FCF

jrex035

It's funny seeing the cycles play out in real time though. ~15 years ago, no one wanted to touch tech with a 10 ft poll, it was hated and the energy sector was booming. But then the energy sector went overboard with capex expenses that wrecked the price of energy and eliminated all their FCF. Sound familiar?

jrex035

It's almost like dumping all their FCF for years into something with no real ROI thus far isn't great for your stock value

Lootoholic

The way I see it, this is a play on interest rate. If the rate come down meaningfully, the stock appreciates significantly, if the rates go higher and stay higher longer, the stock tanks, because the future FCF will be lost to future interest. It looks like a value trap to me.

DickyFishb

I love how ever since DeepFuckingValue made headway with GME six years ago, almost every DD post on WSB feels the need to read like this. Full porting your retirement and expecting a 3x–8x return because “uranium + rare earths + geopolitics” is insane. I'm not even saying UUUU is a shit company. I'm saying you haven't explained why UUUU at TODAY'S valuation is somehow worth 3–8x more. Where's the valuation that gets you there? Revenue? Margins? Uranium prices? Rare-earth production? FCF? What assumptions make this thing worth 3x, let alone 8x? The government wanting domestic uranium and rare-earth production is bullish for the industry. That doesn't automatically mean every company exposed to it becomes the next GME. If you wanted the asymmetric bet, the move would've been around $3 before the late-2025 run. Full-porting AFTER the market has already repriced the story and then expecting another 300–800% is a completely different bet. So good luck, in every sense of the word.

Lootoholic

Tesla is just a bunch of empty promises. Uber had more self-driving cars on the road than tesla. Uber FCF is also higher than Tesla, even though Tesla is like 10 times more expensive.

Lootoholic

You are forgetting that Amazon and Oracle are in a huge AI spending cycle, and have to FCF to go after a large acquisition.

liftingshitposts

I started a position back in the $70s because of their FCF margin, strong balance sheet, and (albeit modest) they are somehow still growing

GrokM14232

The checklist is useful, but I’d add a regime check: margins and multiples built during zero-rate years may not survive with the 10-year Treasury around a structurally higher range. FCF yield should be compared with both the company’s history and the risk-free rate, since a 4% yield means something very different when bills pay 5% than when they pay 0.5%. Most important, write the invalidation point before buying and give it a timeframe, otherwise every miss gets rationalized as “long term.

FreedK70980

I think the invalidation point is the most useful part, since it makes you write down what would prove your thesis wrong before you get attached to it. Dumb beginner question: when comparing FCF yield across companies, how do you account for unusually high stock-based compensation without making the comparison subjective?

EntrepreneurSea5781

I understand your point: Yelp says it aims to return more than 50% of annual FCF through buybacks, so I think you're saying the repurchases were simply execution of a published capital-allocation policy, not management making some independent call that the stock was cheap. But the policy doesn't explain the amount they actually spent. In the first half Yelp generated $106.2M of FCF and spent $174M on repurchases, 164% of FCF. $53M would already have met the 50% threshold. FCF was also down about 20% from the prior-year period while buyback spending increased.s So the criticism isn't that Yelp shouldn't have bought any stock because it had a 50% policy. It's that management chose to go far beyond that policy while the stock was higher, then wound up with revolver debt and paused repurchases after the stock fell. The decision to spend 164% rather than 50%, 75% or 100% was still management's judgment.

EntrepreneurSea5781

I agree 100% with your points. They are treated as a dying ad company because their leadership sucks IMO. They have tons of potential. Ultra low FCF ratio, possible legal victory and valuable data. They are just shackled by some bad leadership. Listen to the quarterly reports yourselves... you'll see how stupid and lazy the CFO is. He blamed Iran for low advertising. Surely he couldn't be that dumb... but he is.

PotadoLoveGun

I mean we can look at the buffet indicator and its not good for USA, they were both high, but USA is higher. Our debt load as a country does scare me. Its a lot, its been this high but usually on actively in Wartime. If we ever lose USD as the global currency were are fucked. But for things to look at: Japan not global currency, which put them at risk global powers fucked them over FCF aggregated Cash on hand aggregated Current ratios Public companies Japan 1990 had 1800 vs now USA has almost 6000 from what I see % of companies in Russell that make profit PE comparisons by sector since the averages vary wildly

jrex035

Dems will win the House, just a question of if they pick up the Senate too which is a big stretch. Regardless, idk why people expect it to have much of an impact on equities. What's really important is the Hormuz crisis which continues to get worse by the day, and is exacerbating other interrelated crises (Suez, Russia-Ukraine, Houthi attacks in Red Sea). Shipping will likely continue to run for a little while come, there are a lot of structural issues pushing shipping rates higher (longer ton-miles from forced workarounds, more idling ships, long lead time on new production, especially in drybulk which hasn't seen a huge surge in new builds, etc). As far as the Mag 7 go, until they see FCF rebound from their huge AI bets, they're going to be trading for much less than they typically do, especially if the Iran war pushes the US into a financial crisis and we see a correction or even bear market in equities

