I use FCF Yield to primarilyidentify under-valued stocks. Only companies with FCF yield over 15% will makethe first cut.
This is what CorporateFinance Institute says about FCF :-
“Free cash flow (FCF)measures a company’s financial performance. It shows the cash that a companycan produce after deducting the purchase of assets such as property, equipment, and other major investments from its operating cash flow. In other words, FCFmeasures a company’s ability to produce what investors care most about - cashthat’s available to be distributed in a discretionary way.Compared to earnings per se, free cash flow ismore transparent in showing the company’s potential to produce cash and profits”.
For stocks that makethe cut, I then use a quantitative and qualitative approach to dissect thecompanies further.
Investing thesis for TER is multi-fold – secular growth,low PE, low EV/EBITDA, high EBITDA yield, high FCF yield etc.Based on the lastest FY reporting and management update,we can derive some interesting inference on TER.
- TER reported strong FCF $306m last FY.
- H2 FCF makes up 82% of full year FCF
- Q4 FCF should be immense (see management comments on Q4business update)
- TER repaid borrowings of $240 million
- FCF Yield based on last FY was 37% (based on current price)
- Upward adjustment of payout ratio and the payment of quarterlydividend reflect Management’s confidence of this FY
TER is indeed a uniqueCash Machine and, barring unforeseen circumstance, we should expect FCF (amountand yield) to easily surpass last FY – thus generating huge returns for shareholders.Please do your owndue diligence.
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Last
18.5¢ |
Change
-0.005(2.63%) |
Mkt cap ! $148.1M |
Open | High | Low | Value | Volume |
18.5¢ | 19.0¢ | 18.5¢ | $620.2K | 3.324M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
37 | 1612006 | 18.0¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
19.0¢ | 347494 | 5 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
37 | 1612006 | 0.180 |
13 | 423883 | 0.175 |
17 | 320317 | 0.170 |
4 | 345095 | 0.165 |
6 | 168877 | 0.160 |
Price($) | Vol. | No. |
---|---|---|
0.190 | 347494 | 5 |
0.195 | 912874 | 11 |
0.200 | 386209 | 11 |
0.205 | 5000 | 1 |
0.210 | 155707 | 7 |
Last trade - 16.10pm 02/09/2024 (20 minute delay) ? |
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TER (ASX) Chart |