Displaying items by tag: free cash flow

Boeing’s latest outlook has injected fresh optimism into its long-running turnaround efforts, as executives signal that the company may finally return to generating positive free cash flow after several challenging years. 

The planemaker now expects free cash flow to swing back into the black in 2026, emphasizing that rising aircraft production, a shrinking inventory backlog, and improving profitability across key divisions are setting the stage for a meaningful financial rebound. Leadership reiterated its long-term ambition to deliver $10 billion in annual free cash flow, a target long viewed as a marker of Boeing’s full recovery and strategic reset. 

At the same time, the company acknowledged that the certification delay of the 737 Max 10, now projected into late 2026, will push some high-value deliveries into 2027. Still, the strong demand for Boeing’s 737 and 787 families, combined with improving performance in defense and services, has reinforced expectations that sustained free cash flow growth remains within reach. 

Finsum: Free cash-generation trajectory—not just deliveries—could be the key catalyst that could redefine valuation in the years ahead.

Free cash flow (FCF) is a critical measure of financial health, showing how much cash a company can reinvest or return to shareholders after covering essential costs. In the small-cap arena, where profitability is often limited, strong FCF can distinguish higher-quality businesses with better growth prospects and lower valuation risk. 

The VictoryShares Small Cap Free Cash Flow ETF (SFLO) seeks to capture this advantage by tracking an index that emphasizes both historical and projected FCF performance. By filtering out slower-growing firms and prioritizing those with robust FCF yields, SFLO aims to balance growth potential with disciplined valuation.

 Its broad small- and mid-cap universe also enhances liquidity and diversification, making it a potentially appealing option for investors seeking targeted small-cap exposure with a quality bias.

Finsum: Since a large share of small-cap companies remain unprofitable, focusing on those with consistent FCF can improve portfolio stability.

(Seattle)

Yes, Amazon looks expensive and has seen massive gains in recent years. This makes many fearful of the stock. But the reality is that the stock is a free cash flow rocket ship that is going to keep surging higher, according to 47 of the 49 Wall Street analysts who cover it. Amazon trades for 69x 2020 earnings, but it still looks pretty inexpensive on a free cash flow basis. The company’s past growth initiatives are now paying off, which means Amazon is throwing off free cash flow in a big way.

FINSUM: Amazon has averaged a 35% gain per year since it went public. We don’t see any big reasons why it cannot continue this year.

(New York)

There has been a lot of anger (and even legal action) about the big declines Lyft has seen since its IPO. The questions around publicly traded companies worth tens of billions of Dollars with annual losses of billions of Dollars are only growing more intense as Uber readies for its IPO. The big question is what investors should do about the stocks—stay away or buy in? TrimTabs Asset Management has some very salient thoughts on the issue. TrimTabs specializes in free cash flow oriented products and lent their expertise to this question. They conducted an in-depth study of how post-IPO companies with negative free cash flow, and negatively trending free cash flow, perform versus those with positive FCF. The results were stark, and in all instances showed major outperformance of FCF positive companies. For instance, over a 12-month horizon following IPO, $1 bn+ companies with positive FCF outperformed those with negative FCF by almost 16%, with the latter averaging losses of 6.41%.

FINSUM: This analysis from TrimTabs could not be more timely or insightful. We think it might be smart to stay away from Uber and Lyft until they at least have a clear path to profitability.

(New York)

Advisors tend to really like dividend stocks, and it makes sense why: clients need good income as they head into retirement. However, this desire leads some (especially retail investors) to overreach, choosing high paying, but ultimately fragile or unsustainable stocks. Right now is a good time to be looking for quality dividend payers, as their valuations relative to the market are the lowest in about 20 years. Some high quality names to look at include Macy’s (6.2%), General Motors (4.1%), Kellogg (4.1%), and Verizon (4.2%).

FINSUM: One of the best ways to judge the quality of dividend stocks is through focusing on free cash flow as that measure shows whether companies can really afford what they are paying out without hurting their underlying business.