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.

Verizon Communications VZ Free cash flow margin

Discontinued — last reported Q3 '19

Free cash flow margin at other companies

AT&TT

13.7%-2.1pp

SBA CommunicationsSBAC

35.7%-6.2pp

Crown CastleCCI

64.7%+0.8pp

Charter Communications, Inc.CHTR

7.4%-0.9pp

ComcastCMCSA

16.3%+3.1pp

T-Mobile USTMUS

20.1%+1.5pp

Other financials

Income statement

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Revenue$34.4B+2.9%

Operating income$8.2B+3.3%

Net income$5.0B+3.4%

EPS (diluted)$1.20+4.3%

Balance sheet

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Cash & equivalents$8.6B+211%

Total debt$51.6B-69.2%

Total equity$104.62B+2.5%

Total assets$417.88B+9.9%

Cash flow

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Operating cash flow$8.0B+2.6%

Valuation

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Market cap$189.45B+10.9%

Enterprise value$232.45B-28.4%

P/E10.9×+1.3×

P/S1.4×+0.1×

Profitability

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Gross margin82.3%—

Operating margin21.2%-0.3pp

Net margin12.5%-0.7pp

Returns & leverage

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Return on equity16.8%-1.2pp

Debt / equity0.5×-1.2×

Current ratio0.6×0.0×

Where this comes from

Calculated from Verizon Communications’s reported figures.

free cash flow/total revenue=13.6%

Based on trailing twelve months.

The official record: Verizon Communications’s 10-Q, filed October 27, 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.