Free cash flow
In the previous part of this series, we looked at estimates for capital expenditure for PotashCorp (POT). What’s left after capital expenditure is known as free cash flow. Investors and analysts often watch free cash flow growth very closely. It’s also used in discounted cash flow valuations.
Free cash flow estimates
For 4Q16, Wall Street analysts are expecting PotashCorp to report $300.0 million in free cash flow, which is a rise of 44.0% year-over-year. For the next 12 months, analysts are estimating a total free cash flow of $483.0 million, which is a 3.0% rise from $467.0 million for the last four quarters.
The free cash flow for POT’s peer (SOIL) Mosaic (MOS) is estimated to fall 48.0% to $163.0 million in the next 12 months. For Agrium (AGU), free cash flow is expected to rise 23.0% to $579.0 million. For CF Industries (CF), which has had negative free cash flow over the last 12 months, free cash flow is estimated at $869.0 million over the next 12 months.
Leftover free cash flow can be used to reduce debt, make acquisitions, and pay dividends. PotashCorp has been paying dividends, but let’s see in the next part how they’re expected to rise in the next 12 months.