Enterprise Value to FCFF (EV/FCFF)
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Kinder Morgan Inc. pages available for free this week:
- Income Statement
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Debt to Equity since 2010
- Price to Operating Profit (P/OP) since 2010
- Price to Sales (P/S) since 2010
- Aggregate Accruals
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Free Cash Flow to The Firm (FCFF)
Kinder Morgan Inc., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 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).
- Net Cash Provided by Operating Activities
- The net cash provided by operating activities demonstrates a fluctuating pattern over the five-year period. Beginning at $5303 million in 2015, there is a decline in 2016 to $4787 million, followed by a further decrease to $4601 million in 2017. In 2018, there is a recovery with an increase to $5043 million; however, this is followed by another decline in 2019, reaching $4748 million. Overall, the operating cash flow shows variability without a clear upward or downward trend.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm exhibits a generally positive trend during the period analyzed. Starting at $1945 million in 2015, FCFF increases substantially in 2016 to $2805 million. Although it slightly decreases to $2668 million in 2017, it recovers and grows to $3578 million in 2018, and further to $3793 million in 2019. This upward trajectory suggests an improvement in the company's ability to generate free cash flow, which could indicate enhanced operational efficiency or effective capital expenditure management.
Interest Paid, Net of Tax
Kinder Morgan Inc., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 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).
2 2019 Calculation
Cash paid during the period for interest, net of capitalized interest, tax = Cash paid during the period for interest, net of capitalized interest × EITR
= × =
- Effective Income Tax Rate (EITR)
-
The effective income tax rate demonstrates a clear downward trend from 2015 to 2018, starting at a notably high 72.9% in 2015 and decreasing substantially each year to reach 23.4% in 2018. This represents a significant reduction of approximately 49.5 percentage points over the four-year period. In 2019, there is a slight uptick in the rate to 29.3%, indicating a minor reversal in the declining trend. Overall, the tax rate has become considerably more favorable over the years with a large decrease especially between 2016 and 2018.
- Cash Paid During the Period for Interest, Net of Capitalized Interest, Net of Tax (US$ in millions)
-
The cash paid for interest shows a consistent upward trend from 2015 to 2018, increasing from $538 million in 2015 to a peak of $1,439 million in 2018. This represents an increase of approximately 167% over the four-year span. In 2019, the amount decreases slightly to $1,315 million, indicating a modest reduction from the previous year’s peak but still maintaining a high level relative to earlier years. The overall pattern illustrates growing interest expenses net of capitalized interest and tax effects, potentially reflecting increased debt levels or higher interest rates prior to 2019.
Enterprise Value to FCFF Ratio, Current
Kinder Morgan Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | |
| Free cash flow to the firm (FCFF) | |
| Valuation Ratio | |
| EV/FCFF | |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Chevron Corp. | |
| ConocoPhillips | |
| Exxon Mobil Corp. | |
| Occidental Petroleum Corp. | |
Based on: 10-K (reporting date: 2019-12-31).
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
Kinder Morgan Inc., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | ||||||
| Free cash flow to the firm (FCFF)2 | ||||||
| Valuation Ratio | ||||||
| EV/FCFF3 | ||||||
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 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).
3 2019 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value exhibited fluctuations over the observed period. Starting at approximately 78.1 billion US dollars in 2015, it increased notably in 2016 to around 89.8 billion. However, this was followed by a decline in 2017 and 2018, reaching a low near 75.6 billion in 2018, before rising again in 2019 to approximately 83 billion.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow showed a strong upward trend throughout the time frame. Beginning at 1.945 billion US dollars in 2015, it increased substantially in 2016 and remained relatively high in subsequent years, reaching 3.793 billion by 2019. The data indicates consistent growth in cash generation capacity over the period.
- EV/FCFF Ratio
- The ratio of enterprise value to free cash flow to the firm demonstrated a clear downward trend, moving from a high of 40.14 in 2015 to roughly 21.88 in 2019. This decline suggests an improvement in valuation multiples, with the company potentially becoming more attractively valued relative to its cash flow generation. The most significant decreases occurred between 2015 and 2018, with a slight stabilization in 2019.
- Overall Insights
- The data indicates that despite volatility in enterprise value, the company's ability to generate free cash flow improved markedly over the analyzed years. The persistent increase in FCFF along with the declining EV/FCFF ratio points toward enhanced operational efficiency or cash flow generation capacity, and possibly a more favorable market valuation relative to its cash flow. These trends may reflect improved financial strength and operational performance.