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11 High Yield Stocks with Cheap Free Cash Flow Ratios

High earnings are good but they are nothing worth if the company needs the money for investments, growth or debt reductions. A figure that measures the real income of the company is the free cash flow. The ratio shows the operating cash flow less changes in working capital and capital expenditures.

I screened the market by high yield stocks with a current cheap price to free cash flow ratio of less than 15. Out there are 59 companies with such a high yield and low price ratio, but most of the results are dominated by stocks with a lower capitalization. That’s why I screened only stocks with a market capitalization of more than USD2 billion. Exactly 11 stocks remained of which 7 are recommended to buy.

Here are my favorite stocks:

1. R.R. Donnelley & Sons (RRD) has a market capitalization of $2.22 billion. The company employs 58,000 people, generates revenues of $10,611.00 million and has a net income of $-121.10 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $657.40 million. Because of these figures, the EBITDA margin is 6.20 percent (operating margin -0.04 percent and the net profit margin finally -1.14 percent).

The total debt representing 44.20 percent of the company’s assets and the total debt in relation to the equity amounts to 351.06 percent. Due to the financial situation, a return on equity of -7.51 percent was realized. Twelve trailing months earnings per share reached a value of $-0.73. Last fiscal year, the company paid $1.04 in form of dividends to shareholders.

Here are the price ratios of the company: The P/E ratio is not calculable, P/S ratio 0.21 and P/B ratio 2.12. Dividend Yield: 8.39 percent. The beta ratio is 1.89. The current price in relation to the free cash flow amounts to 4.53.

2. Plains All American Pipelines (PAA) has a market capitalization of $12.34 billion. The company employs 3,800 people, generates revenues of $34,275.00 million and has a net income of $994.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,530.00 million. Because of these figures, the EBITDA margin is 4.46 percent (operating margin 3.79 percent and the net profit margin finally 2.90 percent).

The total debt representing 33.80 percent of the company’s assets and the total debt in relation to the equity amounts to 95.39 percent. Due to the financial situation, a return on equity of 15.47 percent was realized. Twelve trailing months earnings per share reached a value of $4.93. Last fiscal year, the company paid $3.91 in form of dividends to shareholders.

Here are the price ratios of the company: The P/E ratio is 16.11, P/S ratio 0.37 and P/B ratio 2.32. Dividend Yield: 5.23 percent. The beta ratio is 0.49. The current price in relation to the free cash flow amounts to 13.57.

3. Gannett (GCI) has a market capitalization of $3.65 billion. The company employs 31,000 people, generates revenues of $5,239.99 million and has a net income of $500.13 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,012.42 million. Because of these figures, the EBITDA margin is 19.32 percent (operating margin 15.55 percent and the net profit margin finally 9.54 percent).

The total debt representing 26.61 percent of the company’s assets and the total debt in relation to the equity amounts to 75.62 percent. Due to the financial situation, a return on equity of 20.43 percent was realized. Twelve trailing months earnings per share reached a value of $1.89. Last fiscal year, the company paid $0.24 in form of dividends to shareholders.

Here are the price ratios of the company: The P/E ratio is 8.15, P/S ratio 0.69 and P/B ratio 1.56. Dividend Yield: 5.22 percent. The beta ratio is 2.45. The current price in relation to the free cash flow amounts to 5.26.

Take a closer look at the full table of the cheapest higher capitalized stocks in terms of free cash flow. The average price to earnings ratio (P/E ratio) amounts to 15.84 and forward P/E ratio is 12.84. The dividend yield has a value of 7.67 percent. Price to book ratio is 1.45 and price to sales ratio 0.78. The operating margin amounts to 7.42 percent. The companies are valuated at 8.21 times free cash flow.

Related stock ticker symbols:

FTE, TEF, PBI, RRD, AV, TI, SLF, HNP, GCI, PAA, SIX

Selected Articles:

· 14 Cheap Consumer Goods Dividend Stocks By Price-to-Free Cash Flow

· Stocks With Fast Dividend And Free Cash Flow Growth

· 10 High Yield Growth Stocks With Gaining Earnings Momentum

· The Cheapest High Yield Stocks On The S&P 500

About the author:

Dividend
I am a private full time investor searching for investments and investment ideas.

Visit Dividend's Website


Rating: 1.8/5 (4 votes)

Comments

Adib Motiwala
Adib Motiwala - 2 years ago
Please also talk about the EV in relation to the FCF. RRD has lot of debt and pension liability and including that in the EV makes the story look a lot different.

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