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Many investors believe that a company’s free cash flow (FCF) is one of the more important fundamental metrics in evaluating an equity investment. Some have agued that Wall Street’s focus is on revenue and earnings, which are more easily manipulated through accounting, without direct concern for calculating the actual money that a business is generating.

Free cash flow is operating cash flow minus capital expenditures. FCF is the cash that a company made after paying out the money required to maintain and/or expand the business. Free cash flow enables a company to pursue acquisitions and growth initiatives, among other options. FCF may also allow a company to initiate or increase dividends.
I started this screen for strong FCF equities by limiting it to U.S. mid cap (market valuations of $2-$10 billion) companies in the financial sector. I screened for only those that have 10% earnings per share growth over the past 5 years and a current price to FCF of fewer than 10. Others may meet these criteria and please list any you feel others should know about in the comments.
Ticker
Company
Industry
P/E
Market Cap
P/FCF
(NYSE:ADS)
Alliance Data Systems Corporation
Credit Services
20.99
$4.48 B
5.96
(NYSE:AFG)
American Financial Group Inc.
Property & Casualty Insurance
8.29
$3.59 B
4.86
(NASDAQ:ETFC)
E*TRADE Financial Corporation
Investment Brokerage - National
70.3
$3.10 B
2.26
(NYSE:HCC)
HCC Insurance Holdings Inc.
Property & Casualty Insurance
11.4
$3.60 B
9.23
(NYSE:RGA)
Reinsurance Group of America Inc.
Life Insurance
12.93
$3.76 B
4.79
(NYSE:TRH)
Transatlantic Holdings Inc.
Property & Casualty Insurance
16.78
$3.09 B
3.18
(NYSE:UNM)
Unum Group
Accident & Health Insurance
9.28
$7.82 B
7.12

Free cash flow alone is likely insufficient information to base an investment decision on, but it is an important metric and one that is rarely provided. Such information can help you get a greater understanding of the fundamentals of businesses and identify proper investments.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: This article should not be construed as personalized investment advice as it does not take into account your specific situation or objectives and is intended to informative and not a recommendation for or against anything.

Source: American Mid-Cap Financials With Strong Free Cash Flow