What is P/FCF (Price to Free Cash Flow)? | Investment Basics Episode #2

Описание: The price-to-cash flow ratio measures how much cash a company generates relative to its stock price, rather than what it records in earnings relative to its stock price, as measured by the price-earnings ratio. The price-to-cash flow ratio is said to be a better investment valuation indicator than the price-earnings ratio, due to the fact that cash flows cannot be manipulated as easily as earnings, which are affected by depreciation and other non-cash items. Some companies appear unprofitable because of large, non-cash expenses even though they have positive cash flows.

KEY TAKEAWAYS
The price-to-cash flow ratio is a multiple that compares a company's market value to its operating cash flow or its stock price per share to operating cash flow per share.
The price-to-cash flow multiple works well for companies that have large non-cash expenses such as depreciation.
A low multiple implies that a stock may be undervalued.

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