Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Etsy Inc., FCFF calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2017-12-31).
Between 2017 and 2021, there was a significant expansion in cash generation capabilities, characterized by an aggressive growth phase that peaked in 2020 followed by a moderate contraction in free cash flow in 2021.
- Net Cash Provided by Operating Activities
- A strong upward trend is observed from 2017 to 2020, with values rising from 67.4 million to 679.0 million. The most substantial increase occurred between 2019 and 2020, representing a growth of approximately 228%. In 2021, this metric remained relatively stable, experiencing only a marginal decrease of roughly 4% to 651.6 million.
- Free Cash Flow to the Firm (FCFF)
- FCFF mirrored the growth trajectory of operating cash flow through 2020, increasing from 53.6 million in 2017 to a peak of 671.9 million. However, a notable divergence occurred in 2021, where FCFF declined to 560.1 million. This constitutes a decrease of approximately 16.6% from the previous year's peak, a more pronounced drop than that seen in operating cash flow.
- Capital Expenditure Trends
- The close correlation between operating cash flow and FCFF from 2017 to 2020 suggests a period of low capital intensity relative to cash inflows. The widening variance observed in 2021 indicates an increase in capital expenditures, as the decline in FCFF exceeded the slight reduction in net cash provided by operating activities.
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Interest Paid, Net of Tax
Etsy Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2017-12-31).
2 2021 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= 6,054 × 21.00% = 1,271
The analysis of cash outflows for interest, net of tax, reveals significant volatility between 2017 and 2021. While the effective income tax rate showed a trend of stabilization around 21% for several years, the actual cash paid for interest fluctuated independently of these tax rate movements.
- Effective Income Tax Rate (EITR) Trends
- A substantial reduction in the EITR occurred between 2017 and 2018, decreasing from 35.00% to 21.00%. This rate remained constant through 2019 before experiencing a sharp contraction to 4.50% in 2020. By 2021, the rate returned to the 21.00% baseline.
- Cash Paid for Interest, Net of Tax
- Interest payments peaked in 2018 at 7,902 thousand US dollars, marking a significant increase from the 4,911 thousand US dollars recorded in 2017. A sharp decline followed in 2019, with payments falling to 2,533 thousand US dollars. From 2019 through 2021, a consistent upward trend was observed, with payments rising to 3,252 thousand US dollars in 2020 and reaching 4,783 thousand US dollars by the end of 2021.
- Interrelationship Between Tax Rates and Interest Outflows
- The relationship between the effective tax rate and net interest payments indicates that gross interest obligations were the primary driver of cash outflows rather than tax shielding. The highest net interest payment occurred in 2018 despite a lower tax rate than in 2017. Furthermore, the lowest tax rate recorded in 2020 did not correspond with the lowest net interest payment, suggesting that the increase in gross interest costs during that period offset the benefits of the reduced tax rate.
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Enterprise Value to FCFF Ratio, Current
Etsy Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 13,976,109) |
| Free cash flow to the firm (FCFF) | 560,141) |
| Valuation Ratio | |
| EV/FCFF | 24.95 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Amazon.com Inc. | 271.13 |
| Home Depot Inc. | 23.70 |
| Lowe’s Cos. Inc. | 15.93 |
| TJX Cos. Inc. | 28.65 |
| EV/FCFF, Sector | |
| Consumer Discretionary Distribution & Retail | 197.30 |
| EV/FCFF, Industry | |
| Consumer Discretionary | 79.78 |
Based on: 10-K (reporting date: 2021-12-31).
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
Etsy Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 20,323,794) | 27,211,471) | 6,861,370) | 8,239,666) | 2,805,862) | |
| Free cash flow to the firm (FCFF)2 | 560,141) | 671,915) | 193,326) | 184,149) | 53,589) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 36.28 | 40.50 | 35.49 | 44.74 | 52.36 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Amazon.com Inc. | — | — | — | — | — | |
| Home Depot Inc. | 20.22 | — | — | — | — | |
| Lowe’s Cos. Inc. | 14.88 | — | — | — | — | |
| TJX Cos. Inc. | 18.30 | — | — | — | — | |
| EV/FCFF, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 130.00 | — | — | — | — | |
| EV/FCFF, Industry | ||||||
| Consumer Discretionary | 60.31 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
3 2021 Calculation
EV/FCFF = EV ÷ FCFF
= 20,323,794 ÷ 560,141 = 36.28
4 Click competitor name to see calculations.
Between 2017 and 2021, the valuation of the firm relative to its free cash flow to the firm (FCFF) exhibited a general downward trajectory, despite significant volatility in both enterprise value and cash generation.
- Enterprise Value Trends
- Enterprise value experienced substantial growth over the period, rising from approximately 2.81 billion in 2017 to a peak of 27.21 billion in 2020. A subsequent correction occurred in 2021, with the value decreasing to 20.32 billion.
- Free Cash Flow to the Firm Performance
- FCFF demonstrated consistent growth, increasing from 53.59 million in 2017 to 560.14 million in 2021. The most significant expansion occurred in 2020, when FCFF reached 671.92 million, representing a substantial increase relative to the 2019 figure of 193.33 million.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio declined from a high of 52.36 in 2017 to 36.28 by the end of 2021. This overall compression indicates that the growth in cash generation has generally kept pace with the increase in enterprise value. A temporary increase in the ratio to 40.50 was observed in 2020, reflecting a period where the surge in enterprise value outpaced the immediate growth in FCFF.
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