What is Air Methods Forward Rate of Return (Yacktman) %?
Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. Air Methods's forward rate of return for was 12.38%.
The historical rank and industry rank for Air Methods's Forward Rate of Return (Yacktman) % or its related term are showing as below:
AIRM's Forward Rate of Return (Yacktman) % is not ranked *
in the Transportation industry.
Industry Median: 12.025 * Ranked among companies with meaningful Forward Rate of Return (Yacktman) % only.
Unlike the Earnings Yield %, the Forward Rate of Return uses the normalized Free Cash Flow of the past seven years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
Air Methods Forward Rate of Return (Yacktman) % Historical Data
The historical data trend for Air Methods's Forward Rate of Return (Yacktman) % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
* Premium members only.
Air Methods Forward Rate of Return (Yacktman) % Chart
Competitive Comparison of Air Methods's Forward Rate of Return (Yacktman) %
For the Airports & Air Services subindustry, Air Methods's Forward Rate of Return (Yacktman) %, along with its competitors' market caps and Forward Rate of Return (Yacktman) % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Air Methods's Forward Rate of Return (Yacktman) % Distribution in the Transportation Industry
For the Transportation industry and Industrials sector, Air Methods's Forward Rate of Return (Yacktman) % distribution charts can be found below:
* The bar in red indicates where Air Methods's Forward Rate of Return (Yacktman) % falls into.
Air Methods Forward Rate of Return (Yacktman) % Calculation
Forward Rate of Return is a concept that Don Yacktman uses in his investment approach. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. He said in the interview (March 2012, when the S&P 500 was at about 1400):
If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.
The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).
Air Methods's Forward Rate of Return of Dec. 2016 is
Forward Rate of Return
=
Normalized Free Cash Flow
/
Price
+
5-Year EBITDA Growth Rate
=
1.45295238
/
31.85
+
0.0782
=
12.38 %
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Air Methods (NAS:AIRM) Forward Rate of Return (Yacktman) % Explanation
Unlike the Earnings Yield, the Forward Rate of Return uses the normalized Free Cash Flow of the past five years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over five years. The reason we use five years is to make it comparable to the growth rate.
Be Aware
In the Forward Rate of Return calculation, the growth rate is added directly to today's free cash flow yield. Therefore the calculation is reliable only if the company can grow at the same rate in the future as it did in the past. Investors should pay close attention to this when researching growth stocks. A more accurate measurement for return is Return on Capital.
Air Methods Forward Rate of Return (Yacktman) % Related Terms
Thank you for viewing the detailed overview of Air Methods's Forward Rate of Return (Yacktman) % provided by GuruFocus.com. Please click on the following links to see related term pages.
Air Methods Corp is a Delaware corporation, was established in Colorado in 1982. The Company provides air medical emergency transport services and systems throughout the United States of America. It designs, manufactures, and installs medical aircraft interiors and other aerospace and medical transport products. The Company also provides tourism operations in and around the Grand Canyon and Hawaiian Islands. The Company's operating segments include Air Medical Services, Tourism Division and United Rotorcraft. Air Medical Services provides air medical transportation services to the general population as an independent service and to hospitals or other institutions under exclusive operating agreements. The division operates 380 helicopters and 26 fixed wing aircraft under both Instrument Flight Rules and Visual Flight Rules. Tourism Division provides helicopter tours and charter flights, mainly focusing on Grand Canyon and Hawaiian Island tours. The division operates 48 helicopters under two Part 135 Air Carrier Certificates. United Rotorcraft Division designs, manufactures, and installs aircraft medical interiors and other aerospace and medical transport products for domestic and international customers. The Company maintains patents covering several products, including the Litter Lift System used in the U.S. Army's HH-60M helicopter and Medical Evacuation Vehicle, and the Articulating Patient Loading System and Modular Equipment Frame developed as part of the modular interior concept. The Company competes with several national and regional air medical transportation providers for contracts with hospitals and other healthcare institutions. It also competes with larger aerial tourism operators in the Grand Canyon market and a number of smaller operators in both the Grand Canyon and Hawaiian Island markets. The Company is subject to the Federal Aviation Act of 1958. All of its flight and maintenance operations-including equipment, ground facilities, dispatch, communications, flight training personnel and other matters affecting air safety are regulated and actively supervised by the U.S. Department of Transportation through the FAA. It is also subject to laws, regulations, and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, Dodd-Frank Wall Street Reform and Consumer Protection Act, Securities and Exchange Commission (SEC) regulations, NASDAQ Stock Market rules, and other federal and state securities laws.
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