FCF (Free Cash Flow)
You can use this FCF in the following manners, by comparing it with the EPS, DPS and Market Price per share:
1. Compare FCF/share with EPS
e.g. FCF/share divided by EPS = 80%.
2. Divide FCF/share by the DPS (Dividend per share)
e.g. FCF/share divided by DPS = 1.6x
This looks at the ability of the company to distribute dividends by looking at its free cash flow.
3. FCF yield.
e.g. FCF/share divided by Market share price/share = 5.3%.
Where the FCF yield is high, the investors should be attracted to the stock.