Free Cash Flow Yield
Free Cash Flow Yield tells an investor how much cash a company generated after investment over the past year, relative to its market value.
How it is calculated
(Operating Cash Flow (TTM) + Property, Plant, Equipment Change (Net) (TTM) + Intangible Assets Change (Net) (TTM)) ÷ (Stock Price × Shares (Basic, Weighted) (latest quarter))
Worked out for every trading day, from the latest reported figures on or before that day.
Quarterly and annual values are the daily value on the first trading day on or after each period end.
- Unit
- Percent
- Periods
- Daily, Quarterly, Annual
- Source
- Calculated by stockrow from the inputs below
Reading Free Cash Flow Yield
How to read it
stockrow adds operating cash flow for the trailing twelve months to the net change in property, plant and equipment and the net change in intangible assets over the same period, which reduce the total when the company is investing. It divides that free cash flow by market value: the stock price times the weighted basic share count from the latest quarter. The yield rises when operating cash flow grows, investment falls or the price drops, and falls in the opposite cases. It is worked out for every trading day, from the latest reported figures on or before that day.
What is typical
Asset-light businesses such as software and services convert much of their profit into free cash flow, while capital-heavy industries such as utilities, telecoms and manufacturing spend heavily on equipment and show lower or uneven yields. Fast-growing companies that reinvest heavily can show low or negative yields. Compare the figure with the median for the company’s sector.
Pitfalls
Investment is lumpy, so a year with a large plant or a purchase of intangible assets can make the yield negative, and a year of low spending can flatter it. Operating cash flow swings with working capital, such as the timing of payments from customers. Quarterly and annual values are the daily value on the first trading day on or after each period end.