FCF yield: what it is and how to read it

What it is

Free cash flow divided by market cap: how much cash each euro invested at today's price “earns”. Compare it with the interest on a bond.

How to read it

Compare the FCF yield with what a simple alternative, such as a Treasury bond, would pay. A high yield with falling free cash flow can be a warning sign, not a bargain.

Educational information; not a recommendation to buy or sell.