Keurig Green Mountain's total free cash flow for the
months ended in Dec. 2015 was
$276 Mil.
Its total free cash flow for the trailing twelve months (TTM) ended in Dec. 2015 was $578 Mil.
Keurig Green Mountain's Free Cash Flow per Share for the
months ended in Dec. 2015 was $1.83.
Its free cash flow per share for the trailing twelve months (TTM) ended in Dec. 2015 was $3.74.
Keurig Green Mountain Free Cash Flow Historical Data
The historical data trend for Keurig Green Mountain'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.
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.
Keurig Green Mountain's Free Cash Flow for the fiscal year that ended in Sep. 2015 is calculated as
Free Cash Flow for the trailing twelve months (TTM) ended in Dec. 2015 adds up the quarterly data reported by the company within the most recent 12 months, which was $578 Mil.
* 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.
Keurig Green Mountain (NAS:GMCR) 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.
* 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.
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.
Keurig Green Mountain Free Cash Flow Related Terms
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Keurig Green Mountain (Keurig Green Mountain) Business Description
Keurig Green Mountain Inc is a Delaware Corporation formed in July 1993. The Company is engaged in the coffee and coffeemaker businesses in the United States and Canada. It sells Keurig Single Cup brewers and roast high-quality Arabica bean coffees including single-origin, Fair Trade Certified, certified organic, flavored, limited edition and proprietary blends offered in K-Cup and Vue packs for use with its Keurig Single Cup brewers. The Company also offers traditional whole bean and ground coffee in other package types including bags, fractional packages and cans. In addition, it produces and sells other specialty beverages in portion packs including hot apple cider, hot and iced teas, iced coffees, iced fruit brews, hot cocoa and other dairy-based beverages. The Company manages its operations through three business segments, the Specialty Coffee business unit (SCBU), the Keurig business unit (KBU) and the Canadian business unit (CBU). Due to this combination, the results of U.S. operations, formerly reported in the SCBU and KBU segments, are reported in the Domestic segment and the results of Canadian operations are in the "Canada" segment. The Domestic segment sells single cup brewers and accessories, and sources, produces and sells coffee, hot cocoa, teas and other beverages in portion packs and coffee in more traditional packaging including bags and fractional packs to retailers including supermarkets, department stores, mass merchandisers, club stores, and convenience stores; to restaurants, hospitality accounts, office coffee distributors, and partner brand owners; and to consumers through Company websites. The Canada segment sells single cup brewers, accessories, and sources, produces and sells coffee, teas and other beverages in portion packs and coffee in more traditional packaging including bags, cans and fractional packs under a variety of brands to retailers including supermarkets, department stores, mass merchandisers, club stores, through office coffee services to offices, convenience stores, restaurants, hospitality accounts, and to consumers through its website. The Company's competitors in the coffee marketplace include large national and international companies and numerous local and regional companies.
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