Switch to:

# Forward Rate of Return (Yacktman) %

: 0.00% (As of . 20)
View and export this data going back to 1990. Start your Free Trial

Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. 's forward rate of return for was 0.00%.

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.

## Forward Rate of Return (Yacktman) % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

 Annual Data Forward Rate of Return (Yacktman) %

 Semi-Annual Data Forward Rate of Return (Yacktman) %

## 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).

's Forward Rate of Return of . 20 is

 Forward Rate of Return = Normalized Free Cash Flow / Price + 5-Year EBITDA Growth Rate = 0 / + 0 = 0 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

(:) Forward Rate of Return (Yacktman) % Explanation

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.

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.

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. More accurate measurement return returns are Return on Capital.

## Forward Rate of Return (Yacktman) % Headlines

From GuruFocus

###### Lumbee Guaranty Bank Opens Branch in Historic Downtown Fayetteville

By [email protected] about 2020-02-18 14:00:06

###### Commercial National Declares \$.26 Per Share First Quarter Dividend

By [email protected] about 2020-02-18 14:00:04

###### MGX Renewables Inc. DBA Zinc8 Energy Solutions Announces Grant of Stock Options

By [email protected] about 2020-02-18 11:00:09

###### IEH Corporation Announces Third Quarter Fiscal 2020 Results

By [email protected] about 2020-02-18 09:00:50

###### Gratomic Announces Further Extension of Non-Brokered Private Placement

By [email protected] about 2020-02-18 08:00:14

###### Easi-Set Offers Hands on Knowledge at the Precast Show

By [email protected] about 2020-02-18 08:00:13

###### Stillcanna's Romanian Based ORIGIN CBD Extraction Facility Receives Green Light from Ministry of Health and Anti-Drug Agency

By [email protected] about 2020-02-18 08:00:12

###### Terra Tech and OneQor Announce Successful Completion of Merger

By [email protected] about 2020-02-18 08:00:04

###### National Energy Services Reunited Corp. to Release Fourth Quarter and Full Year 2019 Financial Results on Feb 26th

By [email protected] about 2020-02-18 08:00:02

###### Quebec Precious Metals Grants Stock Options

By [email protected] about 2020-02-18 07:00:04

###### First Mining’s Partner, Auteco Minerals, Increases Land Package at the Pickle Crow Gold Project

By [email protected] about 2020-02-18 06:00:07

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)
/* */