Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Sysco Corp., FCFF calculation
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
The analysis of cash flow performance from 2019 to 2024 reveals a period of initial volatility followed by a sustained upward trajectory in both operating cash generation and free cash flow to the firm (FCFF).
- Operating Cash Flow Trends
- Net cash provided by operating activities experienced a notable decline from US$ 2,411 million in 2019 to US$ 1,619 million in 2020. While a partial recovery occurred in 2021, the figure remained relatively stagnant through 2022 at US$ 1,791 million. A significant acceleration in cash generation began in 2023, with operating cash flow rising to US$ 2,868 million and further increasing to US$ 2,989 million by June 29, 2024.
- FCFF Volatility and Recovery
- Free cash flow to the firm exhibited more pronounced fluctuations than operating cash flow. FCFF dropped sharply to US$ 1,166 million in 2020 before rebounding to a period high of US$ 2,279 million in 2021. A subsequent decrease to US$ 1,570 million in 2022 was followed by a strong recovery phase, with FCFF reaching US$ 2,512 million in 2023 and US$ 2,660 million in 2024.
- Analysis of Cash Flow Relationship
- The variance between operating cash flow and FCFF indicates fluctuations in capital expenditures and other firm-level investments. In 2021, FCFF exceeded net cash provided by operating activities, suggesting an anomalous increase in cash inflows from investing activities or a reduction in capital outlays. In the most recent two fiscal years, the gap between these two metrics has narrowed, indicating a stabilized relationship between operating cash generation and the cash available to the firm's providers of capital.
Overall, the period concludes with a strong growth phase, where both operating cash flows and FCFF have reached their highest levels since 2019, signaling improved liquidity and cash generation efficiency.
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Interest Paid, Net of Tax
Sysco Corp., interest paid, net of tax calculation
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
2 2024 Calculation
Cash paid during the period for interest, tax = Cash paid during the period for interest × EITR
= 557 × 23.80% = 133
The financial trajectory of net interest payments and the effective income tax rate exhibits significant volatility between 2019 and 2021, followed by a period of relative stabilization from 2022 through 2024.
- Cash Paid for Interest, Net of Tax
- A substantial anomaly is observed in 2021, where payments spiked to 787 million US dollars, representing a more than threefold increase from the 239 million US dollars recorded in 2020. Following this peak, expenditures corrected sharply to 388 million US dollars in 2022 and have since maintained a gradual upward trend, reaching 424 million US dollars by June 2024.
- Effective Income Tax Rate (EITR)
- The EITR experienced considerable fluctuation during the initial years of the period, dropping to a low of 10.35% in 2021 after having peaked at 26.55% in 2020. From 2022 onward, the rate stabilized within a narrow range, increasing incrementally from 22.21% in 2022 to 23.80% in 2024.
- Analysis of Volatility and Convergence
- The year 2021 represents a critical point of divergence, characterized by the lowest recorded tax rate coinciding with the highest net interest outflow. In the subsequent three fiscal years, a pattern of convergence is evident, as both the effective tax rate and net interest payments have risen steadily and in tandem, suggesting a return to normalized operational financing and tax conditions.
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Enterprise Value to FCFF Ratio, Current
Sysco Corp., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 48,971) |
| Free cash flow to the firm (FCFF) | 2,660) |
| Valuation Ratio | |
| EV/FCFF | 18.41 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Costco Wholesale Corp. | 50.68 |
| Target Corp. | 25.62 |
| Walmart Inc. | 52.73 |
| EV/FCFF, Sector | |
| Consumer Staples Distribution & Retail | 49.34 |
| EV/FCFF, Industry | |
| Consumer Staples | 36.91 |
Based on: 10-K (reporting date: 2024-06-29).
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
Sysco Corp., historical EV/FCFF calculation, comparison to benchmarks
| Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | Jun 27, 2020 | Jun 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Enterprise value (EV)1 | 48,971) | 44,889) | 52,106) | 48,525) | 37,628) | 45,291) | |
| Free cash flow to the firm (FCFF)2 | 2,660) | 2,512) | 1,570) | 2,279) | 1,166) | 2,029) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | 18.41 | 17.87 | 33.18 | 21.29 | 32.27 | 22.32 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Costco Wholesale Corp. | 59.32 | 35.54 | 58.09 | 35.64 | 25.32 | — | |
| Target Corp. | 21.32 | — | 21.05 | 11.38 | — | — | |
| Walmart Inc. | 30.87 | 30.99 | 33.26 | 14.86 | — | — | |
| EV/FCFF, Sector | |||||||
| Consumer Staples Distribution & Retail | 36.25 | 39.50 | 34.48 | 16.94 | — | — | |
| EV/FCFF, Industry | |||||||
| Consumer Staples | 31.10 | 30.22 | 30.06 | 20.91 | — | — | |
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= 48,971 ÷ 2,660 = 18.41
4 Click competitor name to see calculations.
The financial performance over the six-year period ending June 29, 2024, is characterized by significant volatility in both valuation and cash flow generation. The Enterprise Value to Free Cash Flow to the Firm (EV/FCFF) ratio exhibits a cyclical pattern, with sharp peaks corresponding to periods of diminished cash flow efficiency.
- Enterprise Value (EV) Trends
- Enterprise value fluctuated considerably, reaching a period low of 37,628 million US$ in 2020 before ascending to a peak of 52,106 million US$ in 2022. Following this peak, a contraction occurred in 2023, with the value recovering to 48,971 million US$ by the end of the 2024 fiscal year.
- Free Cash Flow to the Firm (FCFF) Performance
- Cash flow generation experienced two distinct troughs during the analysis period. A primary decline occurred in 2020, with FCFF dropping to 1,166 million US$, followed by a secondary dip to 1,570 million US$ in 2022. A strong recovery trend is observed in the final two years, with FCFF increasing to 2,512 million US$ in 2023 and reaching a period high of 2,660 million US$ in 2024.
- EV/FCFF Ratio Analysis
- The EV/FCFF ratio reflects the inverse relationship between enterprise value and cash flow stability. The ratio peaked in 2020 (32.27) and 2022 (33.18), indicating periods where the enterprise value was high relative to the cash being generated. In contrast, the ratio has normalized significantly in the most recent two years, dropping to 17.87 in 2023 and 18.41 in 2024. This compression suggests an improvement in the firm's ability to generate free cash flow relative to its overall valuation.
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