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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The financial performance between 2020 and 2024 is characterized by a period of rapid expansion followed by a contraction in cash flow generation. Both net cash provided by operating activities and free cash flow to the firm (FCFF) reached a peak in 2022 before experiencing a downward trajectory in the subsequent two years.
- Net Cash Provided by Operating Activities
- Operating cash flows exhibited strong growth from 2020 to 2022, increasing from 3,842 million US$ to a peak of 16,810 million US$. Following this peak, a decline was observed in 2023 and 2024, with values settling at 12,308 million US$ and 11,739 million US$, respectively. Despite the recent decrease, the operating cash flow levels in 2024 remain significantly higher than those recorded in 2020 and 2021.
- Free Cash Flow to the Firm (FCFF)
- FCFF followed a similar upward trajectory initially, rising sharply from 2,686 million US$ in 2020 to 13,717 million US$ in 2022. However, a more pronounced decline occurred after 2022, with FCFF dropping to 6,912 million US$ in 2023 and further to 5,713 million US$ in 2024. The reduction in FCFF from its peak is more severe than the decline seen in operating cash flows.
- Cash Flow Conversion and Capital Allocation
- A notable divergence between operating cash flow and FCFF is evident in the latter part of the period. In 2022, FCFF represented approximately 82% of net cash provided by operating activities. By 2024, this proportion decreased to approximately 49%. This widening gap indicates a significant increase in capital expenditures or other investments relative to the cash generated from operations during 2023 and 2024.
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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
The financial data reveals a significant transition in interest obligations and tax dynamics between 2020 and 2024. A notable shift occurs after 2022, characterized by a reduction in net interest paid and a subsequent increase in capitalized interest, occurring alongside a volatile effective income tax rate.
- Analysis of Net Interest Paid
- Interest paid, net of capitalized interest and tax, remained relatively stable from 2020 to 2022, with values ranging between US$ 1,264 million and US$ 1,340 million. A sharp decline is observed in 2023, where the expense dropped to US$ 802 million, a decrease of approximately 40% compared to the previous year. This figure saw a slight recovery to US$ 858 million in 2024, though it remains substantially lower than the 2020-2022 average.
- Trends in Capitalized Interest
- Capitalized interest, net of tax, showed minimal fluctuation between 2020 and 2023, maintaining a range between US$ 46 million and US$ 72 million. However, a significant increase is evident in 2024, where the amount rose to US$ 134 million. This spike indicates a potential increase in long-term asset investment or the scaling of infrastructure projects that allow for the capitalization of borrowing costs.
- Effective Income Tax Rate (EITR) Fluctuations
- The effective income tax rate experienced high volatility over the five-year period. After an initial rise from 14.00% in 2020 to 25.00% in 2021, the rate plummeted to a period low of 6.00% in 2022. Since that decline, a consistent upward trajectory is observed, with the rate climbing to 27.00% in 2023 and reaching 29.00% by 2024.
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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) | 74,470) |
| Free cash flow to the firm (FCFF) | 5,713) |
| Valuation Ratio | |
| EV/FCFF | 13.04 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Chevron Corp. | 25.68 |
| ConocoPhillips | 21.27 |
| Exxon Mobil Corp. | 28.16 |
| EV/FCFF, Sector | |
| Oil, Gas & Consumable Fuels | 22.72 |
| EV/FCFF, Industry | |
| Energy | 22.48 |
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 | — | |
| ConocoPhillips | 16.31 | 15.38 | 7.43 | 10.72 | — | |
| Exxon Mobil Corp. | 15.76 | 12.47 | 7.84 | 10.06 | — | |
| EV/FCFF, Sector | ||||||
| Oil, Gas & Consumable Fuels | 16.71 | 13.63 | 7.91 | 11.15 | — | |
| EV/FCFF, Industry | ||||||
| Energy | 16.61 | 13.96 | 8.54 | 11.54 | — | |
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.
An analysis of the financial metrics from 2020 to 2024 reveals a period of significant volatility in cash flow generation contrasted with a relatively stable enterprise valuation. While the enterprise value experienced moderate fluctuations, the free cash flow to the firm exhibited a sharp peak followed by a steady contraction, leading to a non-linear trend in the EV/FCFF ratio.
- Enterprise Value (EV) Trends
- The enterprise value showed a gradual increase from 68,728 million USD in 2020 to a peak of 81,681 million USD in 2022. Following this peak, the value corrected slightly in 2023 to 77,093 million USD before stabilizing at 78,428 million USD by the end of 2024. This indicates a level of valuation stability despite the underlying volatility in cash flows.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF demonstrated substantial growth in the early part of the period, rising from 2,686 million USD in 2020 to 13,717 million USD in 2022. This peak represented a five-fold increase over two years. However, a subsequent downward trend occurred, with FCFF falling to 6,912 million USD in 2023 and further decreasing to 5,713 million USD in 2024, signaling a reduction in the firm's ability to generate surplus cash.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio experienced a dramatic compression between 2020 and 2022, dropping from 25.58 to a low of 5.95. This compression was driven primarily by the rapid expansion of FCFF relative to a slower growth in enterprise value. From 2023 onward, the ratio reversed its trajectory, increasing to 11.15 and then to 13.73 in 2024. This upward trend in the ratio suggests that the market valuation remained resilient even as the cash flow yield diminished, effectively increasing the multiple attributed to the firm's free cash flow.
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