What is Cytec Industries Forward Rate of Return (Yacktman) %?
Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. Cytec Industries's forward rate of return for was 27.69%.
The historical rank and industry rank for Cytec Industries's Forward Rate of Return (Yacktman) % or its related term are showing as below:
CYT's Forward Rate of Return (Yacktman) % is not ranked *
in the Chemicals industry.
Industry Median: 8.69 * Ranked among companies with meaningful Forward Rate of Return (Yacktman) % only.
Unlike the Earnings Yield %, the Forward Rate of Return uses the normalized Free Cash Flow of the past seven years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
Cytec Industries Forward Rate of Return (Yacktman) % Historical Data
The historical data trend for Cytec Industries's Forward Rate of Return (Yacktman) % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
* Premium members only.
Cytec Industries Forward Rate of Return (Yacktman) % Chart
Competitive Comparison of Cytec Industries's Forward Rate of Return (Yacktman) %
For the Specialty Chemicals subindustry, Cytec Industries's Forward Rate of Return (Yacktman) %, along with its competitors' market caps and Forward Rate of Return (Yacktman) % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Cytec Industries's Forward Rate of Return (Yacktman) % Distribution in the Chemicals Industry
For the Chemicals industry and Basic Materials sector, Cytec Industries's Forward Rate of Return (Yacktman) % distribution charts can be found below:
* The bar in red indicates where Cytec Industries's Forward Rate of Return (Yacktman) % falls into.
Cytec Industries Forward Rate of Return (Yacktman) % Calculation
Forward Rate of Return is a concept that Don Yacktman uses in his investment approach. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. He said in the interview (March 2012, when the S&P 500 was at about 1400):
If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.
The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Cytec Industries (NYSE:CYT) Forward Rate of Return (Yacktman) % Explanation
Unlike the Earnings Yield, the Forward Rate of Return uses the normalized Free Cash Flow of the past five years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over five years. The reason we use five years is to make it comparable to the growth rate.
Be Aware
In the Forward Rate of Return calculation, the growth rate is added directly to today's free cash flow yield. Therefore the calculation is reliable only if the company can grow at the same rate in the future as it did in the past. Investors should pay close attention to this when researching growth stocks. A more accurate measurement for return is Return on Capital.
Cytec Industries Forward Rate of Return (Yacktman) % Related Terms
Thank you for viewing the detailed overview of Cytec Industries's Forward Rate of Return (Yacktman) % provided by GuruFocus.com. Please click on the following links to see related term pages.
Cytec Industries (Cytec Industries) Business Description
Cytec Industries Inc was incorporated as an independent public company in Delaware in December 1993. It is a specialty materials and chemicals company. Its products serve a diverse range of end markets including aerospace and industrial materials, mining and plastics. Its segments include Aerospace Materials, Industrial Materials, In Process Separation, and Additive Technologies. Its Aerospace Materials segment is a provider of technologically advanced materials for aerospace markets. Its product lines are Advanced composites, Structural and film adhesives, and Carbon fibers. It markets Aerospace Materials products and services directly to its customers using sales and technical support team. It is a supplier for military fixed wing programs, such as the F-35 Joint Strike Fighter and F-18 fighter jet programs, where advanced composites generally account for a higher percentage of structural weight. Advanced composites are exceptionally strong and lightweight materials (prepregs and resin infusion systems) it manufactures from high performance fibers (like carbon fiber) with epoxy, bismaleimide, phenolic, polyimide and other resins formulated or purchased by the Company. Structural and film adhesives are used for bonding and surfacing both metal and composite aircraft components. It also manufactures specialty adhesive forms for complex composites assemblies, such as honeycomb and sandwich structures and special surfacing films to provide aircraft lightning strike protection. It began construction on a new standard modulus carbon fiber line in South Carolina in early 2008. Its Industrial Materials segment provides Structural materials and Process materials. In Industrial Materials, it markets its products through a direct sales force for the structural materials and process materials product lines. Structural materials product line includes the development, manufacturing and supply of advanced composite materials for a diverse range of industries such as motorsports, automotive, defense, rail, tooling, recreation, alternative energy and other markets. Process materials product line includes the development, manufacture, and supply of vacuum bagging and other process materials to the composites industry and other markets, providing a wide range of materials and technical support to a growing number of international customers. Its In Process Separation segment provides Mining chemicals, and Phosphines. It markets In Process Separation chemicals through specialized sales and technical service staffs for each of its product lines. Mining chemicals product line is primarily used in applications to separate desired minerals from host ores. Phosphine specialties are utilized for a variety of applications. Its Additive Technologies segment provides Polymer additives, Specialty additives, and Formulated resins. It markets Additive Technologies chemicals through specialized sales and technical service staffs for each of its product lines. I
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