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
23.5¢ |
Change
0.005(2.17%) |
Mkt cap ! $188.2M |
Open | High | Low | Value | Volume |
23.5¢ | 24.3¢ | 23.0¢ | $390.4K | 1.644M |
Buyers (Bids)
No. | Vol. | Price($) |
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14 | 747510 | 23.5¢ |
Sellers (Offers)
Price($) | Vol. | No. |
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24.0¢ | 257196 | 2 |
View Market Depth
No. | Vol. | Price($) |
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14 | 747510 | 0.235 |
46 | 1217894 | 0.230 |
16 | 563961 | 0.225 |
23 | 2026941 | 0.220 |
3 | 155350 | 0.215 |
Price($) | Vol. | No. |
---|---|---|
0.240 | 257196 | 2 |
0.245 | 328336 | 15 |
0.250 | 368439 | 5 |
0.255 | 130000 | 2 |
0.260 | 649123 | 6 |
Last trade - 16.10pm 02/05/2024 (20 minute delay) ? |
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Last
23.8¢ |
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Change
0.005 ( 2.15 %) |
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Open | High | Low | Volume | ||
23.5¢ | 24.3¢ | 23.5¢ | 900286 | ||
Last updated 15.58pm 02/05/2024 ? |
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Dusko Ljubojevic, MD
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