Price-to-cash flow

Price-to-Cash Flow Ratio

The ratio of a company's stock price to the quantity of its cash inflows, minus its cash outflows over a given time, usually a year. The price-to-cash flow is similar to a company's price-earnings ratio, but it does not take into account earnings that have not actually been received. Some analysts prefer the price-to-cash flow ratio because it allows them to assess risk relative to the company's cash on-hand, instead of the cash it ought to have.

Price-to-cash flow.

You find a company's price-to-cash flow ratio by dividing the market price of its stock by its cash receipts minus its cash payments over a given period of time, such as a year.

Some institutional investors prefer price-to-cash flow over price-to-earnings as a gauge of a company's value.

They believe that by focusing on cash flow, they can better assess the risks that may result from the company's use of leverage, or borrowed money.

References in periodicals archive ?
The reference index MSCI USA Prime Value 100% hedged to EUR Index includes companies with a relatively low valuation, taking into account indicators such as the price-to-earnings, price-to-book, price-to-sales as well as price-to-cash flow ratios.
Price-to-cash flow and price-to-earnings ratios are good but not outstanding.
AN INVESTOR WHO IS WILLING TO follow the value school of investing should consider eight factors in selecting securities (or mutual funds), including price-to-earnings ratio, price-to-cash flow ratio, price-to-book value ratio, dividend yield, private market value, adjusted net working capital, insider buying and stock repurchases.
CHICAGO -- Kevin Matras shows how to search for stocks with increasing Cash Flows, but low Price-to-Cash Flow ratios.
However, the Price-to-Cash Flow, or P/CF, is another great ratio to do just that.
Investors should regard time-tested truths, about price-to-cash flow and regression to a mean, the way engineers regard Newton's Laws," said Hirtle.
Lamar's stock has traded in a wide price-to-cash flow (P/CF) multiple range of 10 to 22 over the last five years.
It trades at a discount to its industry peers using other relative valuation ratios such as price-to-book, price-to-sales, and price-to-cash flow.
The company fits the strategy's definition of being a contrarian investment because its P/E and price-to-cash flow ratios are in the bottom 20 percent of the market.
Likewise, SCG trades at a moderate discount to its industry peers based on price-to-cash flow multiples yet at relative parity with respect to multiples of sales and book value.
It qualifies as contrarian by being in the bottom 20% of the overall market for two or more of the following four ratios: price-to-earnings, price-to-cash flow, price-to-book and price-to-dividend.