FCF yield
ValuationFree cash flow as a percentage of market cap — the cash return the business generates at today's price.
Formula
FCF yield = free cash flow ÷ market cap
Why it matters
If you owned the whole company at today's price, the FCF yield is the cash rate the business would pay you after sustaining itself — before any growth. That makes it the single most direct valuation number on the site: comparable across companies, comparable to bond yields, and grounded in cash rather than accounting profit. Total expected return can be roughly framed as FCF yield plus long-run FCF growth.
What good looks like
Above 5% is cheap for a stable business — you are being paid a bond-beating cash rate with growth as a bonus. 3–5% is fair for quality with moderate growth. Under 2% means you are paying almost entirely for future growth, and the burden of proof shifts to the growth evidence.
Caveats
A single year of FCF drives the number, so capex timing and working-capital swings distort it — glance at the multi-year FCF series. SBC add-backs inflate FCF at heavy issuers; haircut mentally using SBC/FCF. Market cap ignores debt: a leveraged company's FCF partly belongs to its lenders' refinancing risk, which is why we also compute OCF yield on enterprise value.