Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Raytheon Co., 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).
Between 2015 and 2019, a consistent upward trajectory is observed in both net cash provided by operating activities and free cash flow to the firm (FCFF). Despite a marginal contraction in 2017, the period concludes with significant growth, indicating an improved capacity to generate cash from core operations and a strengthening of the firm's overall liquidity position.
- Operating Cash Flow Performance
- Net cash provided by operating activities increased from 2,346 million US$ in 2015 to 4,482 million US$ in 2019. This represents a substantial cumulative increase, characterized by a notable acceleration in the final two years of the period, with 2019 exhibiting the strongest annual growth.
- Free Cash Flow to the Firm (FCFF) Analysis
- FCFF mirrored the trend of operating cash flow, rising from 2,119 million US$ in 2015 to 3,661 million US$ in 2019. The temporary decline observed in 2017, where FCFF fell to 2,319 million US$, was swiftly reversed, leading to a peak in 2019.
- Investment and Capital Expenditure Trends
- The variance between operating cash flow and FCFF expanded progressively over the five-year period. The difference between the two metrics grew from 227 million US$ in 2015 to 821 million US$ in 2019. This widening gap suggests a strategic increase in capital expenditures or investments in the firm's infrastructure and capabilities, occurring simultaneously with the growth in absolute free cash flow.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Interest Paid, Net of Tax
Raytheon Co., 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 for interest on commercial paper and long-term debt, tax = Cash paid for interest on commercial paper and long-term debt × EITR
= 193 × 16.50% = 32
An analysis of the cash paid for interest, net of tax, reveals a period of fluctuation between 2015 and 2019, characterized by an inverse relationship between the effective income tax rate (EITR) and the net cash outflow for debt servicing.
- Effective Income Tax Rate Volatility
- The effective income tax rate exhibited significant variance over the five-year period. After a gradual increase from 26.30% in 2015 to a peak of 35.80% in 2017, the rate experienced a sharp decline to 8.40% in 2018, before recovering to 16.50% in 2019. This volatility suggests substantial shifts in the tax environment or the utilization of deferred tax assets.
- Net Interest Cash Outflows
- Cash payments for interest on commercial paper and long-term debt remained within a range of 137 million to 178 million US dollars. A notable decline occurred in 2017, where outflows reached their lowest point of 137 million US dollars, followed by a peak of 178 million US dollars in 2018. By 2019, the figure stabilized at 161 million US dollars.
- Correlation Between Tax Rates and Net Payments
- A strong inverse correlation is observable between the EITR and the net cash paid for interest. In 2017, the highest tax rate of 35.80% coincided with the lowest net interest payment, indicating a larger tax shield that reduced the net cash impact. Conversely, the lowest tax rate in 2018 (8.40%) resulted in the highest net cash outflow of 178 million US dollars, as the reduced tax rate diminished the tax deductibility benefit of the interest expense.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Enterprise Value to FCFF Ratio, Current
Raytheon Co., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 64,443) |
| Free cash flow to the firm (FCFF) | 3,661) |
| Valuation Ratio | |
| EV/FCFF | 17.60 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Boeing Co. | 303.26 |
| Caterpillar Inc. | 44.13 |
| Eaton Corp. plc | 45.56 |
| GE Aerospace | 40.43 |
| Honeywell International Inc. | 14.66 |
| Lockheed Martin Corp. | 17.31 |
| RTX Corp. | 29.78 |
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
Raytheon Co., 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 | 64,443) | 52,515) | 62,981) | 46,438) | 40,176) | |
| Free cash flow to the firm (FCFF)2 | 3,661) | 2,787) | 2,319) | 2,427) | 2,119) | |
| Valuation Ratio | ||||||
| EV/FCFF3 | 17.60 | 18.84 | 27.15 | 19.14 | 18.96 | |
| Benchmarks | ||||||
| EV/FCFF, Competitors4 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | — | — | — | — | — | |
| Eaton Corp. plc | — | — | — | — | — | |
| GE Aerospace | — | — | — | — | — | |
| Honeywell International Inc. | — | — | — | — | — | |
| Lockheed Martin Corp. | — | — | — | — | — | |
| RTX 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
= 64,443 ÷ 3,661 = 17.60
4 Click competitor name to see calculations.
The financial performance from 2015 to 2019 is characterized by a general expansion in Enterprise Value and a consistent growth trend in Free Cash Flow to the Firm (FCFF). While the Enterprise Value experienced significant volatility, the FCFF demonstrated a steady upward trajectory, concluding the period at its highest recorded level.
- Enterprise Value (EV) Trends
- The Enterprise Value grew from 40,176 million US$ in 2015 to 64,443 million US$ by 2019. This growth was non-linear, marked by a substantial increase in 2017, a correction in 2018, and a subsequent recovery to a period peak in 2019.
- Free Cash Flow to the Firm (FCFF) Growth
- FCFF exhibited a strong overall growth pattern, increasing from 2,119 million US$ in 2015 to 3,661 million US$ in 2019. Apart from a marginal decline in 2017, the cash flow generation improved annually, with the most significant acceleration occurring between 2018 and 2019.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio remained relatively stable near 19x for the majority of the period, with a notable exception in 2017 when the ratio peaked at 27.15. This spike was the result of a sharp increase in Enterprise Value coinciding with a slight contraction in FCFF. Following this peak, the ratio compressed, reaching its lowest point of 17.60 in 2019. This final decline indicates that the growth in cash flow generation began to outpace the growth in the overall valuation of the firm.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?