PotadoLoveGun

I show Meta having FCF after they are spending 92% of it. Debts not inherently bad, but to compare it to Japan is silly. In 1990 Japan had avg debt to equity ratios between 1.5 and 2.0. Thats when it is an issue. METAs is .25, which is spectacular

longGERN

It's temporary and why would you need another large loan after paying it off lmfao Also doesn't stop FICO from returning g FCF to shareholders

Immediate_Code_9272

I mean, it's a growth stock. You can rate it for its merits on that basis but why are you why are you looking at EV/FCF? its essentially useless at this stage. Revenue growing 39% YoY, non-GAAP operating margins are 9% in expansion phase. This stock really is a bet on AI - whether you think it will be revenue generator or sink. If its a sink then yes you might be right. If it can further increase revenue and also reduce development costs in terms of future SBC, then its a huge tailwind. If it can sustain 3 years of 45% growth or higher (personally I think AI credits for software are a revenue tailwind) on this years. That gives 4.46B revenue in 3 years, at a more normal 30% operating margin for software (maybe better with reduced dev headcount due to AI) gives 1.4B looking at around 1B net. So lots of potential expansion on multiple over the next few years as it matures. (presuming the growth rates will still be high then, even if decelerating) Of course this is predicated on maintaining or accelerating growth, which is the whole point. FCF is not.

Maestro_Canello

On the fundamental side EPS have been heading down for the past 5 years, as it did ROIC, FCF has negative growth, just to name few important metrics. On a macro base: Hoka and On are rapidly eating market share. Also Nike took some terrible commercial decisions, like betting heavikly on his own digital channels, thinking that they could overlook big retailers like Foot Locker. Add the tariff war with China to the recipe, and the soup is ready. To me, Nike looks attractive at these levels only for those who don't yet hold a position and want to chase a good dividend yield (though, if things continue this way, the dividend might be at risk in a few years) and buy in at historically low P/E ratios.

I_like_code

This is a substantial post. The author’s core argument is that **AI companies can be producing very real earnings while the overall AI investment cycle can still become bubble-like**, because a large portion of today’s revenue is ultimately being financed by continued capital investment rather than mature end-user demand. The financing-flow argument is the most interesting part. Hyperscalers, AI labs, VCs, and other investors pour capital into AI infrastructure; that money then becomes genuine revenue for companies such as NVIDIA, data-center operators, power-equipment suppliers, and construction firms. So NVDA can report completely legitimate, enormous revenue and profits even if the ultimate economic return on all those GPUs and data centers eventually disappoints. The author therefore isn’t really arguing **“AI is fake.”** Quite the opposite. They acknowledge the technology has obvious utility and that today’s major AI beneficiaries are fundamentally much stronger businesses than dot-com-era speculative companies. Their concern is that expectations and investment spending could outrun the eventual cash generated by customers using AI. For your own AI thesis, I’d pay particular attention to three things the post identifies: **hyperscaler capex, inference/end-user monetization, and free cash flow.** The bearish scenario isn’t necessarily “AI stops growing.” It could simply be: **AI usage grows rapidly → infrastructure gets overbuilt → compute becomes cheaper → hyperscaler returns fall → capex growth slows → suppliers lose pricing power/growth multiples.** That’s a much more credible risk to NVDA and the broader AI infrastructure trade than “AI turns out to be useless.” The author also correctly points out that Google, Meta and others have effectively said the risk of **underbuilding is currently worse than overbuilding**, which naturally creates the possibility of eventual excess capacity. Where I’d push back is the author’s claim that **75%+ of the ecosystem’s money ultimately comes from investors**. They explicitly describe that as a rough ChatGPT-generated estimate. That’s far too uncertain to serve as the quantitative foundation for the argument. Hyperscaler capex also isn’t equivalent to speculative VC financing: Microsoft, Google, Amazon and Meta have enormous operating cash flows and existing cloud businesses that monetize infrastructure across many workloads. Their proposed exit strategy is also much weaker than their diagnosis. They plan to stay invested, watch for an obvious peak followed by a significant decline and failed rallies, and then progressively reallocate based partly on their judgment of whether the bubble has popped. That’s essentially **market timing after the fact**, and identifying a bear-market rally in real time is notoriously difficult. So I’d rate the post as **thought-provoking and directionally useful, but considerably more speculative than its detailed presentation makes it appear**. The financing-flow concept is worth incorporating into how we monitor your AI exposure, but I wouldn’t use the author’s bubble dashboard as a sell signal by itself. In fact, for your NVDA/SCHG/AI-infrastructure thesis, I’d simplify the monitoring considerably: watch **hyperscaler capex guidance → GPU/data-center utilization → inference revenue growth → AI pricing → hyperscaler FCF → NVDA backlog/margins**. If capex keeps climbing *while* inference/customer monetization catches up, the author’s central concern gets progressively weaker. If capex keeps exploding while monetization stalls, it gets much stronger. That distinction is probably the single most useful takeaway from the entire post.

