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Nvidia
Estimated Fair Value$299.17
Current Price$229.28
Valuation Gap30.5%
Historical Median EV/FCF63.44x
Current EV/FCF48.49x
Enterprise Value-to-Free Cash Flow (EV/FCF)
For informational and educational purposes only • Not investment advice.
Compare EV/FCF valuations across companies
Apple
Estimated Fair Value$191.89
Current Price$336.64
Valuation Gap-43.0%
Historical Median EV/FCF25.17x
Current EV/FCF44.00x
Alphabet
This company isn't supported by EV/FCF.
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Microsoft
Estimated Fair Value$348.00
Current Price$535.07
Valuation Gap-35.0%
Historical Median EV/FCF34.32x
Current EV/FCF52.92x
Selected EV/FCF Multiple
What is Enterprise Value-to-Free Cash Flow (EV/FCF) Valuation?
Enterprise Value-to-Free Cash Flow (EV/FCF) Valuation estimates a company's Fair Value based on its Free Cash Flow to the Firm (FCFF) and the EV/FCF multiple applied to that cash flow.
The EV/FCF ratio compares a company's Enterprise Value with its Free Cash Flow to the Firm. FCFF represents cash generated by the operating business that is available to both shareholders and lenders.
Historical EV/FCF multiples show the valuation levels at which the company's operating business has traded in the past. They can be used as a reference for estimating Fair Enterprise Value from FCFF.
EV/FCF Valuation is most useful for companies with positive and relatively stable FCFF, but it may be less reliable when cash generation is highly volatile or changes materially over time.
How the EV/FCF Model Works
The EV/FCF model estimates fair value by calculating the company's historical EV/FCF multiples, selecting a valuation multiple, applying it to FCFF, and converting Enterprise Value into equity value per share.
Historical
FCFF & Enterprise Values
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Calculate Historical
EV/FCF
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Select
Valuation EV/FCF
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Estimate Fair
Enterprise Value
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Fair Value
per Share
EV/FCF Formula
Key Model Assumptions
• The company must have positive Free Cash Flow to the Firm (FCFF).
• FCFF is based on trailing twelve-month (TTM) financial data when sufficient quarterly data is available; annual data may be used as a fallback.
• Historical EV/FCF multiples require valid FCFF, market value and balance sheet data.
• The 10 most recent valid historical EV/FCF multiples are used to estimate the company's typical valuation multiple.
• The historical median EV/FCF forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median EV/FCF.
• Historical EV/FCF multiples may not remain representative if the company's cash generation, capital structure or operating performance changes materially.
• FCFF is based on trailing twelve-month (TTM) financial data when sufficient quarterly data is available; annual data may be used as a fallback.
• Historical EV/FCF multiples require valid FCFF, market value and balance sheet data.
• The 10 most recent valid historical EV/FCF multiples are used to estimate the company's typical valuation multiple.
• The historical median EV/FCF forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median EV/FCF.
• Historical EV/FCF multiples may not remain representative if the company's cash generation, capital structure or operating performance changes materially.
Step 1 — Calculate Historical EV/FCF Multiples
Historical Enterprise Value = Historical Market Cap + Historical Net Debt
Historical EV/FCF = Historical Enterprise Value / Historical FCFF
Historical Median EV/FCF = Median of the 10 most recent valid historical EV/FCF multiples
Historical EV/FCF = Historical Enterprise Value / Historical FCFF
Historical Median EV/FCF = Median of the 10 most recent valid historical EV/FCF multiples
The model calculates historical Enterprise Value and historical EV/FCF multiples using Free Cash Flow to the Firm. The median of the 10 most recent valid EV/FCF multiples is then used as the company's historical valuation benchmark.
Step 2 — Select the Valuation Multiple
Selected EV/FCF = Historical Median EV/FCF × Scenario Adjustment
The selected scenario adjusts the historical median EV/FCF to determine the valuation multiple used to estimate Fair Value.
Step 3 — Estimate Fair Value per Share
Fair Enterprise Value = FCFF × Selected EV/FCF
Fair Equity Value = Fair Enterprise Value − Net Debt
Fair Value per Share = Fair Equity Value / Shares Outstanding
Fair Equity Value = Fair Enterprise Value − Net Debt
Fair Value per Share = Fair Equity Value / Shares Outstanding
The selected EV/FCF multiple is applied to current Free Cash Flow to the Firm to estimate Fair Enterprise Value. Net Debt is then subtracted, or Net Cash is added, to determine Fair Equity Value. The resulting equity value is divided by Shares Outstanding to estimate Fair Value per Share.
Step 4 — Compare With the Current Market Valuation
Current Enterprise Value = Current Market Cap + Current Net Debt
Current EV/FCF = Current Enterprise Value / FCFF
Valuation Gap = Fair Value per Share / Current Price − 1
Current EV/FCF = Current Enterprise Value / FCFF
Valuation Gap = Fair Value per Share / Current Price − 1
Current EV/FCF shows the multiple currently assigned to the company's Free Cash Flow to the Firm, while the Valuation Gap compares the estimated Fair Value with the current stock price.