Stocks With Deteriorating Cash Flows

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 |  Includes: FDX, GCI, MO, NUE, PEG
by: Stookle

Investors who focus on a company’s earnings often ignore the free cash flow (FCF). FCF is the net inflow of cash a company generates through its operations, excluding the cost of expanding its asset base. This metric is one of the most important measures of assessing the future financial health of company. The FCF shows a real picture of a company’s operations and sustainability. The higher the FCF, the better it is for the company. Stookle.com detected the following stocks with consistently decreasing cash flows in the last 5 years.

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Nucor Corp (NYSE:NUE): Nucor Corporation and its subsidiaries engage in the manufacture and sale of steel and steel products internationally. Nucor also produces direct reduced iron for use in the Company’s steel mills. The company has a return on assets (ROA) of 1.01% and a return on equity (ROE) of 1.85%. The stock is trading with a return on invested capital (ROIC) of 1.23%. The FCF dropped by 72% from $1.9B to $0.5B over the last 5 years. The company is trading at a price to earnings to growth ((NYSE:PEG)) of 0.59. NUE is currently trading at $39.58, falling $4.63 or 10.5% this year.

Altria Group (NYSE:MO):

Altria Group, Inc., through its subsidiaries, engages in the manufacture and sale of cigarettes, smokeless products, and wine globally. It offers cigarettes under the Marlboro, Virginia Slims, Parliament, Benson & Hedges, Basic, and L&M brands; smokeless tobacco products under the Copenhagen, Skoal, Red Seal, Husky brands, and Marlboro brands; and machine-made large cigars and pipe tobacco. (Source)

The stock has a ROA of 10.5% and a ROE of 84.33%. Altria is trading with a ROIC of 23.37%. The stock is trading at a PEG of 1.76.The FCF dropped by 77% from $11B to $2.6B over the last 5 years. MO is currently trading at $28.53, raising $4.03 or 16.4% this year.

FedEx (NYSE:FDX): FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. The Company operates in four segments: FedEx Express, FedEx Ground, FedEx Freight and FedEx Services. The stock has a ROA of 5.14% and a ROE of 8.97%. FDX is trading with a ROIC of 7.98%. The stock is trading at a PEG of 0.81.The FCF dropped by 72% from $1.1B to $0.3B over the last 5 years FDX is currently trading at $82.47, falling $10.7 or 11.5% this year.

Public Service Enterprise (PEG): Public Service Enterprise Group Incorporated and its subsidiaries operate in the energy industry. PEG primarily operates in the northeastern and mid Atlantic United States generating asset operations through its wholesale energy, fuel supply, energy trading, and marketing and risk management activities. The company has a ROA of 5.33% and a ROE of 16.98%. The company is trading with a ROIC of 8.66%. The company is trading at a PEG of 8.37. The free cash flows dropped by more than 99% from $914M to $4M over the last 5 years. PEG is currently trading at $31.53, falling $0.27 or 0.849% this year.

Gannett Co (NYSE:GCI): Gannett Co., Inc. is an international media and marketing solutions company. The Company provides consumers with the information through the Internet, mobile, newspapers, magazines and television stations. The Company operates in three segments: publishing, digital and broadcasting. The company has a ROA of 8.42% and a ROE of 31.22%. The stock is trading with a ROIC of 12.81%. The company is trading at a PEG of 1.00. The FCF dropped by 45% from $1.3B to $0.7B over the last 5 years. GCI is currently trading at $12.71, falling $2.71 or 17.6% this year.

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