Mike, re "You probably don't need to be reminded that I follow FCF per share more closely than FCF. "
Perhaps at my investment peril, I've not been evaluating FCF, so the reminder is helpful.
re "That's because [ed: FCF per share] takes into account share dilution, including dilution caused by employee stock options. "
That seems perfectly logical to me, as FCF-Per-Diluted-Share provides more accurate year-to-year comparisons over the long term. I'm assuming you use the same "Diluted Shares" number companies use to report EPS.
I'm curious as to whether or not you also use FCFPDS as the basis for company-to-company comparisons. If "yes", I further assume you divide the FCFPDS by the price per share .. resulting in the comparison of dimensionless numbers.
re "Huey seems to ignore in my posts when he conveniently quotes them out of context, as I believe he regularly does and did again in his most recent post here in the folder."
Huey and I have discussed expensing options from time to time .. over the last 2 years IIRC .. so I interpret his post differently. I don't think he really disagrees with your argument of looking at FCF on a per share basis. He merely used the cite as a segue to express his belief that a further step should be taken, i.e., to include the impact of option expense in OCF per SFAS 123 and, thereby as a consequence, in FCF.
Since the IRS does not recognize SFAS 123 employee compensation as an expense, there is consequently no tax deduction for this expense. Therefore, it is logical to use the "tax benefit from option expense" as a proxy.
Hence, to *include* option expense and *include* the tax benefit in calculating FCFPDS .. is my interpretation of Huey's POV. I agree with that POV.
Regards, Ron
P.S. After sticking my neck out with 2 assumptions and an extensive paraphrase, I ask you to "please respond kindly". :-)) |
