FCF yield
Free cash flow as a percent of market cap: the cash the business makes for each dollar of stock.
Worked example · a round-number company
Free cash flow$1.0B÷Market cap$10.0B=FCF yield10.0%How to read it
↑Higher is better. More cash for the price. Under 2% usually means investors are paying for growth.
Example Co. 10.0%
Under 2%2% to 6%Over 6%
Compare with a 10-year Treasury yield for a sense of what cash costs elsewhere.
Keep in mind
- Stock-based pay isn't subtracted, which flatters companies that pay staff in shares.