Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
eBay Inc., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
The cash flow profile from 2014 to 2018 is characterized by significant volatility and a general decline in liquid capital availability. While operating activities provided a baseline of cash, the free cash flow to equity experienced drastic fluctuations, indicating inconsistent capital expenditure patterns or varying levels of net borrowing and asset divestitures.
- Net Cash Provided by Operating Activities
- A substantial contraction is observed between 2014 and 2015, where cash from operations decreased from 5,677 million USD to 2,877 million USD. Following this initial drop, the metric remained relatively stable, oscillating between 2,661 million USD and 3,146 million USD through 2018. The overall trend indicates a reduction in the primary cash-generating capacity of core operations compared to the 2014 peak.
- Free Cash Flow to Equity (FCFE) Volatility
- FCFE exhibited extreme instability over the five-year period. A peak of 7,888 million USD in 2014 was followed by a sharp decline to 1,359 million USD in 2015. A partial recovery occurred in 2016, reaching 4,397 million USD, before trending downward again to 1,260 million USD by 2018. This volatility suggests that the cash available to shareholders was heavily influenced by factors beyond standard operating performance.
- Analysis of Cash Flow Divergence
- The disparity between operating cash flow and FCFE suggests significant non-operating cash movements. In 2014 and 2016, FCFE exceeded operating cash flow, implying net inflows from financing activities or the sale of assets. Conversely, in 2015 and 2018, FCFE fell significantly below operating cash flow, indicating periods of heightened capital expenditures or substantial debt repayments.
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Price to FCFE Ratio, Current
eBay Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 813,525,054 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 1,260) |
| FCFE per share | 1.55 |
| Current share price (P) | 35.62 |
| Valuation Ratio | |
| P/FCFE | 23.00 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Amazon.com Inc. | 127.13 |
| Home Depot Inc. | 21.02 |
| Lowe’s Cos. Inc. | 8.82 |
| TJX Cos. Inc. | 29.10 |
Based on: 10-K (reporting date: 2018-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
eBay Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 914,880,451 | 1,012,079,673 | 1,087,042,601 | 1,178,705,177 | 1,210,046,829 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 1,260) | 3,512) | 4,397) | 1,359) | 7,888) | |
| FCFE per share3 | 1.38 | 3.47 | 4.04 | 1.15 | 6.52 | |
| Share price1, 4 | 34.08 | 42.37 | 32.03 | 23.94 | 54.50 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 24.75 | 12.21 | 7.92 | 20.76 | 8.36 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Amazon.com Inc. | — | — | — | — | — | |
| Home Depot Inc. | — | — | — | — | — | |
| Lowe’s Cos. Inc. | — | — | — | — | — | |
| TJX Cos. Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Data adjusted for splits and stock dividends.
3 2018 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,260,000,000 ÷ 914,880,451 = 1.38
4 Closing price as at the filing date of eBay Inc. Annual Report.
5 2018 Calculation
P/FCFE = Share price ÷ FCFE per share
= 34.08 ÷ 1.38 = 24.75
6 Click competitor name to see calculations.
The financial period between 2014 and 2018 is characterized by significant volatility in both equity valuation and cash flow generation, leading to wide fluctuations in the Price to Free Cash Flow to Equity (P/FCFE) ratio.
- Share Price Trends
- The share price experienced a sharp decline in 2015, falling from 54.50 to 23.94. A partial recovery followed over the next two years, peaking at 42.37 in 2017, before retreating to 34.08 by the end of 2018.
- Free Cash Flow to Equity (FCFE) per Share
- Cash flow generation exhibited extreme instability. FCFE per share dropped precipitously from 6.52 in 2014 to 1.15 in 2015. Although it recovered to 4.04 in 2016 and remained relatively stable in 2017 at 3.47, another significant decline occurred in 2018, with the value falling to 1.38.
- P/FCFE Ratio Analysis
- The P/FCFE ratio fluctuated significantly as a result of the divergence between market pricing and cash flow performance. In 2014, the ratio was relatively low at 8.36. The ratio spiked to 20.76 in 2015, driven not by a price increase, but by the collapse in FCFE per share. A normalization occurred in 2016, where the ratio reached its lowest point of 7.92, indicating a period where cash flow generation was high relative to the share price. However, by 2018, the ratio reached a period high of 24.75, reflecting a scenario where the share price remained elevated despite a sharp contraction in available free cash flow to equity.
Overall, the data indicates a lack of stability in cash flow conversion, which has historically caused the valuation multiple to swing between conservative and aggressive levels regardless of the absolute share price.
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