Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. Beam's forward rate of return for was 1.87%.
The historical rank and industry rank for Beam's Forward Rate of Return (Yacktman) % or its related term are showing as below:
FRA:BJM's Forward Rate of Return (Yacktman) % is not ranked *
in the Beverages - Alcoholic industry.
Industry Median: 8.44 * 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.
Beam Forward Rate of Return (Yacktman) % Historical Data
The historical data trend for Beam'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.
Competitive Comparison of Beam's Forward Rate of Return (Yacktman) %
For the Beverages - Wineries & Distilleries subindustry, Beam'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.
Beam's Forward Rate of Return (Yacktman) % Distribution in the Beverages - Alcoholic Industry
For the Beverages - Alcoholic industry and Consumer Defensive sector, Beam's Forward Rate of Return (Yacktman) % distribution charts can be found below:
* The bar in red indicates where Beam's Forward Rate of Return (Yacktman) % falls into.
Beam 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.
Beam (FRA:BJM) 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.
Beam Forward Rate of Return (Yacktman) % Related Terms
Thank you for viewing the detailed overview of Beam's Forward Rate of Return (Yacktman) % provided by GuruFocus.com. Please click on the following links to see related term pages.
Beam Inc., is incorporated under the laws of Delaware in 1985. On May 30, 1997, the Company's name was changed from American Brands, Inc. to Fortune Brands, Inc. Following the spin-off on October 3, 2011, the Company became a standalone Spirits Company under the name Beam Inc. It is a premium spirits company that makes and sells branded distilled spirits products in major markets. The Company's three reportable segments are the geographic regions of North America, EMEA and APSA. Each segment is engaged in the manufacture and sale of distilled spirits products. Its principal products include bourbon whiskey, Scotch whisky, Canadian whisky, tequila, cognac, rum, cordials, and ready-to-drink pre-mixed cocktails. The Company's portfolio consists of brands it identifies as Power Brands, Rising Stars, Local Jewels and Value Creators. The Power Brands are the core brand equities, with its reach in premium categories and large annual sales volume. Rising Stars are smaller premium brands in priority markets. Brands identified as Local Jewels act as Power Brands in local markets. Value Creators include a variety of brands competing across multiple categories. The principal markets for its spirits products are the United States, Australia, Germany, Spain, the United Kingdom, and Canada, and continues to invest in emerging markets such as India, Brazil, Mexico, Russia, Central Europe, Asia, and other geographies. The Company operates its business on the basis of geographical regions, consisting of North America, Europe/Middle East/Africa, and Asia-Pacific/South America. Its peak season for business is the fourth calendar quarter due to holiday buying. Raw materials for the production, storage and aging of distilled products are corn and other grains for whiskies and other spirits, agave for tequila, molasses for rum, grapes for cognac and fortified wines, new or used oak barrels, and plastic and glass for bottles. These materials are generally readily available from a number of sources, except that new oak barrels are available from only a few sources. The Company uses different business models to market and distribute its products in different regions of the world. In the U.S., it sells products either to wholesale distributors for resale to retail outlets or, in those states that control alcohol sales, to state governments who then sell them to retail customers and consumers. It competes on the basis of product quality, brand image, innovation, price, and service in response to consumer preferences. The production, storage, transportation, distribution and sale of its products are subject to regulation by federal, state, local, and foreign authorities.
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