Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Constellation Brands Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
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Between February 2017 and February 2022, the financial data indicates a period of sustained growth in cash generation followed by a contraction in the final fiscal year. Net cash provided by operating activities demonstrated a steady upward trajectory for five consecutive years before experiencing a slight decline in the most recent period.
- Operating Cash Flow Growth
- Net cash provided by operating activities grew from US$ 1,696,000 thousand in 2017 to a peak of US$ 2,806,500 thousand in 2021. This represents a consistent increase in the ability to generate cash from core business operations. A marginal decrease to US$ 2,705,400 thousand was observed in 2022, marking the first decline in the reported period.
- Free Cash Flow to the Firm (FCFF) Trajectory
- FCFF exhibited a more aggressive growth pattern than operating cash flow from 2017 to 2021, rising from US$ 1,009,394 thousand to US$ 2,301,450 thousand. This acceleration suggests a significant increase in the surplus cash available to all capital providers. However, this trend reversed sharply in 2022, with FCFF falling to US$ 1,679,781 thousand, representing a decrease of approximately 27% from the 2021 peak.
- Analysis of Cash Conversion and Capital Outlays
- The variance between operating cash flow and FCFF indicates shifting capital allocation priorities. From 2017 to 2020, the gap between these two metrics narrowed, meaning a higher percentage of operating cash was converted into free cash flow. In 2022, a significant divergence occurred: while operating cash flow remained relatively stable, FCFF dropped substantially. This pattern suggests a marked increase in capital expenditures or other firm-level cash outflows during the 2022 fiscal year.
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Interest Paid, Net of Tax
Constellation Brands Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
2 2022 Calculation
Interest, net of interest capitalized, tax = Interest, net of interest capitalized × EITR
= 368,500 × 99.70% = 367,395
3 2022 Calculation
Capitalized interest costs, tax = Capitalized interest costs × EITR
= 25,300 × 99.70% = 25,224
A comprehensive review of the interest expenditures net of tax reveals a period of gradual expansion followed by a severe contraction in the final reporting year. The figures indicate a significant shift in the company's financial obligations or accounting treatment between February 2021 and February 2022.
- Net Interest Expense Trends
- Interest costs, net of capitalized interest and tax, exhibited a general upward trajectory from February 2017 through February 2020, increasing from $220.8 million to a peak of $354.6 million. After a slight moderation to $334.4 million in 2021, the expenditure collapsed to $1.1 million in February 2022, representing a near-total elimination of the net interest burden for that period.
- Capitalized Interest Analysis
- Capitalized interest costs, net of tax, mirrored the primary interest trend, growing from $17.3 million in 2018 to a peak of $29.4 million in 2020. Similar to the general interest expense, these costs saw a sharp decline in February 2022, falling to $76 thousand.
- Effective Income Tax Rate (EITR) Volatility
- The EITR demonstrated extreme volatility, with a notable low of 0.5% in 2018 and an anomalous spike to 99.7% in 2022. The correlation between the 2022 tax rate surge and the precipitous decline in net-of-tax interest expenses suggests that the net figures were heavily influenced by significant tax adjustments or one-time accounting events in the final year.
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Enterprise Value to FCFF Ratio, Current
Constellation Brands Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 49,045,081) |
| Free cash flow to the firm (FCFF) | 1,679,781) |
| Valuation Ratio | |
| EV/FCFF | 29.20 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Coca-Cola Co. | 59.53 |
| Mondelēz International Inc. | 27.42 |
| PepsiCo Inc. | 22.01 |
| Philip Morris International Inc. | 28.13 |
| EV/FCFF, Sector | |
| Food, Beverage & Tobacco | 33.75 |
| EV/FCFF, Industry | |
| Consumer Staples | 41.28 |
Based on: 10-K (reporting date: 2022-02-28).
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
Constellation Brands Inc., historical EV/FCFF calculation, comparison to benchmarks
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Enterprise value (EV)1 | 58,379,762) | 56,550,645) | 41,954,208) | 53,510,359) | 53,800,019) | 42,376,898) | |
| Free cash flow to the firm (FCFF)2 | 1,679,781) | 2,301,450) | 2,208,619) | 1,650,497) | 1,211,702) | 1,009,394) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | 34.75 | 24.57 | 19.00 | 32.42 | 44.40 | 41.98 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Coca-Cola Co. | 27.95 | 25.28 | — | — | — | — | |
| Mondelēz International Inc. | 34.05 | 31.98 | — | — | — | — | |
| PepsiCo Inc. | 40.39 | 33.08 | — | — | — | — | |
| Philip Morris International Inc. | 19.53 | 16.35 | — | — | — | — | |
| EV/FCFF, Sector | |||||||
| Food, Beverage & Tobacco | 28.47 | 24.71 | — | — | — | — | |
| EV/FCFF, Industry | |||||||
| Consumer Staples | 30.06 | 20.91 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
3 2022 Calculation
EV/FCFF = EV ÷ FCFF
= 58,379,762 ÷ 1,679,781 = 34.75
4 Click competitor name to see calculations.
The financial trajectory between February 2017 and February 2022 is characterized by significant volatility in valuation multiples, driven by divergent movements in enterprise value and free cash flow to the firm. The enterprise value to free cash flow to the firm (EV/FCFF) ratio experienced a cyclical pattern, peaking early in the period, reaching a trough in 2020, and subsequently expanding through 2022.
- Enterprise Value Trends
- Enterprise value exhibited a non-linear progression, increasing from approximately 42.38 billion USD in 2017 to a peak of 58.38 billion USD by 2022. A notable contraction occurred in February 2020, where the value dropped to 41.95 billion USD, representing the lowest valuation point in the analyzed period before recovering strongly in the subsequent two years.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF demonstrated a consistent upward trend for the majority of the period, growing from 1.01 billion USD in 2017 to a peak of 2.30 billion USD in 2021. This growth suggests a period of improving operational efficiency or expanding cash-generating capacity. However, this trend reversed in 2022, with FCFF declining to 1.68 billion USD.
- EV/FCFF Ratio Dynamics
- The EV/FCFF ratio shifted from a high of 44.40 in 2018 to a low of 19.00 in 2020. The compression observed between 2018 and 2020 was the result of simultaneous declines in enterprise value and steady increases in free cash flow. Conversely, the expansion of the ratio from 24.57 in 2021 to 34.75 in 2022 indicates a valuation misalignment where enterprise value continued to rise despite a marked decrease in the firm's free cash flow generation.
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