Do you look for investment ideas using free cash flow yield? If so this new indicator, called Free Cash Flow Score we just added to the screener can help you.
Combines free cash flow growth and stability
Free Cash Flow Score (FCF Score) is calculated by combining Free cash flow growth with free cash flow stability.
It gives you a combined indication of free cash flow quality.
How it is calculated
Free Cash Flow Score (FCF Score) is calculated as follows:
(Three year free cash flow growth X 0.7) – (Variability of quarterly free cash flow over the past 3 years X 0.3)
The FCF Score is thus put together of 70% Free cash Flow Growth and 30% Free Cash Flow Quality
The higher the value the better as it means free cash flow growth is high or the variability of free cash flow is low or both.
Use it if you are a dividend yield investor
You can use the FCF Score with Free cash flow yield when looking for stable high dividend yield companies. A high FCF Score will make sure a company has the cash generating ability to maintain its high dividend pay-out.