So far investors have been lulled in to complacency with Wall Streets generic Free Cash Flow metrics. In this market you have the hyperscale's, gobbling up all available assets, disregarding their old low asset models. Wall Streets should be using a levered free cash flow metric to account for equity, but that doesn't make stock prices go up, it will have the opposite and you will see drawn downs on some of Wall Street's darlings. Some of the biggies could go down 50-50%. I thought the free ride would continue throughout this year.(I think we all know the transition has to happen sometime) It appears investors have begun crunching equity numbers into their valuationsThe affects can be quite sobering. For a deep dive in to a ROE look into the Dupont analysis. It allows you to see what parts are producing what performace,How efficient the Company is being run, or are earnings just due to higher leverage?? Investors might challenge managements vie of where the company is headed. For example, "Why didn't we just stick with our old business model'? "If we just used cash for stock buy backs wouldn't we be better off than we are now?/ (JMHO)
DuPont Analysis - Learn How To Create A DuPont Analysis Model
