than operating cash flows during the initial period of volatility. While operating cash flows dropped sharply in 2020, FCFE remained relatively resilient at 3,235 million US dollars. A further decline occurred in 2021 to 2,808 million US dollars, despite the recovery in operating cash. However, a substantial increase is observed in 2022, with FCFE rising to 8,027 million US dollars and remaining stable at 8,051 million US dollars in 2023.
- Cash Flow Divergence and Correlation
- A notable divergence occurred between 2020 and 2021. The relative resilience of FCFE in 2020 despite the sharp decline in operating cash flows suggests a significant reduction in capital expenditures or a net increase in debt. Conversely, the 2021 decline in FCFE amid recovering operating cash flows indicates a period of intensified capital investment or debt repayment. From 2022 onwards, FCFE has shifted to a higher baseline, correlating with the increased operating cash flow and reflecting an enhanced capacity for shareholder distributions or balance sheet optimization.
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Price to FCFE Ratio, Current
| No. shares of common stock outstanding | 316,585,228 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 8,051) |
| FCFE per share | 25.43 |
| Current share price (P) | 128.73 |
| Valuation Ratio | |
| P/FCFE | 5.06 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Chevron Corp. | 18.70 |
| ConocoPhillips | 25.86 |
| ExxonMobil Holdings Corp. | 28.59 |
| P/FCFE, Sector | |
| Oil, Gas & Consumable Fuels | 20.99 |
| P/FCFE, Industry | |
| Energy | 21.00 |
Based on: 10-K (reporting date: 2023-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 332,481,908 | 371,150,836 | 409,303,630 | 408,562,891 | 409,337,126 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 8,051) | 8,027) | 2,808) | 3,235) | 3,857) | |
| FCFE per share3 | 24.21 | 21.63 | 6.86 | 7.92 | 9.42 | |
| Share price1, 4 | 139.78 | 132.43 | 85.84 | 75.81 | 71.72 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 5.77 | 6.12 | 12.51 | 9.57 | 7.61 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Chevron Corp. | 18.24 | 10.59 | 32.05 | — | — | |
| ConocoPhillips | 11.74 | 8.93 | 10.61 | — | — | |
| ExxonMobil Holdings Corp. | 12.46 | 8.73 | 19.82 | — | — | |
| P/FCFE, Sector | ||||||
| Oil, Gas & Consumable Fuels | 13.84 | 9.33 | 19.75 | — | — | |
| P/FCFE, Industry | ||||||
| Energy | 14.25 | 10.19 | 20.81 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Data adjusted for splits and stock dividends.
3 2023 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 8,051,000,000 ÷ 332,481,908 = 24.21
4 Closing price as at the filing date of Valero Energy Corp. Annual Report.
5 2023 Calculation
P/FCFE = Share price ÷ FCFE per share
= 139.78 ÷ 24.21 = 5.77
6 Click competitor name to see calculations.
The financial analysis reveals a significant shift in valuation metrics between 2019 and 2023, characterized by a divergence between share price growth and cash flow generation capacity.
- Share Price Trajectory
- A consistent upward trend is observed in the share price, which rose from 71.72 US$ in 2019 to 139.78 US$ by 2023. The most substantial growth occurred between 2021 and 2022, where the price increased from 85.84 US$ to 132.43 US$.
- FCFE per Share Dynamics
- Free Cash Flow to Equity (FCFE) per share underwent a period of contraction from 2019 to 2021, declining from 9.42 US$ to 6.86 US$. This trend reversed sharply in 2022, with FCFE per share jumping to 21.63 US$, and continuing to climb to 24.21 US$ in 2023.
- P/FCFE Ratio Analysis
- The P/FCFE ratio exhibited an inverse relationship with cash flow growth between 2019 and 2021, peaking at 12.51 as FCFE per share hit its lowest point. Conversely, from 2022 to 2023, the ratio compressed significantly, falling to 6.12 and then to 5.77. This compression indicates that the growth in cash flow generation has substantially outpaced the increase in share price, resulting in a lower valuation multiple relative to the equity cash flows produced.
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