Price-to-cash-flow divides market cap by trailing twelve-month operating cash flow. It is an alternative to P/E that uses cash generated from operations rather than accounting earnings. Cash flow is harder to manipulate than earnings, making P/CF a useful check on whether a stock's P/E-based valuation is supported by actual cash generation.
P/CF = Market Capitalization / Operating Cash Flow (TTM)
GeminIQ divides market cap by TTM operating cash flow from the cash flow statement in SEC filings.
A: P/CF is more useful for capital-intensive businesses where depreciation is a large non-cash charge that depresses earnings relative to cash flow. It is also useful when comparing companies with different depreciation policies or when earnings are distorted by non-cash items.
A: A P/CF below 10 is generally considered attractive. Between 10 and 20 is moderate. Above 20 is expensive unless justified by high growth. As with all valuation ratios, compare within the same industry.
A: Operating cash flow can differ if the platform adjusts for certain items. GeminIQ uses Operating Cash Flow as reported on the cash flow statement.