What matters more - FCF growth rate or FCF yield?
What matters more - FCF growth rate or FCF yield?
The correlation between the share price growth rate and the FCF/share growth rate is higher (left), than the correlation between the share price growth rate and the change in FCF yield (right).
I used 10 year data for the $.SPX(.SPX)$ . $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2412(ESmain)$
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What I take from your chart is that over the course of 1 year the multiple impacts 46% of performance, which then drops rapidly to just 5% over 10 years.
So yes, I think both charts are explaining the same thing. Over the short term, the multiple is just noise.
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