What is the 'Free Cash Flow Yield'
The free cash flow yield is 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:
BREAKING DOWN '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.

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What's the difference between free cash flow and operating cash flow?
Learn the difference between free cash flow and operating cash flow. Explore how analysts use earnings and cash flow when ... Read Answer >> 
What are some ratios I can use the operating cash flow ratio with?
Understand the importance of a company's operating cash flow. Learn about some of the financial ratios that use the operating ... Read Answer >> 
What is the difference between cash flow and free cash flow?
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Is free cash flow the same as net free cash flow?
Know the difference between your net cash flow and free cash flow when pitching your company to any of your potential stockholders. Read Answer >> 
What is the formula for calculating free cash flow?
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What is the difference between cash flow and fund flow?
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