FartPolluter

If this survives till next earnings with no correction, we know exactly what it will be. Hyperscalar "Record beating FCF" while their balance sheet will have deteriorated sharply while they dont reveal 2027 capex. Bols will sell it as a major victory

Xalksahsax

It's undervalued if anything. $20 B FCF by 2028. Don't bet against the American dream. I'll sell it to you at $350.

Lootoholic

Their stock return may be less than money market, BUT their FCF yield is far better than money market. Don't judge Berkshire's performance by the performance of their stock

Lootoholic

It's good to have some high quality dividend stocks within your portfolio among other things. Be careful though not to fall for a dividend trap. A dividend stock is considered high-quality if they have been paying dividend for a long long time, without reducing or removing it, and they should have enough room in their FCF to support (and raise) that dividend in the future. some of my favorite dividend stocks: T, VZ, BAM, DB

nobertan

I already had oil stocks with the expectation that nothing would get resolved and it’ll rip. More recently though, with the Fed losing control of interest rates (*they’re set by the market now, not them*), I’m not confident in holding long bonds thru a recession with the hope of “*lowering interest rates to stimulate growth*”. I’m just gonna pivot my safety money in low debt (including hidden AI debt), high FCF stocks. Maybe dumb, maybe not, but long bonds look like complete ass.

vollov2021

Agree with you right here. 0.14% isn't a dividend play other than being able to, technically, call themselves a dividend stock. Imagine if Meta had paid out the invests into the metaverse as dividends instead...that would have made them incredibly attractive with their FCF plus dividends. But, instead of returning value back to investors, they put it into metaverse, AR, and now AI build out when they are laggards. Even MSFT isn't a dividend play. They are still a growth stock. And the reason why they and the other Hyperscalars have risk now is they are sacrificing FCF for building the future. If their business is mature, without other CAPEX investment, I would expect a conversion of FCF into dividends.

Avidtrader81

Some of the fundamental numbers matter to me, others depend on the reason. For example FCF went negative on goog. Top lines were great. But cap ex spending was the reason in the bottom line numbers. The next question is will the capex generate good returns and if I believe in the outlook of the business model.

Bekabam

I think you're looking at this too binary. It's not a yes/no to dividends, it's how much of a portfolio is allocated to them and which ones. You have to weigh opportunity cost. Another metric to layer is the investor's life position. Full yield chasing portfolios I think many can agree are irrelevant for young investors, yet we see many are seduced by the surface-level arguments for them. From a business perspective, dividends are the last option for using FCF. Investing in the core business, in moonshots, in stock buybacks all come before deciding to pay a dividend.

BTCTickerlicker

Their plan has them hitting positive FCF with current cash on hand and burn. Delays could be dilutive but so far they are on track.

dieharddubsfan

I don't know man, looking at [Nike's financials table](https://www.stock-table.com/ticker/NKE/fundamentals?public_uuid=8ad80ca9-c8f6-4845-9c85-3a9a090ede5d&timeframe=annual) for the past few years, it really seems to be on a downward spiral with no obvious signs of reversal. Revenue, EPS, ROIC, FCF all trending downwards. Yes, its P/E seems cheap at 18 now, but it's cheap for a reason. The only thing attractive about NKE right now is its 4% dividend yield.

Midget_Molester10

projected FCF between 50-70% of their current market cap by 2030.

