Currently, the average Price to Cash Flow (P/CF) for the stocks in the S&P 500 is 14.05. But just like the P/E ratio, a value of less than 15 to 20 is generally considered good.
Cash per share is the broadest measure of available cash to a business divided by the number of equity shares outstanding. Cash per share tells us the percentage of a company’s share price available to spend on strengthening the business, paying down debt, returning money to shareholders, and other positive campaigns.
Is a high P CF ratio good?
A high P/CF ratio indicated that the specific firm is trading at a high price but is not generating enough cash flows to support the multiple—sometimes this is OK, depending on the firm, industry, and its specific operations.
As a general rule, P/FCF under 5 (or price is less than 5 times free cash flow per share) is considered “undervalued,” which means the stock may be trading at too low of a price and may rise in the future to properly reflect the free cash flow generated by the firm.
What is considered a high PE ratio?
A higher P/E ratio shows that investors are willing to pay a higher share price today because of growth expectations in the future. The average P/E for the S&P 500 has historically ranged from 13 to 15. For example, a company with a current P/E of 25, above the S&P average, trades at 25 times earnings.
What is a good p CF?
Here are the parameters for selecting true value stocks: P/CF less than or equal to X-Industry Median. Price greater than or equal to 5: The stocks must all be trading at a minimum of $5 or higher. Average 20-Day Volume greater than 100,000: A substantial trading volume ensures that the stock is easily tradable.
Cash per share is calculated by dividing cash on hand by the total number of shares. Cash per share is the percentage of a firm’s share price that is immediately accessible for spending. Cash per share consists of cash and short-term investments.
Net Cash per Share is calculated by taking all a company’s cash, less all current liabilities and dividing that number by the total shares outstanding.
Cash flow per share can be calculated by dividing cash flow earned in a given reporting period (usually quarterly or annually) by the total number of shares outstanding during the same term.
What does price to cash flow tell you?
The price-to-cash flow (P/CF) ratio is a stock valuation indicator or multiple that measures the value of a stock’s price relative to its operating cash flow per share. The ratio uses operating cash flow (OCF), which adds back non-cash expenses such as depreciation and amortization to net income.
What is good price to sales ratio?
Price-to-sales (P/S) ratios between one and two are generally considered good, while a P/S ratio of less than one is considered excellent. As with all equity valuation metrics, P/S ratios can vary significantly between industries.
What is considered a good cash flow ratio?
A ratio less than 1 indicates short-term cash flow problems; a ratio greater than 1 indicates good financial health, as it indicates cash flow more than sufficient to meet short-term financial obligations.