Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Kraft Foods Group Inc., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
The financial data reveals trends in the cash flow activities of the company over three consecutive years ending in December 2012, 2013, and 2014.
- Net Cash Provided by Operating Activities (US$ in millions)
- There is a noticeable decline in net cash provided by operating activities from 3,035 million in 2012 to 2,043 million in 2013, representing a reduction of approximately 32.7%. This downward trend continues slightly into 2014, with the figure falling marginally to 2,020 million. The decrease suggests a reduction in the company's ability to generate cash from its core operations over this period.
- Free Cash Flow to Equity (FCFE) (US$ in millions)
- The FCFE exhibits a more pronounced decline, dropping steeply from 8,576 million in 2012 to 1,617 million in 2013, which is an approximate 81.1% decrease. Further decline is observed in 2014, with FCFE reducing to 1,487 million, indicating continuing pressure on the free cash available to equity shareholders. This sharp decrease relative to operating cash flow suggests potential changes in capital expenditures, debt repayment, or dividend payments during this timeframe.
Overall, the data indicates a significant contraction in the company’s cash flow capacity, both at the operational level and in terms of equity cash flow. The substantial drop in free cash flow to equity compared to the operating cash flow decline could imply increased financial obligations or investments impacting the distributable cash to shareholders.
Price to FCFE Ratio, Current
Kraft Foods Group Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 591,940,002 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 1,487) |
| FCFE per share | 2.51 |
| Current share price (P) | 85.88 |
| Valuation Ratio | |
| P/FCFE | 34.19 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| lululemon athletica inc. | 17.32 |
| Nike Inc. | 16.12 |
Based on: 10-K (reporting date: 2014-12-27).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Kraft Foods Group Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| No. shares of common stock outstanding1 | 587,988,695 | 596,311,563 | 593,372,593 | |
| Selected Financial Data (US$) | ||||
| Free cash flow to equity (FCFE) (in millions)2 | 1,487) | 1,617) | 8,576) | |
| FCFE per share3 | 2.53 | 2.71 | 14.45 | |
| Share price1, 4 | 64.17 | 55.09 | 51.66 | |
| Valuation Ratio | ||||
| P/FCFE5 | 25.37 | 20.32 | 3.57 | |
| Benchmarks | ||||
| P/FCFE, Competitors6 | ||||
| lululemon athletica inc. | — | — | — | |
| Nike Inc. | — | — | — | |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 Data adjusted for splits and stock dividends.
3 2014 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,487,000,000 ÷ 587,988,695 = 2.53
4 Closing price as at the filing date of Kraft Foods Group Inc. Annual Report.
5 2014 Calculation
P/FCFE = Share price ÷ FCFE per share
= 64.17 ÷ 2.53 = 25.37
6 Click competitor name to see calculations.
- Share Price Trend
- The share price showed a steady increase over the three-year period, rising from $51.66 in 2012 to $55.09 in 2013, and then further to $64.17 in 2014. This represents a consistent upward trend, indicating growing market confidence or favorable conditions impacting the stock value.
- Free Cash Flow to Equity (FCFE) per Share
- FCFE per share exhibited a sharp decline from $14.45 in 2012 to $2.71 in 2013, followed by a slight further decrease to $2.53 in 2014. This considerable drop signals a significant reduction in cash flow available to shareholders, which may raise concerns about the company’s operational cash efficiency or increased capital expenditures during this period.
- Price to FCFE (P/FCFE) Ratio
- The P/FCFE ratio increased markedly from 3.57 in 2012 to 20.32 in 2013, and further to 25.37 in 2014. This sharp rise is primarily driven by the decline in FCFE per share, while share price increased. A higher P/FCFE ratio suggests that the stock became more expensive relative to the cash flow it generates for equity holders, potentially indicating overvaluation or market expectations of future growth not reflected in current cash flows.
- Overall Analysis
- Despite a favorable trend in share price, the underlying free cash flow available to equity holders declined substantially, which negatively impacted the valuation multiple. This divergence suggests that while market sentiment remained positive or optimistic, underlying financial fundamentals related to cash flow generation weakened. Investors might need to consider the sustainability of cash flows and the reasons behind the reduced FCFE when evaluating the company’s financial health and stock valuation.