What is ARI Network Services Forward Rate of Return (Yacktman) %?
Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. ARI Network Services's forward rate of return for was 8.02%.
The historical rank and industry rank for ARI Network Services's Forward Rate of Return (Yacktman) % or its related term are showing as below:
ARIS's Forward Rate of Return (Yacktman) % is not ranked *
in the Software industry.
Industry Median: 13.53 * 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.
ARI Network Services Forward Rate of Return (Yacktman) % Historical Data
The historical data trend for ARI Network Services'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.
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ARI Network Services Forward Rate of Return (Yacktman) % Chart
Competitive Comparison of ARI Network Services's Forward Rate of Return (Yacktman) %
For the Software - Application subindustry, ARI Network Services'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.
ARI Network Services's Forward Rate of Return (Yacktman) % Distribution in the Software Industry
For the Software industry and Technology sector, ARI Network Services's Forward Rate of Return (Yacktman) % distribution charts can be found below:
* The bar in red indicates where ARI Network Services's Forward Rate of Return (Yacktman) % falls into.
ARI Network Services 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.
ARI Network Services (NAS:ARIS) 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.
ARI Network Services Forward Rate of Return (Yacktman) % Related Terms
Thank you for viewing the detailed overview of ARI Network Services's Forward Rate of Return (Yacktman) % provided by GuruFocus.com. Please click on the following links to see related term pages.
ARI Network Services (ARI Network Services) Business Description
ARI Network Services Inc was incorporated in Wisconsin in 1981. The Company creates software-as-a-service and data-as-a-service solutions that help equipment manufacturers, distributors and dealers in selected vertical markets Sell More Stuff!TM online and in-store. Its SaaS and DaaS solutions include eCommerce-enabled websites, which provide a web presence for dealers and serve as a platform for driving leads and eCommerce sales, eCatalogs, which drive sales of inventory and PG&A both online and within the dealership, and lead management software designed to increase sales for dealers through more efficient management and improved closure of leads. Its SaaS and DaaS solutions are sold through its internal sales force and are comprised of recurring hosting, license and eCatalog subscriptions. Customers typically sign annual, auto-renewing contracts. Its eCommerce-enabled websites provide consumers with information about a dealership and its product lines and allow consumers to obtain information on whole goods and purchase PG&A through the dealers website 24 hours a day, 7 days a week. Its website solutions are tailored to each of the vertical markets it serves and tightly integrated with its electronic library of inventory and PG&A content. The Company also offers a mobile solution that allows dealers websites to be fully functional on smart mobile phones. Its eCatalog solutions, which encompass its PartSmart, PartSmart Web and PartStream products, leverage its library of electronic whole goods and PG&A content to allow distributors and dealers to view and interact with this information to efficiently support the sales and service of equipment. Its SaaS solution, Footsteps, is designed to efficiently manage and nurture generated leads, increasing conversion rates and ultimately revenues for its customers. It also offers solutions, which include search engine marketing, software and website customization services, website hosting, and document transfer and communication services. Competition for its products and services varies by product and by vertical market. In eCatalogs, it competes with Snap-on Business Solutions, which designs and delivers eCatalogs, accessory sales tools, and manufacturer network development services, mainly to the automotive, powersports, OPE, construction, agriculture and mining markets.
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