The formula
FCF yield = Free cash flow (trailing twelve months) / Market capitalisation.
Worked example
Trailing FCF$108,807
Market capitalisation$3,400,000
FCF yield3.2%
Sector benchmarks
| Sector | FCF yield range (2025-26) |
|---|---|
| Consumer staples | 4-7% |
| Mature tech (large-cap platform) | 2-4% |
| High-growth SaaS | 0-2% |
| Energy majors | 5-10% |
| Industrials | 3-6% |
Ranges derived from Damodaran NYU sector datasets (latest January update). Treat as indicative, not statutory.
Trailing vs. forward
Trailing FCF is auditable; forward FCF is a forecast. For comparing investment opportunities, prefer trailing. For modelling, use a normalised forward number that strips one-off working-capital swings.