Glossary term
FCF Yield
Free cash flow divided by market capitalization — the cash return the business generates on its current price. The inverse of P/FCF, and harder to flatter with accounting choices than earnings yield.
Definition & Context
FCF yield divides trailing free cash flow — operating cash flow minus capital expenditures — by market capitalization. A 5% FCF yield means the business threw off five cents of spendable cash last year for every dollar of market value. Because cash flow statements leave less room for discretion than income statements, FCF yield is the valuation lens earnings-quality investors reach for first: depreciation schedules, revenue-recognition timing and one-off charges all wash out of it.
Reading the Number
High FCF yield can mean a cheap durable business or a business the market believes is shrinking — the number alone does not distinguish a bargain from a value trap. Low or negative FCF yield is normal for heavy-investment phases: a company building factories or datacenters converts cash into capacity, so the metric has to be read against capex intensity and growth. Comparing FCF yield to bond yields frames the equity-versus-credit trade-off directly.
How Closelook Uses It
FCF yield feeds the Valuation module of the Closelook Company Score alongside P/E, PEG, EV/Sales, EV/EBITDA and P/FCF. On the stock pages it sits in the established-ratios layer with its universe percentile, so the reader can weigh it on their own terms before our composite does.