Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Parker-Hannifin Corp., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
- Operating Cash Flow
- The net cash provided by operating activities demonstrated a consistent upward trend from June 30, 2017, through June 30, 2021. The amount increased from approximately $1.3 billion in 2017 to around $2.6 billion in 2021, reflecting an overall improvement in cash generation from core business operations. However, in the year ending June 30, 2022, there was a noticeable decline to approximately $2.44 billion, indicating a reduction in operating cash inflows after five years of sustained growth.
- Free Cash Flow to the Firm (FCFF)
- The free cash flow to the firm showed a similar progression, rising steadily from approximately $1.2 billion in 2017 to a peak of nearly $2.69 billion in 2021. This upward movement highlights enhanced cash availability after capital expenditures during this period. Comparable to operating cash flow, FCFF experienced a decline in 2022, falling to approximately $2.45 billion. Despite this downturn, the level remained significantly higher than in the earlier years of the data set.
- General Observations
- The data suggests a strengthening liquidity position and increased operational efficiency from 2017 to 2021. The peak in both key cash flow metrics in 2021 may indicate the culmination of growth phases or effective working capital management. The slight weakening in 2022 warrants consideration, as it could reflect changes in market conditions, operational challenges, or increased investment activities, affecting cash generation and availability.
Interest Paid, Net of Tax
Parker-Hannifin Corp., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
2 2022 Calculation
Cash paid during the year for interest, tax = Cash paid during the year for interest × EITR
= 240,313 × 18.50% = 44,458
- Effective Income Tax Rate (EITR)
- The effective income tax rate exhibits notable fluctuations over the analyzed period. Starting at 26% in mid-2017, it increased sharply to 37.7% by mid-2018. Subsequently, there is a marked decline in the following years, reaching a low of 18.5% by mid-2022. This trend suggests significant variations in tax expense relative to pre-tax income, possibly influenced by changes in tax regulations, income composition, or the company's tax planning strategies.
- Cash Paid During the Year for Interest, Net of Tax
- Interest payments, net of tax, show an overall increasing trend from mid-2017 through mid-2022. The figure rose from approximately $97.6 million in 2017 to a peak of about $246 million in 2020, indicating a substantial increase in interest expenses. Following 2020, the interest payments decreased somewhat but remained elevated relative to 2017 levels, with payments of roughly $184 million in 2021 and $196 million in 2022. This pattern may reflect increased borrowing or higher interest rates during this timeframe.
Enterprise Value to FCFF Ratio, Current
Parker-Hannifin Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 55,695,791) |
| Free cash flow to the firm (FCFF) | 2,446,894) |
| Valuation Ratio | |
| EV/FCFF | 22.76 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Boeing Co. | — |
| Caterpillar Inc. | 21.76 |
| Eaton Corp. plc | 39.23 |
| GE Aerospace | 54.92 |
| Honeywell International Inc. | 27.49 |
| Lockheed Martin Corp. | 21.06 |
| RTX Corp. | 40.90 |
| EV/FCFF, Sector | |
| Capital Goods | 38.87 |
| EV/FCFF, Industry | |
| Industrials | 33.49 |
Based on: 10-K (reporting date: 2022-06-30).
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
Parker-Hannifin Corp., historical EV/FCFF calculation, comparison to benchmarks
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Enterprise value (EV)1 | 47,574,598) | 45,011,584) | 34,689,668) | 24,040,987) | 26,811,235) | 25,893,192) | |
| Free cash flow to the firm (FCFF)2 | 2,446,894) | 2,689,767) | 2,110,646) | 1,714,266) | 1,559,637) | 1,211,004) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | 19.44 | 16.73 | 16.44 | 14.02 | 17.19 | 21.38 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Boeing Co. | 37.53 | — | — | — | — | — | |
| Caterpillar Inc. | 23.54 | 20.50 | 23.83 | — | — | — | |
| Eaton Corp. plc | 33.44 | 38.16 | 21.94 | — | — | — | |
| GE Aerospace | 17.29 | 56.53 | 32.34 | — | — | — | |
| Honeywell International Inc. | 29.82 | 25.22 | 26.49 | — | — | — | |
| Lockheed Martin Corp. | 19.69 | 13.92 | 14.64 | — | — | — | |
| RTX Corp. | 28.45 | 27.29 | 35.26 | — | — | — | |
| EV/FCFF, Sector | |||||||
| Capital Goods | 25.87 | 32.16 | 74.97 | — | — | — | |
| EV/FCFF, Industry | |||||||
| Industrials | 24.30 | 28.80 | 189.49 | — | — | — | |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
3 2022 Calculation
EV/FCFF = EV ÷ FCFF
= 47,574,598 ÷ 2,446,894 = 19.44
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value shows a general upward trend over the period analyzed. Starting at approximately $25.9 billion in mid-2017, it increased modestly to around $26.8 billion in 2018 before experiencing a decline to about $24.0 billion in 2019. Following this temporary decline, a significant rise occurred in 2020, reaching nearly $34.7 billion, then continued to increase sharply in 2021 to approximately $45.0 billion, with a further smaller increase to about $47.6 billion in 2022.
- Free Cash Flow to the Firm (FCFF)
- Free cash flow to the firm displayed steady growth from 2017 to 2021. Beginning at about $1.21 billion in 2017, it rose annually to reach nearly $2.69 billion by mid-2021. In 2022, there was a slight decrease in FCFF, falling to approximately $2.45 billion. Despite this decrease, the overall trend remains positive over the six-year span.
- EV/FCFF Ratio
- The EV/FCFF ratio declined from 21.38 in 2017 to a low of 14.02 in 2019, indicating that enterprise value grew at a slower rate than free cash flow during this period. However, from 2019 onwards, the ratio increased again, reaching 16.44 in 2020 and slightly rising to 16.73 in 2021, before climbing more notably to 19.44 in 2022. This upward trend suggests that enterprise value growth outpaced free cash flow growth during the last three years under review.