NCI's total free cash flow for the
months ended in Jun. 2017 was
$3.9 Mil.
Its total free cash flow for the trailing twelve months (TTM) ended in Jun. 2017 was $13.6 Mil.
NCI's Free Cash Flow per Share for the
months ended in Jun. 2017 was $0.28.
Its free cash flow per share for the trailing twelve months (TTM) ended in Jun. 2017 was $0.99.
The historical data trend for NCI'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.
NCI's Free Cash Flow for the fiscal year that ended in Dec. 2016 is calculated as
Free Cash Flow for the trailing twelve months (TTM) ended in Jun. 2017 adds up the quarterly data reported by the company within the most recent 12 months, which was $13.6 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.
NCI (NAS:NCIT) 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.
NCI Free Cash Flow Related Terms
Thank you for viewing the detailed overview of NCI's Free Cash Flow provided by GuruFocus.com. Please click on the following links to see related term pages.
NCI Inc is a Delaware corporation incorporated in July 2005. The Company provides enterprise services and solutions to Defense, Intelligence, Healthcare, and Civilian Government agencies. The Company provides services in areas including cybersecurity and information assurance; engineering and logistics support; enterprise information management and advanced analytics; cloud computing and information technology (IT) infrastructure optimization; health IT and medical support; IT service management; and modeling, simulation and training. The Company uses an integrated, tailorable engineering and operations methodology for governing how it provides cloud computing and IT infrastructure optimization services that fulfill its customer's important mission needs. It supports Department of Defense (DoD) weapon systems lifecycle support efforts in diminishing manufacturing sources and material shortages (DMSMS) analysis and engineering solutions in support of modernization and technology insertion. It supports rapid and relevant discovery, anticipatory intelligence, focused analysis, and persistent surveillance across multiple customer domains and operational disciplines as well as enriches the intelligence-to-operations lifecycle by applying scalable technologies and advanced algorithms to help interpret data. The Company provides a broad spectrum of health IT services experience, including cybersecurity/IA, Health Insurance Portability and Accountability Act (HIPPA) and Federal Information Security Management Act (FISMA) compliance, data analysis/management. The Company designs, installs, and manages complex mission-critical enterprise systems for its customers, increasing the reliability, security, and efficiency of their IT operations while meeting stringent guidelines and requirements. The Company often competes against or team with divisions of Defense and IT services contractors, including Lockheed Martin Corporation, Northrop Grumman Corporation, General Dynamics Corporation, Computer Sciences Corporation, Raytheon, Harris, BAE Systems, Booz Allen Hamilton, Leidos, and Science Applications International Corporation (SAIC). It also competes against or team with mid-tier Federal contractors, such as CACI International and ManTech International that have specialized capabilities, as well as numerous non-public companies within the sector. The Company is subject to various laws and regulations that may affect its business. U.S. Federal Government contracts are subject to a number of Federal laws and regulations, including the Federal Acquisition Regulation (FAR).
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