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Apple Forward Rate of Return (Yacktman) %

: 10.51% (As of Dec. 2020)
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Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. Apple's forward rate of return for was 10.51%.

NAS:AAPL' s Forward Rate of Return (Yacktman) % Range Over the Past 10 Years
Min: 9.35   Med: 23.28   Max: 28.89
Current: 10.54
9.35
28.89

During the past 13 years, Apple's highest Forward Rate of Return was 28.89. The lowest was 9.35. And the median was 23.28.

NAS:AAPL's Forward Rate of Return (Yacktman) % is ranked higher than
58% of the 1479 Companies
in the Hardware industry.

( Industry Median: 6.70 vs. NAS:AAPL: 10.54 )

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.

Apple Forward Rate of Return (Yacktman) % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.

* Premium members only.

Apple Annual Data
Sep11 Sep12 Sep13 Sep14 Sep15 Sep16 Sep17 Sep18 Sep19 Sep20
Forward Rate of Return (Yacktman) % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 24.84 19.24 17.24 13.60 9.70

Apple Quarterly Data
Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20
Forward Rate of Return (Yacktman) % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 11.73 11.66 10.21 9.70 10.51
Competitive Comparison
* 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.

Apple Forward Rate of Return (Yacktman) % Distribution

* The bar in red indicates where Apple's Forward Rate of Return (Yacktman) % falls into.


Apple 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).

Apple's Forward Rate of Return of Dec. 2020 is

Forward Rate of Return=Normalized Free Cash Flow/Price+5-Year EBITDA Growth Rate
=3.328/132.69+0.08
=10.51 %

* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.

Apple  (NAS:AAPL) 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.

Apple Forward Rate of Return (Yacktman) % Related Terms

Apple Forward Rate of Return (Yacktman) % Headlines

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