The Cato (The Cato) Free Cash Flow

: $-12.1 Mil (TTM As of Jan. 2024)

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The Cato's total free cash flow for the months ended in Jan. 2024 was $-13.5 Mil. Its total free cash flow for the trailing twelve months (TTM) ended in Jan. 2024 was $-12.1 Mil.

The Cato's Free Cash Flow per Share for the months ended in Jan. 2024 was $-0.69. Its free cash flow per share for the trailing twelve months (TTM) ended in Jan. 2024 was $-0.62.

During the past 3 years, the average Free Cash Flow per Share Growth Rate was 32.00% per year. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Free Cash Flow Growth Rate using Free Cash Flow per Share data.

During the past 13 years, The Cato's highest 3-Year average Free Cash Flow per Share Growth Rate was 71.90% per year. The lowest was -34.20% per year. And the median was 4.40% per year.

The Cato Free Cash Flow Historical Data

The historical data trend for The Cato's Free Cash Flow 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.

The Cato Annual Data

Trend

Jan15

Jan16

Jan17

Jan18

Jan19

Jan20

Jan21

Jan22

Jan23

Jan24

Free Cash Flow

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45.09

-44.67

55.68

-6.06

-12.06

The Cato Quarterly Data
	Apr19	Jul19	Oct19	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Jan23	Apr23	Jul23	Oct23	Jan24
Free Cash Flow	Get a 7-Day Free Trial															-10.98	3.73	9.38	-11.71	-13.45

The Cato Free Cash Flow Calculation

Free Cash Flow is considered one of the most important parameters to measure a company's earnings power by value investors because it is not subject to estimates of Depreciation, Depletion and Amortization (DDA). However, when we look at the Free Cash Flow, we should look from a long term perspective, because any year's Free Cash Flow can be drastically affected by the spending on Property, Plant, & Equipment (PPE) of the business in that year. Over the long term, Free Cash Flow should give pretty good picture on the real earnings power of the company.

The Cato's Free Cash Flow for the fiscal year that ended in Jan. 2024 is calculated as

Free Cash Flow (A: Jan. 2024 )	=	Cash Flow from Operations	+	Capital Expenditure
	=	0.477	+	-12.532
	=	-12.1

The Cato's Free Cash Flow for the quarter that ended in Jan. 2024 is calculated as

Free Cash Flow (Q: Jan. 2024 )	=	Cash Flow from Operations	+	Capital Expenditure
	=	-11.193	+	-2.261
	=	-13.5

Free Cash Flow for the trailing twelve months (TTM) ended in Jan. 2024 adds up the quarterly data reported by the company within the most recent 12 months, which was $-12.1 Mil.

The Cato (NYSE:CATO) Free Cash Flow Explanation

Free Cash Flow is very close to Warren Buffett's definition of Owner's Earnings, except that in Warren Buffett's Owner's Earnings, the spending for Property, Plant, and Equipment is only for maintenance (replacement), while in the Free Cash Flow calculation, the cost of new Property, Plant, and Equipment due to business expansion is also deducted. There, Free Cash Flow is more conservative than Owner's Earnings.

In Don Yacktman's calculation of forward rate of return, he uses Free Cash Flow for the calculation. 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.

This is what Yacktman said in his March 2012 interview - when the S&P 500 was at 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 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 seven years. The reason we use seven years is because research shows that seven years is the length of the typical business cycle.

Therefore, as of Jan24, The Cato's Forward Rate of Return (Yacktman) % is

Forward Rate of Return (Yacktman) % (Jan24)	=	Normalized Free Cash Flow	/	Price	+	5-Year EBITDA Growth Rate
	=	1.90171429	/	6.76	+	-0.1764
	=	10.49 %

Be Aware

Free Cash Flow within a report period can be affected by management's decisions of capital spending. Therefore, it is important to look at long term when it comes to Free Cash Flow.

The Cato Free Cash Flow Related Terms

Thank you for viewing the detailed overview of The Cato's Free Cash Flow provided by GuruFocus.com. Please click on the following links to see related term pages.

The Cato (The Cato) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » The Cato Corp (NYSE:CATO) » Definitions » Free Cash Flow

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CO2A:Germany

Address

8100 Denmark Road, Charlotte, NC, USA, 28273-5975

Website

https://www.catofashions.com

The Cato Corp operates as a specialty retailer of fashion apparel and accessories primarily in the southeastern United States. Its primary objective is to be the fashion specialty retailer for fashion and value in its markets. The company operates through the following business segments: Retail and Credit. The Retail segment which generates majority revenue offers fashion specialty stores. The Credit segment involves credit card services.

Executives

Bailey W Patrick	director
Cato John P D	director, officer: CHAIRMAN/PRESIDENT/CEO	CATO CORP, PO BOX 34216, CHARLOTTE NC 28234
Audrey Schwarz	officer: Vice President, DMM	PO BOX 34216, CHARLOTTE NC 28234
Charles D Knight	officer: EVP - Chief Financial Officer	TOYS R US, INC., ONE GEOFFREY WAY, WAYNE NJ 07470-2030
Hang Matchett	officer: SVP-Mdse Plan, Alloc&Ctrl, MIO	PO BOX 34216, CHARLOTTE NC 28234
Karen Anne Collins	officer: SVP-Tsry,Tax,Fin Pln,Tax,Cr,IR	PO BOX 34216, CHARLOTTE NC 28234
Theresa J Drew	director	ONE NORTH SECOND STREET, HARTSVILLE SC 29550
Daniel Harding Stowe	director	CATO CORP, PO BOX 34216, CHARLOTTE NC 28234-4216
Abby Shearer	officer: SVP, General Merchandise Mgr	PO BOX 34216, CHARLOTTE NC 28234
Lewis Pamela S Dr	director	QUEENS UNIVERSITY OF CHARLOTTE, 1900 SELWYN AVENUE, CHARLOTTE NC 28274
Scott Gurvis	officer: SVP,Treasury, Fin Plan, Credit	PO BOX 34216, CHARLOTTE NC 28234
Weisiger, Jr Edward I	director	PO BOX 34216, CHARLOTTE NC 28234
Vickie Smith	officer: SVP, MERCH PLNG, ALLOC & CNTL	C/O DESTINATION XL GROUP, INC., 555 TURNPIKE STREET, CANTON MA 02021
Lisa Krows	officer: SVP, DESIGN, TREND & COLOR	PO BOX 34216, CHARLOTTE NC 28234
Cathy Bailey	officer: SVP, GMM (CATO DIV)	PO BOX 34216, CHARLOTTE NC 28234