Which_Cost8015

u/TreGet234 PANW’s drop is more about the softer-than-expected FCF margin outlook and stretched valuation, while the constant acquisition spree is adding integration and execution concerns.

liftingshitposts

You can easily look up how much ZM invested in anthropic, and then use math + their disclosed gains on strategic investments to size. ZM actually doesn’t have a bad underlying business either. Good enterprise growth, excellent FCF margin, strong balance sheet

Outrageous_Length975

When he took over, they were already the largest market cap company in the world and were making more FCF than they could conceivably ever put back into the business. What new product lines did he put out there, AirPods and Apple Vision Pro in 15 years? In the 15 year tenure under Jobs, they did iMac G4, iTunes Music Store, iPod, iPhone, iPad, and the App Store. You or I could very easily replicate Tim's performance. We would not be able to replicate Steve's performance.

Outrageous_Length975

I think you or I could be in that chair and perform the same. We'd tell some of the division heads, "Hey, which of these expensive parts that we source out could we conceivably vertically integrate and do ourselves?" And then sink a few of the endless billions of dollars of FCF into executing that.

Sure_Let6170

Red after red, decline after decline, and people here still shill for mag7 CEOs pretending those crappy stocks were not floated only with buybacks. Considering zero dividends it only fits. Now that they sacrificed their entire FCF to gods of overpriced korean RAM, they're slipping to Paypal levels. And honestly, well deserved. Tech giants my ass. I hope Walmart and Nvidia buys them off once they get low enough.

Comprehensive_Tea388

The stock comp gap is the real story here. 25.6% of revenue at CrowdStrike vs 3.9% at Fortinet means Fortinet's FCF is structurally more credible. 47x isn't cheap, but you're paying for a business that actually converts revenue to cash rather than one that dilutes shareholders to show growth.

HiddenCompounding

You forgot to mention some small details: the stunning growth rates (**+32% revenue, +25% net income**), the outstanding profitability (**\~41% net margin**) and cash generation (**\~19% FCF margin**). And maybe the low valuation (**\~7.8x forward P/E / \~13% earnings yield**), because yeah, it’s Kazakhstan. But also Kazakhstan: Contrary to many Western countries, it has favorable demographics (**\~29% of the population aged 0–14; population growing \~1.2% p.a.**) and, due to its vast resources, is energy-independent (**\~221% energy self-sufficiency**). Two claims many countries wish to have, but don’t.

Parking-Banana-212

yes, i think you're right, but im just betting it would hit companies with FCF, profitable companies, less so then growth names, thats all

MarthaJulietta

Even in the very unlikely world where margins continually compress and increased revenue can’t make up for it and net income and FCF fall 5% YoY, the buybacks, even reducing alongside FCF will buoy the stock price. Worst case in 5 years they’ve bought back 50% of the company and it’s worth 25B doing 4B a year it likely trades higher than it does today. The downside is extremely limited even in bad scenarios. In my eyes the asymmetry is obvious and sizeable. I can eat the argument that there is much more upside potential elsewhere in the market. I can’t eat that the downside is comparable

Virtual_Secretary_98

Bro they have negative FCF they won't pump for a while just accept it

hirschimwald

If we have a 3 year capex cycle, then the relevant number is 3 year forward P/FCF. That is 31.52x. They are not going to go bankrupt, they're not cheap either.

Different_One_5257

Think about it like real estate. If I’m developing a $100M building, during construction my cash flow looks terrible — I’m spending millions every month and collecting $0 of rent because the building isn’t open yet. You wouldn’t value the project based on that year’s free cash flow while ignoring the signed leases that start when the building delivers. Oracle is in a similar period. It generated $32B of operating cash flow, then spent $55.7B largely building infrastructure for future cloud revenue. Of course FCF looks terrible today. The real question is what cash flow looks like when that capacity is operating and generating contracted revenue. If Oracle has to keep spending $50–100B every year forever just to maintain it, the bears are right. If this is the heavy construction phase and capex eventually normalizes while revenue catches up, today’s P/FCF is measuring the company at probably the worst possible point in the cycle.

