The compound annual growth of free cash flow per share over three years. Captures both FCF growth and share buyback effects. Growing FCF per share is the foundation of sustainable dividend increases.
Formula
Description
Compound annual growth rate of free cash flow per share over three years. This captures both FCF growth and the impact of share count changes (buybacks or dilution). Growing FCF per share is the foundation of sustainable dividend increases and long-term shareholder value.
Interpretation
Above 10% is strong. Compare to EPS growth: if FCF/share growth exceeds EPS growth, cash quality is improving. Declining FCF/share with growing EPS is a warning sign of deteriorating cash conversion.
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