Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Occidental Petroleum Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
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- Net cash provided by operating activities
- The net cash provided by operating activities has shown a substantial increase from 2020 to 2022, rising from 3,842 million US dollars in 2020 to a peak of 16,810 million US dollars in 2022. Following this peak, a decline is observed in the subsequent years, with values decreasing to 12,308 million in 2023 and further to 11,739 million in 2024. Despite this downward trend in the latter years, the operating cash flow remains significantly higher than the 2020 baseline, indicating overall growth in operational cash generation capacity over the five-year period.
- Free cash flow to the firm (FCFF)
- The free cash flow to the firm mirrors a similar pattern to operating cash flow but with slightly more pronounced fluctuations. Starting at 2,686 million US dollars in 2020, FCFF surged to 13,717 million in 2022, reflecting strong cash generation after capital expenditures. However, after 2022, FCFF experienced a sharper decline compared to operating cash flow, dropping to 6,912 million in 2023 and further to 5,713 million in 2024. This decrease suggests potentially increased capital spending or other cash outflows impacting the free cash flow, resulting in a reduced capacity for discretionary use of cash post-2022, despite remaining above the initial 2020 figure.
- Overall analysis
- Both operating cash flow and free cash flow to the firm show strong growth culminating in 2022, indicative of favorable operational performance and cash management. The subsequent decline in 2023 and 2024 points to a moderation in cash generation, possibly attributable to external factors affecting the business environment or strategic changes in investment or operating activities. Nonetheless, the levels remain substantially elevated compared to 2020, suggesting resilience in cash flow generation capability over the period analyzed.
Interest Paid, Net of Tax
Occidental Petroleum Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2 2024 Calculation
Interest paid, net of capitalized interest, tax = Interest paid, net of capitalized interest × EITR
= 1,208 × 29.00% = 350
3 2024 Calculation
Capitalized interest, tax = Capitalized interest × EITR
= 189 × 29.00% = 55
- Effective income tax rate (EITR)
- The effective income tax rate exhibited notable fluctuations over the analyzed periods. It increased from 14% in 2020 to 25% in 2021, then sharply decreased to 6% in 2022. Following this, it rose again to 27% in 2023 and further to 29% in 2024. This pattern suggests significant variability in tax expenses relative to pre-tax earnings across the years, indicating possible changes in tax regulations, income composition, or tax planning strategies.
- Interest paid, net of capitalized interest, net of tax
- The interest paid, net of capitalized interest and tax, remained relatively stable around the 1300 million USD mark from 2020 to 2022, with slight annual fluctuations (1308 million in 2020, 1264 million in 2021, and 1340 million in 2022). However, a marked decrease occurred in 2023, with interest paid dropping to 802 million USD, representing a reduction of approximately 40% compared to 2022. A slight increase followed in 2024, reaching 858 million USD, but this value remained significantly lower than the initial years. This downward trend in interest expense could reflect reduced borrowing costs, lower debt levels, or improved capital structure management in recent years.
- Capitalized interest, net of tax
- Capitalized interest showed some variability but an overall increasing trend over the periods. Beginning at 71 million USD in 2020, it decreased to 46 million in 2021 but then rose to 65 million in 2022 and 72 million in 2023. The most notable increase occurred in 2024, where capitalized interest nearly doubled from the previous year, reaching 134 million USD. This upward movement may indicate increased investment in capital projects or changes in accounting treatment of borrowing costs.
Enterprise Value to FCFF Ratio, Current
Occidental Petroleum Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 75,697) |
| Free cash flow to the firm (FCFF) | 5,713) |
| Valuation Ratio | |
| EV/FCFF | 13.25 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Chevron Corp. | 17.87 |
| ConocoPhillips | 15.65 |
| Exxon Mobil Corp. | 15.92 |
| EV/FCFF, Sector | |
| Oil, Gas & Consumable Fuels | 16.11 |
| EV/FCFF, Industry | |
| Energy | 15.91 |
Based on: 10-K (reporting date: 2024-12-31).
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
Occidental Petroleum Corp., historical EV/FCFF calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Enterprise value (EV)1 | 78,428) | 77,093) | 81,681) | 72,969) | 68,728) | |
| Free cash flow to the firm (FCFF)2 | 5,713) | 6,912) | 13,717) | 8,693) | 2,686) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 13.73 | 11.15 | 5.95 | 8.39 | 25.58 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Chevron Corp. | 18.98 | 14.85 | 8.27 | 13.33 | 106.63 | |
| ConocoPhillips | 16.31 | 15.38 | 7.43 | 10.72 | 92.48 | |
| Exxon Mobil Corp. | 15.76 | 12.47 | 7.84 | 10.06 | — | |
| EV/FCFF, Sector | ||||||
| Oil, Gas & Consumable Fuels | 16.44 | 13.39 | 7.72 | 10.86 | 163.02 | |
| EV/FCFF, Industry | ||||||
| Energy | 16.37 | 13.70 | 8.29 | 11.22 | 117.62 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 78,428 ÷ 5,713 = 13.73
4 Click competitor name to see calculations.
The financial data over the five-year period presents notable trends in enterprise value (EV), free cash flow to the firm (FCFF), and the EV to FCFF ratio. These metrics provide insight into valuation and cash generation efficiency of the company.
- Enterprise Value (EV)
- There is a general upward trend in the enterprise value from 2020 through 2022, increasing from approximately $68.7 billion to $81.7 billion. However, in 2023, EV decreased to around $77.1 billion before slightly increasing again in 2024 to $78.4 billion. This fluctuating pattern suggests some volatility in the company's market valuation or capital structure, with a peak observed in 2022.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow demonstrates significant growth in the early years, rising sharply from $2.7 billion in 2020 to $8.7 billion in 2021, and then peaking at $13.7 billion in 2022. Following this peak, FCFF shows a marked decline in 2023 and 2024, falling to $6.9 billion and $5.7 billion respectively. This indicates a reduction in the company’s ability to generate free cash flow after 2022.
- EV/FCFF Ratio
- The EV/FCFF ratio declines significantly from a very high 25.58 in 2020 to a low of 5.95 in 2022, reflecting improved valuation relative to free cash flow during this period—that is, the market or enterprise value became more attractive compared to cash flow generation. However, from 2023 onwards, the ratio rises again to 11.15 in 2023 and further to 13.73 in 2024, suggesting a deteriorating valuation metric possibly due to the decline in free cash flow combined with fluctuating enterprise value.
In summary, the period from 2020 to 2022 is characterized by increasing enterprise value and strongly improving free cash flow, which culminated in a more favorable EV/FCFF ratio. From 2023 onward, both enterprise value and free cash flow display volatility and declines respectively, leading to a less favorable valuation multiple. This shift may highlight emerging challenges in maintaining cash flow generation or changes in market perception affecting the company’s valuation metrics.