Different_One_5257

“Near-term bankruptcy” is a huge leap. Oracle generated $32B of operating cash flow last year. FCF is negative because they’re deliberately spending \~$56B on capex, not because the core business is bleeding cash. Only about $7B of debt matures in FY27 and \~$10B in FY28, while roughly $90B matures after FY31. OpenAI is concentration risk, absolutely. But “OpenAI fails = Oracle fails” assumes the compute itself becomes worthless. I don’t buy that. This is strategic, scarce, powered AI infrastructure that took years to secure and build. Think SpaceX/Starlink: massive capital goes in before the mature revenue stream exists because the infrastructure is the bottleneck. If OpenAI ever has a financing crisis, recapitalizing/restructuring the buyer is far more plausible than abandoning gigawatts of valuable compute. I’m underwriting demand for the compute, not OpenAI’s current P&L

RavenGentlyRapping

The difference between Oracle and other hyperscalers is how they build their data center capticty. To do it purely on debt and not have the revenue or cash reserves to back it up is what makes that a very suspect bet. FY26 Q4: * Revenue: 19.18B * Debt: 167.43B * FCF: -1.87B * Cash: 31.3B Let's assume that Orcale can generate the revenue they project in their forward earnings. Does this debt seem like something that would not weigh down their balance sheets for years to come? They are not the only ones setting up data centers, but as far as I can tell they are the only ones trying to punch well above their weight with little revenue to back it up.

Inevitable_Zebra_0

MSFT had 20b$ in FCF in the last quarter, and 67b$ for the last year. Of all the hyperscalers, they still have the healthiest balance sheet. Then Amazon, Alphabet, Meta, and Oracle (the shittiest one).

Asleep_Emphasis69

okay now do FCF for late ‘26, ‘27 and probably ‘28…that’s why the valuation is compressed. Investors don’t like that so they sell. Personally, I think we see $400s next year and if they can start projecting positive FCF again it will go up. This isn’t the lows unfortunately. I think Meta is a great company long term and wouldn’t short it, but investors care about these things in the short term

Disastrous_Rent_6500

Yup, but “in the moment” is not investing. You have too look in the future and so the eps and FCF growth. That extra step is too much for most people to handle

LDNBrickTop

Only thing I’d add it Netskope - if their FCF turns positive I can see this running 20%+

FaithlessnessOk7379

Fair point on the entry. My case isn’t just the $130 target though—revenue grew 38% ARR 33%, FCF was $65.7M, and management raised full-year revenue ARR, EPS and FCF guidance I’m watching the fundamentals not just the target https://www.rubrik.com/company/newsroom/press-releases/26/rubrik-reports-second-quarter-fiscal-year-2027-financial-results

Due-Perspective-3197

AUR has \~$1.22B of liquidity plus \~$1.0B of remaining ATM capacity against a 2028 FCF target. The CFO said he believes current cash carries it there, with ATM use mainly for bonus/tax funding. So, further large dilution is not a sure thing... and then, post-FCF, expect buybacks.

Due-Perspective-3197

From the FAQ on my DD paper Q: Does Aurora have enough cash, and will shareholders be diluted? \~$1.22B of liquidity plus \~$1.0B of remaining ATM capacity against a 2028 FCF target. **Management (CFO Maday, answering this question in the recent town hall) believes current cash carries it there, with ATM use mainly for bonus/tax funding** — so further large dilution is not certain, but the funding bridge in my research shows most paths issue something: YE-2028 counts of \~2.16–2.44B depending on burn and price. Post-FCF, expect buybacks to at least freeze the count (§8).

jrex035

The problem is that both are dumping all their FCF into capex with a questionable ROI. Meta is the king of wasting FCF on spurious adventures (metaverse anyone?)

JerryCurlEarl69

I will not dispute that there is accounting noise, but this is not a secret either. The company explicitly mentioned that non-GAAP EPS was inflated by 2.52$ per share because of this. That means the company made 3.37$ per share in the quarter. Forward EPS is still probably around 14-15$ without any acquisition-related increase to earnings. That means the stock is trading around 15x even with this today's gain. The company increased FCF by 81% YoY and that isn't even affected by mark-to-market gain and its new segments are growing substantially. It still expects to buyback 25 billion of stock. For a company of this quality and potential revenue growth, I do not see much downside to this.

feng_sg

OCF up 25% doesn't make the 91% FCF drop the wrong number. Capex went $17.01B to $31.07B. That's \~$14B extra, and impression/price growth already show up in the $31.86B OCF. None of that says the new spend earns its cost of capital.

PyloPower

What economy? War, sticky inflation, high interest, most profitable companies in the world seeing their FCF compress to zero, geopolitical tension at a 50-year high, multiple unusual interventions of the largest central bank in the world? You meant "in this meme market".

