Allergan (FRA:AG4) Forward Rate of Return (Yacktman) % : 35.14% (As of Dec. 2014)

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What is Allergan Forward Rate of Return (Yacktman) %?

Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. Allergan's forward rate of return for was 35.14%.

The historical rank and industry rank for Allergan's Forward Rate of Return (Yacktman) % or its related term are showing as below:

FRA:AG4's Forward Rate of Return (Yacktman) % is not ranked ^*
in the Drug Manufacturers industry.
Industry Median: 8.56
* 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.

Allergan Forward Rate of Return (Yacktman) % Historical Data

The historical data trend for Allergan'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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Allergan Forward Rate of Return (Yacktman) % Chart

Allergan Annual Data

Trend

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Dec14

Forward Rate of Return (Yacktman) %

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39.49

-0.11

13.04

27.19

35.14

Allergan Quarterly Data
	Mar10	Jun10	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14
Forward Rate of Return (Yacktman) %	Get a 7-Day Free Trial															27.19	29.09	30.83	32.60	35.14

Competitive Comparison of Allergan's Forward Rate of Return (Yacktman) %

For the Drug Manufacturers - Specialty & Generic subindustry, Allergan'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.

Allergan's Forward Rate of Return (Yacktman) % Distribution in the Drug Manufacturers Industry

For the Drug Manufacturers industry and Healthcare sector, Allergan's Forward Rate of Return (Yacktman) % distribution charts can be found below:

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

Allergan 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).

Allergan's Forward Rate of Return of Dec. 2014 is

Forward Rate of Return	=	Normalized Free Cash Flow	/	Price	+	5-Year EBITDA Growth Rate
	=	2.91771429	/	175.875	+	0.2
	=	21.66 %

Allergan (FRA:AG4) 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.

Allergan Forward Rate of Return (Yacktman) % Related Terms

Thank you for viewing the detailed overview of Allergan's Forward Rate of Return (Yacktman) % provided by GuruFocus.com. Please click on the following links to see related term pages.

Allergan (FRA:AG4) Business Description

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GURUFOCUS.COM » STOCK LIST » Healthcare » Drug Manufacturers » Allergan Inc (FRA:AG4) » Definitions » Forward Rate of Return (Yacktman) %

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Allergan IncÂ incorporated in Delaware in 1977.Â It is a multi-specialty health care company. The Company is engaged in the developing and commercializing pharmaceuticals, biologics, medical devices and over-the-counter products that enable people to live life to its full potential - to see more clearly, move more freely and express themselves more fully. It offers products for the ophthalmic, neurological, medical aesthetics, medical dermatology, breast aesthetics, urological and other specialty markets in more than 100 countries around the world. It is also engaged in specialty pharmaceutical, biologic and medical device research and development. The Company's business segments are specialty pharmaceuticals and medical devices. The specialty pharmaceuticals segment produces pharmaceutical products, including: ophthalmic products for dry eye, glaucoma, inflammation, infection, allergy and retinal disease;Â BotoxÂ for certain therapeutic and aesthetic indications; skin care products for acne, psoriasis, eyelash growth and other prescription and over-the-counter skin care products; and urologics products. The medical devices segment produces medical devices, including: breast implants for augmentation, revision and reconstructive surgery and tissue expanders; and facial aesthetics products. The Company sells its products directly through itsÂ own sales subsidiaries in approximately 40 countries and, supplemented by independent distributors, in over 100 countries.Â Its products are sold to drug wholesalers, independent and chain drug stores, pharmacies, commercial optical chains, opticians, mass merchandisers, food stores, hospitals, group purchasing organizations, integrated direct hospital networks, ambulatory surgery centers, government purchasing agencies and medical practitioners. The Company also utilize distributors for its products in smaller international markets.Â The Company's competitors include Akorn, Inc., Alcon Laboratories, Inc./Novartis AG, Abbott Laboratories, Alimera Sciences, Inc., BauschÂ & Lomb, Inc., a division of Valeant, Genentech/Hoffmann La Roche AG, MerckÂ & Co., Pfizer Inc., Regeneron Pharmaceuticals, Inc. and Santen Seiyaku. Mentor and Sientra, Inc., or Sientra, a partner of Silimed, LifeCell Corporation, CR Bard Inc. The Company's operations are subject to federal, state, local and foreign environmental laws and regulations, including the U.S. Occupational Safety and Health Act, the U.S. Toxic Substances Control Act, the U.S. Resource Conservation and Recovery Act, Superfund Amendments and Reauthorization Act, Comprehensive Environmental Response, Compensation and Liability Act and other current and potential future federal, state or local regulations.

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