What does free cash flow margin mean?

How much real, spendable cash each sales dollar generates after reinvestment.

How do you interpret free cash flow margin?

A high and rising FCF margin is the hallmark of a cash-generative business. Persistent gaps between net margin and FCF margin warrant a look at working capital or capital intensity.

How does free cash flow margin compare across companies?

Strong cross-company quality signal; capital-light compounders post structurally higher FCF margins than asset-heavy peers.

Equity Residential EQR Free cash flow margin

Discontinued — last reported Q2 '19

Free cash flow margin at other companies

UDRUDR

36.8%+0.2pp

Mid-America Apartment CommunitiesMAA

31%-3.3pp

AvalonBay CommunitiesAVB

45.7%-2.0pp

Invitation HomesINVH

43.2%+3.0pp

American Homes 4 RentAMH

43%-2.5pp

Equity Lifestyle PropertiesELS

21.7%-1.8pp

Other financials

Income statement

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Revenue$779.8M+2.5%

Operating income$392.5M+61.9%

Net income$90.1M-64.9%

EPS (diluted)$0.24-64.2%

Balance sheet

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Cash & equivalents$34.7M-13.0%

Total debt$304.6M-0.1%

Total equity$10.7B-3.4%

Total assets$20.5B-0.2%

Cash flow

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Operating cash flow$400.5M-5.9%

Valuation

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Market cap$24.02B-17.8%

P/E25.2×-4.1×

P/S7.7×-2.0×

Profitability

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Operating margin40.4%+4.3pp

Net margin30.6%-2.5pp

Returns & leverage

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Return on equity8.8%-0.2pp

Debt / equity0×0.0×

Where this comes from

Calculated from Equity Residential’s reported figures.

free cash flow/total revenue=51.5%

Based on trailing twelve months.

The official record: Equity Residential’s 10-Q, filed August 3, 2020, on SEC EDGAR. View the filing →

Questions, answered.

What does free cash flow margin mean?: How much real, spendable cash each sales dollar generates after reinvestment.
How do you interpret free cash flow margin?: A high and rising FCF margin is the hallmark of a cash-generative business. Persistent gaps between net margin and FCF margin warrant a look at working capital or capital intensity.
How does free cash flow margin compare across companies?: Strong cross-company quality signal; capital-light compounders post structurally higher FCF margins than asset-heavy peers.