Value Factors


This ratio is the opposite of FCF Yield and was added to the screener to solve an important flaw. When sorting companies based on FCF yield, companies with a small enterprise value and positive FCF will show up at the top of the list, but as soon as the EV becomes negative, the stock will drop to the bottom. Similarly, stocks with a negative FCF and a negative EV will likely feature at the top of the list.

To prevent this behaviour, we created the EV/FCF ratio. Stocks with a negative FCF get a blank score, and by sorting stocks ascending, stocks, where the EV becomes negative, don't get sent to the bottom of the list.

We calculate the EV/FCF as follows:

EV/FCF = Enterprise Value ( Cash Flow from Operations - Capital Expenditure )

Stocks with an FCF <= 0 automatically get a blank score