Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Williams-Sonoma Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).
The financial trajectory from 2019 to 2024 exhibits a general upward trend in both operating cash flows and free cash flow to the firm (FCFF), characterized by a period of rapid expansion followed by a temporary contraction and a subsequent strong recovery.
- Operating Cash Flow Performance
- Net cash provided by operating activities grew modestly between 2019 and 2020, followed by a substantial increase in 2021, where values more than doubled to reach 1,274,848 thousand USD. After continuing this growth in 2022 to 1,371,147 thousand USD, a decline was recorded in 2023 to 1,052,822 thousand USD, before surging to a period high of 1,680,273 thousand USD in 2024.
- Free Cash Flow to the Firm (FCFF) Trends
- FCFF mirrored the trajectory of operating cash flows, starting at 404,760 thousand USD in 2019 and rising to 1,147,028 thousand USD by 2022. A significant reduction occurred in 2023, with FCFF falling to 699,298 thousand USD. However, a robust recovery was observed in 2024, with FCFF reaching its maximum value of 1,492,439 thousand USD.
- Cash Flow Correlation and Volatility
- A strong positive correlation is maintained between operating cash flows and FCFF throughout the analyzed period. The volatility observed in 2023 affected both metrics simultaneously, suggesting that the decline was driven by operational factors. The recovery in 2024 demonstrates a significant rebound in the ability to generate cash available to all capital providers.
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Interest Paid, Net of Tax
Williams-Sonoma Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).
2 2024 Calculation
Cash paid during the year for interest, tax = Cash paid during the year for interest × EITR
= 837 × 25.40% = 213
An analysis of the financial outflows and tax rates reveals a significant divergence between interest expenditures and the effective income tax rate from 2019 through 2024.
- Cash Interest Expenditure Trends
- Cash paid for interest, net of tax, exhibited a growth phase between February 2019 and January 2021, rising from 8,876 thousand US$ to a peak of 13,961 thousand US$. This was followed by a precipitous decline starting in January 2022, where payments dropped to 2,398 thousand US$. This downward trajectory continued into January 2023 and January 2024, with values stabilizing at 593 thousand US$ and 624 thousand US$, respectively, representing a substantial reduction in net interest costs over the latter half of the period.
- Effective Income Tax Rate (EITR) Dynamics
- The effective income tax rate remained relatively stable throughout the observed period, fluctuating within a narrow range between 22.10% and 25.40%. A gradual upward trend is observable in the final two years, with the rate increasing from 22.40% in January 2022 to 25.40% by January 2024.
- Comparative Analysis of Outflows and Tax Rates
- The data indicates that the sharp reduction in cash paid for interest occurred independently of the movements in the effective income tax rate. The substantial decrease in net interest payments following 2021 suggests a significant shift in debt levels or financing structures, as the EITR continued to trend slightly upward while interest costs nearly vanished.
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Enterprise Value to FCFF Ratio, Current
Williams-Sonoma Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 17,246,502) |
| Free cash flow to the firm (FCFF) | 1,492,439) |
| Valuation Ratio | |
| EV/FCFF | 11.56 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Amazon.com Inc. | 281.35 |
| Home Depot Inc. | 28.41 |
| Lowe’s Cos. Inc. | 18.89 |
| TJX Cos. Inc. | 29.96 |
| EV/FCFF, Sector | |
| Consumer Discretionary Distribution & Retail | 49.60 |
| EV/FCFF, Industry | |
| Consumer Discretionary | 44.30 |
Based on: 10-K (reporting date: 2024-01-28).
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
Williams-Sonoma Inc., historical EV/FCFF calculation, comparison to benchmarks
| Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Feb 2, 2020 | Feb 3, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Enterprise value (EV)1 | 17,654,317) | 7,427,720) | 9,779,733) | 13,118,520) | 3,113,818) | 4,624,223) | |
| Free cash flow to the firm (FCFF)2 | 1,492,439) | 699,298) | 1,147,028) | 1,119,296) | 430,897) | 404,760) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | 11.83 | 10.62 | 8.53 | 11.72 | 7.23 | 11.42 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Amazon.com Inc. | 60.78 | 45.92 | — | — | — | — | |
| Home Depot Inc. | 21.94 | 27.17 | 25.12 | 20.22 | — | — | |
| Lowe’s Cos. Inc. | 24.69 | 19.56 | 19.56 | 14.88 | — | — | |
| TJX Cos. Inc. | 24.44 | 31.93 | 33.03 | 18.30 | — | — | |
| EV/FCFF, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 44.15 | 38.32 | 111.04 | 130.00 | — | — | |
| EV/FCFF, Industry | |||||||
| Consumer Discretionary | 41.98 | 33.07 | 51.09 | 60.31 | — | — | |
Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).
3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 17,654,317 ÷ 1,492,439 = 11.83
4 Click competitor name to see calculations.
The analysis of the Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio reveals a period of significant volatility characterized by sharp fluctuations in both market valuation and operational cash generation between 2019 and 2024.
- Enterprise Value (EV) Trends
- Enterprise Value exhibited extreme variance over the observed period. After a decline in February 2020 to 3.11 billion USD, a substantial increase occurred by January 2021, where the value reached 13.12 billion USD. This was followed by a two-year contraction, bringing the valuation down to 7.43 billion USD by January 2023, before a sharp surge to a period peak of 17.65 billion USD in January 2024.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF demonstrated a generally positive long-term growth trajectory despite a temporary decline in 2023. Cash flows increased from 404.76 million USD in 2019 to 1.49 billion USD in 2024. A significant inflection point is observed between 2020 and 2021, where FCFF more than doubled, suggesting a substantial improvement in the firm's ability to generate cash during that interval.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio fluctuated between a minimum of 7.23 in 2020 and a maximum of 11.83 in 2024. The compression of the ratio to 7.23 in 2020 indicates a period where the firm was valued lower relative to its cash flow generation. Conversely, the expansion of the ratio to 11.72 in 2021 and 11.83 in 2024 suggests an increase in the market multiple applied to the firm's free cash flows, reflecting higher valuation premiums during those periods.
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