KnownButton8327

They also committed to returning 60%+ of FCF to investors

Ehh_littlecomment

In addition to bonds, Google did what 80B in equity issuances? Looks like unlimited FCF.

Rich-Badger-7601

Taking in so much cash that they had to stop buybacks, issue debt and dilute their equity holders just to keep their current spend rates going lmaoooo Google alone went from like $100B+ a year in share buybacks to a whopping $0 and it still wasn't enough to save their FCF

yourgirl696969

It’s the space race on steroids. Both countries gonna spend every penny building compute. I’m not sure why people think it’ll stop lol all the major tech companies in China are also spending all their FCF on Data centres too. Imagine thinking you’re smarter than the top CEOs in the world lol

MitchCurry

That isn't math so much as you saying a number with no way of getting to it but whatever, let's work with it. Also will assume you meant FCF, not CFC. So you need growth to accelerate from 82% to >100% for the next 8 quarters AND have FCF margins increase to >60% to reach $20B FCF. So yes, if PLTR increases growth to >100% for the next 8 quarters and increases FCF margin to >60%, I agree, it's currently cheap right now.

SpongEWorTHiebOb

Settlement is almost 80% of FCF for the past year. That’s manageable but it’s a significant penalty.

SpongEWorTHiebOb

lol…using market cap as a reference point. Market cap is nit a tangible asset for companies to pay bills and claims. This amount is over 77% of their FCF for the past year.

alphixir

Right, and the way to actually quantify what shareholders give up is the diluted share count over time, not the income statement. Roblox's stock-based comp ran over $1.1B in fiscal 2025 against roughly $1.5B in quarterly revenue, and all of it shows up as more shares outstanding rather than a cash expense line. FCF tells you the company isn't burning cash; the share count trend tells you what that comp actually costs existing holders.

tundraaaa

They're not deep in debt lol. Net debt/TTM EBITDA is 1.46x. Analysts project their FCF to be $1.1B in FY27 vs net debt of $1.12B.

illonlybeonforaminut

That’s your call if you want to base valuation on non-GAAP measure and/or EBITDA. Companies will share whatever story makes them look the best. FCF is a great metric but you need to watch what % of that FCF is spent on buybacks to neutralize dilution (aka sterilization).

Jeff__Skilling

>When looking at what caused the other Giants to fail, it looks like Nike might be repeating the same mistakes. The common denominator among the four listed in the OP is that they were B2C retail businesses with a significant physical prescense and convoluted / expensive supply chain that got outcompeted by Amazon, unburdened from the overhead of owning a portfolio of physical outlets. How does this apply to Nike? From what I understand, their B&M presence is pretty marginal -- their cash balance on their BS exceeds PP&E, Net. Their 10-K shows ~$700MM in capex on ~$2.9bn in OCF -- so over $2.0bn in FCF on the year. Having a really hard time seeing how Nike falls into the same bucket as Blockbuster, Sears, Toys R Us, Circuit City, and every other pre-internet business that got their shit handed to them by the e-commerce sector in the 00s...

UsefulStooge

Yeah this post is nonsense - Nike doing poorly is not the same as them being close to collapse. Huge gross margin gives them a lot of wiggle room. They have just been making poor decisions on where they spend their gross margin.  *But* on the other hand $NKE share price has a lot more room to fall based on FCF vs risk free rate.  Both can be true.

lightning_Mcking29

FCF not covering the dividend is a fair yellow flag and the stock is ugly for good reasons, but Nike isn’t a pure-play retailer stuck in a dying format with no brand power left. Balance sheet + brand + product pipeline give it runway the others didn’t have. Turnaround still has to deliver, though

Correct_Mastodon1112

I do. But whether their spend/debt and sacrifice to FCF yields acceptable ROI is tbd

Which_Cost8015

My earnings watchlist this week. I’m holding options on all x 4: NVDA is the main read-through for the entire AI capex cycle. I’ll be watching guidance, Blackwell/Rubin demand, gross margin, China exposure and whether hyperscaler spending still looks strong. MRVL is the more interesting. Custom AI silicon, networking and optics are where I want to see whether the Google deal and broader AI bookings are actually pushing FY27/FY28 expectations higher. IREN is the higher-risk infrastructure test. I’m less focused on the headline EPS number and more on whether contracted ARR is converting, GPUs are getting deployed on schedule, and capex is turning into usable capacity. CRWD gives a different angle. It’s the software/security read on AI. Net-new ARR and FCF matter, but I really want to see whether AI is accelerating actual platform adoption rather than just giving management another talking point. If I had to narrow it down, NVDA tells me whether the AI buildout is still intact. MRVL tells me where the next layer of that spend may be showing up. DYOR.

