Free cash flow yield
Also known as: FCF yield
A ratio compares the price the market puts on a stock to something the company actually produces, its , its , or its cash flow. It tells you how expensive a stock is relative to that measure, not just whether the share price is high or low in absolute terms.
Free cash flow yield divides by , showing what percentage of the company's is generated as actual free cash each year. Unlike most ratios, it is expressed as a percentage rather than a multiple, which makes it directly comparable to other yields, such as a bond's interest rate or a .
The formula is: / x 100.
A higher free cash flow yield generally signals a cheaper stock relative to the real cash it produces. Some investors calculate this against instead of , to account for debt and cash on the , the same adjustment used in .