Barrick reiterated its business focus on generating returns and free cash flows rather than increasing production.
FORBES: Barrick Gold Can Still Sparkle Despite Higher Costs And Impairment Charges In Results
Colgate has an impressive cash conversion ratio (free cash flows as a % of sales) of close to 14%.
FORBES: Unilever-Colgate Combination Would Be Logical And Timely
The value of an operating asset are the net present value of expected free cash flows discounted to infinity.
In fact, FrontRange has been able to do this from its strong free cash flows (there are over 13, 000 customers).
Falling free cash flows in the gold mining sector are discouraging investors.
FORBES: Barrick Gold Can Still Sparkle Despite Higher Costs And Impairment Charges In Results
The value of a company should be based on the value of its future free cash flows discounted at its cost of capital.
FORBES: Ben Bernanke's QE3: The Best Thing for Crowdfunding Since the JOBS Act
Here is a better way to value stocks: First, the investor should weigh the cost of capital against the firm's stream of current and future free cash flows to determine the asset's value.
Once the capacity expansion program winds down, my expectation is for large free cash flows going forward and for the company to embark on a sizable stock repurchase plan and to aggressively raise its dividend.
FORBES: Head To Canada For Bargains In Fertilizer And Energy
Despite a slow quarter in terms of revenues, IBM has shown a significant increase in free cash flows that we expect it will invest back into highly profitable, high margin businesses such as Big Data Analytics and Cloud Services.
FORBES: Big Blue Heads To $230 After Flexing Its Earnings Muscles
As a result the most important variables to the price of an asset are the level and future shape of free cash flows, and the discount rate used, which, as you rightly point out, can be analysed in terms of risk premium.
But fans of the company emphasize the company's global cigarette franchise, real potential growth in new markets, and robust free-cash flows.
It is not just growth companies that are opting out of dividends, but all companies, including those enjoying healthy flows of free cash.
Most of these actions were necessitated by sudden and substantial declines in free cash flow resulting from recession-induced contractions in property cash flows and per-share cash flow dilution caused by the issuances of additional equity.
The more conservative method is to use a Modified IRR (MIRR) where all of the cash flows are assumed reinvested at the lower risk free rate.
FORBES: My Prediction Was Wrong: Why We Didn't Get To $8 Natural Gas
应用推荐