Stoic_Brain

VFLO looks great but is US-based (I am from EU country and can't buy this). Some other differences: VFLO is distributing, and has 50 US-companies. XDEV is accumulating, and has 400 companies of developed countries (US, Japan, European countries, ...). So a bit different but I like how VFLO focusses on FCF rules.

Full_Cash6140

Plenty of cheap commodity stocks out there with enormous FCF yields. I hold a few stocks with forward PE of 3!

Disastrous_Rent_6500

The reason why Nike is not attractive based on this metric is because technically speaking leaving FCF in a money market fund has a higher economic yield than buying back stock at this price

W_Edwards_Deming

I didn't mention the PEG, which is great. ROE is my first metric and it fails. P/E is one of he highest I have seen, as with the P/FCF. No dividend, profit margin barely passes.

Organic-Energy7300

Azioni Wide Moat che presentano fondamentali di primissimo ordine per FCF, EBIT Margin e ROIC. 100 azioni per titolo, assegnate in tempi diversi tramite la vendita di opzioni put. Tra dividendi e vendita di covered call, queste posizioni mi generano un discreto rendimento da flusso di cassa: ​Illinois Tool Works(ITW)Industriale; ​AbbVie (ABBV) Pharma; ​Morgan Stanley (MS) Finanza; ​Chevron (CVX) Energia; ​Procter & Gamble (PG) Consumer Staples; ​Waste Management (WM) Utilities & Servizi Ambientali.

Puzzleheaded_War6102

Do you understand FCF? Their cows are not printing fast enough

Puzzleheaded_War6102

Wouldn’t have negative FCF and borrowing money if they had infinite cash like you claim 🤷🏿‍♂️

BriackYOLO

Negative FCF from temporary CapEx spikes doesn't mean they are broke

W_Edwards_Deming

AMD does not match my fundamentals. The P/E and P/FCF are absurd, no dividend and worst of all the ROE. Good luck...

Puzzleheaded_War6102

They don’t have infinite cash if their FCF is negative and debt going up 😂

Puzzleheaded_War6102

Hyperscalers don’t have cash. They are in fact debt financing and using off balance sheet finance and all have negative FCF except MSFT.

icydragon_12

Sure fair. But they've had capital discipline too. GOOG has spent \~5% of operating CF and FCF as "other bets" pretty consistently. At the peak of reality labs, META spent \~25-30% of OCF and 70% of FCF .. on nothing.

Which_Cost8015

The buyback is meaningful, but one nuance matters. SK Hynix recently issued 17.79M new shares for the U.S. listing, and 10 U.S. ADSs represent one Korean common share. The new buyback covers about 24.07M shares, or 3.3% of shares outstanding. So the bigger thesis for me isn’t the $29B headline. It’s whether HBM cash generation stays strong enough to fund massive capacity investment while still returning 50%+ of FCF to shareholders. That’s what could drive the rerating.

Which_Cost8015

Right now STRL is at the top of my list, followed by CLS and FN. STRL has the cleanest gap between what the market seems to be pricing and what I think the underlying business is showing. CLS has stronger growth but a higher expectations bar, while FN is interesting after the reset but I want better FCF conversion. I’m not treating any of them as “buy at any price” though. The entry still has to make sense relative to the thesis.

octopus_serenader

Look at the chart for VFLO etf it's all high FCF.

Etherius

Considering capex is explicitly subtracted from operating income to get the FCF number, it’s no surprise there. Yes we get it. Capex is very high. But these are also companies completely flush with hundreds of billions in cash.

icydragon_12

I'd buy META over RDDT. Both stocks face market overhangs for different reasons, with uncertain timeline to resolution. But in the case of META, the market has already digested, to some degree, the magnitude of the problem (Capex eating FCF/ uncertain ROI), and seems to be oscillating between: the capex will generate ROI and .. no it won't. Obv the performance of the stock depends on operating performance at this point. If they can show operating strength, it will validate the spend. My sense is that GOOG and RDDT will come to an understanding, but we could get 1 or 2 quarters where GOOG gives us a glimpse of how much they can decelerate RDDT's growth.

Thetagang888

Zuck will cuck you. But I wouldnt bet against him. I also would dip buy at least a bit on a FCF monster machine that prints money every quarter.

