What is AEP Industries Forward Rate of Return (Yacktman) %?
Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. AEP Industries's forward rate of return for was 16.98%.
The historical rank and industry rank for AEP Industries's Forward Rate of Return (Yacktman) % or its related term are showing as below:
AEPI's Forward Rate of Return (Yacktman) % is not ranked *
in the Vehicles & Parts industry.
Industry Median: 5.52 * 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.
AEP Industries Forward Rate of Return (Yacktman) % Historical Data
The historical data trend for AEP Industries'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.
AEP Industries Forward Rate of Return (Yacktman) % Chart
Competitive Comparison of AEP Industries's Forward Rate of Return (Yacktman) %
For the Auto Parts subindustry, AEP Industries'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.
AEP Industries's Forward Rate of Return (Yacktman) % Distribution in the Vehicles & Parts Industry
For the Vehicles & Parts industry and Consumer Cyclical sector, AEP Industries's Forward Rate of Return (Yacktman) % distribution charts can be found below:
* The bar in red indicates where AEP Industries's Forward Rate of Return (Yacktman) % falls into.
AEP Industries 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).
* 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.
AEP Industries (NAS:AEPI) 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.
AEP Industries Forward Rate of Return (Yacktman) % Related Terms
Thank you for viewing the detailed overview of AEP Industries's Forward Rate of Return (Yacktman) % provided by GuruFocus.com. Please click on the following links to see related term pages.
AEP Industries (AEP Industries) Business Description
AEP Industries Inc was founded in 1970 and incorporated in Delaware in 1985. The Company is a manufacturer of plastic packaging films in North America. It manufactures and markets a diverse line of polyethylene, polyvinyl chloride and polypropylene flexible packaging products, with consumer, industrial and agricultural applications. The Company's plastic packaging films are used in the packaging, transportation, beverage, food, automotive, pharmaceutical, chemical, electronics, constructions, agriculture and textile industries. It manufactures plastic films, mainly from resins blended with other raw materials, which it either sell or further process by printing, laminating, slitting or converting. The Company's processing technologies enable it to create a variety of value-added products according to the specifications of its customers. Its manufacturing operations are located in the United States and Canada. It manufactures both industrial grade products, which are manufactured to general industry specifications, and specialty products, which are manufactured under more exacting standards to assure certain required chemical and physical properties. Specialty products generally sell at higher margins than industrial grade products. It manufactures custom films, generally for industrial applications, including sheeting, tubing and bags. The Company manufactures a line of stretch film products for both hand wrap and rotary applications, using both monolayer and co-extruded constructions used to wrap pallets of industrial and commercial goods for shipping or storage. The Company manufacture specifically formulated in-store and pre-store films with its Resinite line of polyvinyl chloride food wrap for the supermarket and industrial markets. It offers product with approximately 50 different formulations. Its Griffin, Georgia facility also produces dispenser (ZipSafe cutter) boxes containing polyvinyl chloride food wrap for sale to consumers and institutions, including restaurants, schools, hospitals and penitentiaries. The Company's PROformance films are used for food, pharmaceutical and medical applications and are available in up to five layers for applications requiring strength, clarity, sealability, barrier properties against oxygen or moisture transmission, and breathability for preserving freshness. Its canliners product line includes retail kitchen and standard trash bags and others. The Company manufactures approximately ten color printing, sheeting, and wicketed bags. It's printed and converted films provide printed rollstock to the food and beverage industries and other manufacturing and distributing companies. It also converts printed rollstock to bags and pouches for use by bakeries, fresh or frozen food processors, manufacturers or other dry goods processors. The Company's operations are conducted within one business segment-the production, manufacture and distribution of flexible plastic packaging products, for the food
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