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free cash flow yield
Definition
An indicator of the return expected per share. It equals free cash flow per share divided by the current market price per share (or equivalently, the company's overall cash flow divided by its market capitalization). This is similar to earnings yield, except it considers cash flow instead of earnings, and is used primarily by individuals who believe cash flow to be a more accurate indicator than earnings.
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Reasoning from 200 Years Ago is Still Valid NowIn probably 90% of the cases we use 15x as our target multiple of normalized free cash flow. That has been the average for American stocks over the past 200 years and it results in a roughly 6.5% free ... Read more
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