MitchCurry

I disagree on the momentum loss argument. Utilization is still climbing at the same rate it was a year ago and recurring revenue is 85% of the total and growing 19%, instruments & accessories revenue per procedure rose in Q2, FCF is up 75% YTD y/y. They placed 468 systems in Q2 (18% growth y/y) with 53% of those placements being the next-gen dV5 system (which has accelerating placement growth) along with meaningful margin improvements. ISRG has close to 12,000 da Vinci's deployed. Seems like a lot until you realize a hospital with enough beds and surgeries to financially justify having a da Vinci is close to 25,000 worldwide and many hospitals that have a robot are extremely willing to upgrade to next-gen versions. ISRG is in the early innings of their European, Asian (ex. Japan) LatAm, and Middle East expansion. They only just signed a direct distribution deal in Italy, Spain, and Portugal.

VotedOut

The individual companies that are trading at low forward P/E ratios relative to their historic forwards are likely either CYCLICAL (semi-conductor and computer hardware companies) or mature companies spending now spending heavy on CapEx (such as META, GOOG, MSFT, AMZN - their Price/FCF ratios are now more expensive than they've ever been) . There's a reason that one of the charts I linked is the Cyclically Adjusted P/E ratio (current price / 10-year average inflation-adjusted earnings) rather than just plain P/E ratio or 12-month forward P/E ratio. Semiconductors companies are experiencing a period of abnormally high profits and margins right now that I question the sustainability of. There's a very good chance that companies like Nvidia and Micron will have a margin crash and earnings crash sometime in 2027-2029 as data centers come online, supply begins to meet demand, and then supply exceeds demand because they over-built. As a rule of thumb, if you see a company's revenue and earnings shoot up very fast within a very short time period, you should be suspicious about the sustainability of the revenue & earnings. The P/E ratios of banks were fairly normal-looking and their earnings were growing well just before they got wrecked in the Great Recession. You had to dig a bit deeper underneath to see what was going on. With all that said, no I don't have puts on companies that have P/E ratios within a normal range incase my thesis that their earnings are not sustainable is wrong. But my suspicion about their earnings sustainability is enough to keep me out of investing in them, as at least 2-3 years of earnings growth is priced into them, and I don't want to be holding them incase the market starts re-pricing them to forecasting a cyclical decline or recession.

YourWifesBoyfrien69

\> They are also likely to lose the lawsuits paving the way for more attorney generals to steal their FCF This I would not be so sure. If meta is found guilty, then it kind of applies to all social networks. Have you see the shit posted on Truth Social?

Rich-Badger-7601

/thread The man somehow found a way to run a company making $100B in *profit* into a negative FCF in less than three years, just awe inspiring work

RepresentativeTill90

Zuckerberg has to balance short term profits to long term bets. This makes meta a good long term investment since it is not short sighted and bets heavily on future returns. You should be okay with short term headwinds to FCF only then should you invest. Same goes with Amazon stock.

No_Cell6708

Been looking at both the last year and it's genuinely insane how expensive they are given how slowly they're growing at this point. I understand that they're considered to be extremely safe, but the valuations just don't make any sense. $900B for something like $15B in FCF is wild

WilliamTeacher

Anything to avoid signalling that they’re increasing production capacity. The market fears a supply glut if DRAM / NAND more than anything for memory stocks and rightfully so. Expenditure of their FCF on anything other than production capacity is bullish. Samsung and Micron are also following suit - this should all A) boost share price and B) maintain the memory shortage until the planned 2028 and perhaps beyond.

dwoj206

from a corporate treasury management standpoint, it very much is. Also incremental benefit to FCF to use stock based comp vs. cash.

JabCrossE4E5Quark

Metas earnings are a mirage. EPS is boosted by the way they depreciate their capex. EPS is also boosted by gains on investments being M2Md. Also, based on FCF, what is Metas multiple?

yourgirl696969

SKHY doing buybacks (28 billion I think) causes 6% rally in Korea. Imagine Micron buybacks starting December after the chips act expires. Projected to have at least $300 billion FCF by 2028. All going to buybacks. This is the cheapest memory stocks are gonna be

PaleCommission150

you can't really go by FCF either as all the earnings are being poured into R and D.

octopus_serenader

Just threw some cash into VFLO etf to hold for a while. Literally an FCF index, I like it.

Normal_Ad5955

FCF going negative, Capex through the roof, Eps is going to be down significantly over the coming years due to depreciation on chips, and investors dont see the ROI on capex like Amazon or Google. Solid long term play though.