DEFINITION of 'Free Cash Flow Yield'
An overall return evaluation ratio of a stock, which standardizes the free cash flow per share a company is expected to earn against its market price per share. The ratio is calculated by taking the free cash flow per share divided by the share price. To illustrate:
INVESTOPEDIA EXPLAINS 'Free Cash Flow Yield'
Free cash flow yield is similar in nature to the earnings yield metric, which is usually meant to measure GAAP earnings per share divided by share price. Generally, the lower the ratio, the less attractive the investment is and vice versa. The logic behind this is that investors would like to pay as little price as possible for as many earnings as possible.
Some investors regard free cash flow (which takes into account capital expenditures and other ongoing costs a business incurs to keep itself running) as a more accurate representation of the returns shareholders receive from owning a business, and thus prefer to free cash flow yield as a valuation metric over earnings yield.

Earnings Per Share  EPS
The portion of a company's profit allocated to each outstanding ... 
Free Cash Flow To Sales
A ratio that illustrates the percentage of free cash flow to ... 
Earnings Yield
The earnings per share for the most recent 12month period divided ... 
Cash Flow Per Share
A measure of a firm's financial strength, calculated as: Cash ... 
Cash Flow Return on Investment ...
A valuation model that assumes the stock market sets prices based ... 
Free Cash Flow  FCF
A measure of financial performance calculated as operating cash ...

Fundamental Analysis
Discounted Cash Flow Analysis
Find out how analysts determine the fair value of a company with this stepbystep tutorial and learn how to evaluate an investment's attractiveness for yourself. 
Markets
How To Use PriceToSales Ratios To Value Stocks
Take a look at how this effective ratio can be influenced by certain critical factors. 
Forex
Understanding Free Cash Flow
Cash in the bank is what every company strives to achieve. Find out how to determine how much a company is generating and keeping. 
Markets
Free Cash Flow: Free, But Not Always Easy
Free cash flow is a great gauge of corporate health, but it's not immune to accounting trickery. 
Forex Education
Free Cash Flow Yield: The Best Fundamental Indicator
Cash in the bank is what every company strives to achieve. Find out how to determine how much a company is generating and keeping. 
Bonds & Fixed Income
Equity Premiums: Looking Back And Looking Ahead
If stocks become less profitable in the future, you may have to change your investment strategy. 
Fundamental Analysis
How do I calculate dividend payout ratio from a balance sheet?
Understand what the dividend payout ratio indicates and learn how it can be calculated using the figures from a company's balance sheet statement. 
Credit & Loans
When is it necessary to get a letter of credit?
Capitalize on assets and negate risks by using a letter of credit. Letters of credit are often requested for buying, selling or trading. 
Fundamental Analysis
Can entities other than banks issue letters of credit?
Obtaining a letter of credit from a nonbank is legally acceptable according to the ICC, but companies tend to prefer to receive them from banks. 
Investing Basics
What is the difference between a fixed asset and a current asset?
Discover the difference between fixed assets and current assets and the value of each to a company. Learn the category and where to record each asset.