Cash flow
Free Cash Flow Yield
Free cash flow yield is the cash a business produces expressed as a percentage of its market cap.
Yield language makes valuation comparable to a bond or a dividend. A 6% free-cash-flow yield means the company generated free cash equal to 6% of the price you are paying for the equity. You do not receive that 6% unless management pays it out, but it is the pool they can pay from.
Stocklytics shows free-cash-flow yield inside the value score so a high cash yield helps the value pillar. Still check the trend. A yield that spiked because the share price collapsed is not the same as a yield that rose because cash generation improved.
Formula
FCF yield = trailing free cash flow ÷ market capitalization
Live example
Apple Inc. (AAPL) last printed at $345.33 with a market cap of $5.04T. Market cap is the equity value you see above. Enterprise value would add net debt, which this quote row does not itemize.
Related
Free Cash Flow · Dividend Yield · Earnings Yield
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Questions
How is this different from dividend yield?
Dividend yield is what is paid. Free-cash-flow yield is what could be paid, reinvested, or used to cut debt. The gap is retained cash.
What is a good free-cash-flow yield?
Above the earnings yield of the market, with stable cash, is interesting. A high yield with collapsing cash is a trap. Context beats a cutoff.