Free Cash Flow Per Share

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Definition

Free cash flow (FCF) per share is free cash flow over average diluted shares outstanding. This is a quick way to see how much each share of the company is generating in cash flow per stock.

If a company is generating significant free cash flow per share, this may be a sign that the company is performing well. High FCF per share does not necessarily mean a company is over/undervalued (unlike a P/E multiple), because FCF per share doesn't detail what a stock is currently trading at. For instance, a tech company trading at unrealistically high P/E multiples may also have a high FCF per share.

Use of FCF per share is often used to analyze a company's solvency. Corporations with high (low) FCF per share are less (more) likely to default.

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