Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
YUM! Brands Inc., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).
The financial performance from 2011 to 2015 is characterized by relatively stable operating cash flows contrasted with a significant and accelerating increase in free cash flow to equity (FCFE).
- Operating Cash Flow Trends
- Net cash provided by operating activities remained consistent throughout the period, fluctuating within a narrow range between 2,049 million and 2,294 million US dollars. A peak was observed in 2012, followed by a marginal decline through 2014, and a subsequent recovery to 2,139 million US dollars by the end of 2015.
- Free Cash Flow to Equity Analysis
- FCFE exhibited a strong upward trajectory following a slight contraction between 2011 and 2012. From 2012 to 2015, FCFE grew from 913 million US dollars to 1,797 million US dollars. The growth accelerated in the final two years of the period, with the most substantial increase occurring between 2014 and 2015.
- Cash Flow Conversion Efficiency
- A notable divergence is observed between the flat trend of operating cash flows and the rising trend of FCFE. The conversion rate of operating cash to FCFE improved significantly, rising from approximately 44.6% in 2011 to 84.1% in 2015. This suggests a reduction in capital expenditures or an increase in net debt issuance, allowing a much larger proportion of operating cash to be available to equity holders.
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Price to FCFE Ratio, Current
YUM! Brands Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 367,005,511 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 1,797) |
| FCFE per share | 4.90 |
| Current share price (P) | 88.25 |
| Valuation Ratio | |
| P/FCFE | 18.02 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Airbnb Inc. | 19.65 |
| Booking Holdings Inc. | 15.17 |
| Chipotle Mexican Grill Inc. | 27.98 |
| DoorDash, Inc. | 21.02 |
| McDonald’s Corp. | 23.58 |
| Starbucks Corp. | 36.37 |
Based on: 10-K (reporting date: 2015-12-26).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
YUM! Brands Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 26, 2015 | Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 408,711,522 | 433,115,252 | 442,931,286 | 450,729,244 | 460,414,239 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 1,797) | 1,366) | 1,023) | 913) | 968) | |
| FCFE per share3 | 4.40 | 3.15 | 2.31 | 2.03 | 2.10 | |
| Share price1, 4 | 69.52 | 76.05 | 73.24 | 64.56 | 65.50 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 15.81 | 24.11 | 31.71 | 31.87 | 31.15 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| DoorDash, Inc. | — | — | — | — | — | |
| McDonald’s Corp. | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).
1 Data adjusted for splits and stock dividends.
3 2015 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,797,000,000 ÷ 408,711,522 = 4.40
4 Closing price as at the filing date of YUM! Brands Inc. Annual Report.
5 2015 Calculation
P/FCFE = Share price ÷ FCFE per share
= 69.52 ÷ 4.40 = 15.81
6 Click competitor name to see calculations.
The financial performance between 2011 and 2015 is characterized by a significant divergence between the growth of free cash flow to equity (FCFE) and the valuation multiple applied to those cash flows.
- Share Price Trajectory
- The share price exhibited moderate volatility with a general upward trend until 2014. After starting at 65.50 US$ in 2011, the price peaked at 76.05 US$ in 2014 before experiencing a correction to 69.52 US$ by the end of 2015.
- FCFE per Share Expansion
- A consistent and accelerating growth pattern is observed in FCFE per share. The value increased steadily from 2.10 US$ in 2011 to 3.15 US$ in 2014, followed by a substantial jump to 4.40 US$ in 2015. This represents a total increase of approximately 109% over the analyzed period, indicating a strong improvement in the company's ability to generate cash for equity holders.
- P/FCFE Ratio Compression
- The P/FCFE ratio underwent a dramatic contraction. From 2011 to 2013, the ratio remained stable at elevated levels, averaging approximately 31.4x. A sharp decline began in 2014, with the ratio falling to 24.11, and continuing downward to 15.81 in 2015. This compression indicates that the market valuation of the company did not keep pace with the rapid growth in cash flow generation, leading to a more conservative valuation multiple by the end of the period.
The overall trend indicates that while the company significantly enhanced its cash flow productivity per share, the market's willingness to pay a premium for those cash flows diminished, resulting in a halved P/FCFE ratio between 2013 and 2015.
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