FCF
First Commonwealth Financial Corporation
stock NYSE

Its like 4.5 P/E, 2.7 P/FCF, 0.9 P/B. This company could shrink 10% per year and I still make money in theory. They have a pretty sizable buyback/dividend policy planned to turn that cash flow into shareholder yield. It makes sense to me, the biggest worry is the company works better on paper than in reality. But I have so much margin of safety from the numbers I see (7-9 P/E seems right for the industry, possible 60-100% upside if it rerates to the average valuation multiples for the industry.
Im experimenting but on paper this trade makes too much sense for me not to start catching the knife.

OSIS, GHM, ITT, FEIM, ATI, BELFB, MOG.A
I own all these, haven't look at the current fundamentals, but basically all these are actually generating FCF.

One thing that has worked for me, is not worrying too much about how much something has run, as long as the fundamentals support the valuation.
I think so interesting names to look into:
TOITF, spin off from CSU. Software is getting killed since there is fears around AI. Since it spun off, some of the TTM numbers look larger, but should be a great long term compounder.
THR - it's up 30% YoY so a bit over. They are a niche industrial play. Valuation isn't too bad and it's a play around onshoring/data centers.
SYF - Also 30% YoY, however fundamentals are pretty cheap. Pays a little dividend. They do a ton of store credit cards, like the ones for Sam's Club and Gap. They also do the financing for some brands.
PEGA - Enterprise software company that is seeing explosive growth in the cloud. Valuation isn't the worst, but seeing a lot of FCF growth because of the cloud growth. It's also reoccurring revenue. Like they saw around 35% YoY growth in FCF. For full year, they are forecasting 30%.

The buyback would come out of the FCF, $20 billion doesn’t magically appear from nowhere.

Yes the math is correct but the thesis is not just on the raw FCF yield. You have to layer in the $20B buyback which raises price per share FCF yield over the next 2-3 years, as-well as the margin expansion from advertising, already scaling at a 70-90% incremental margin and the AV agnostic model.

$7B FCF on $180B EV = 3.9% FCF yield. Not screaming cheap, not expensive.

Anyone here follow PATH at all? Haven't really looked too much into them, but valuation doesn't seem too terrible at these levels and I think they profitable now and actually generating FCF.
Kind of an interesting name.

When you say operating leverage, what do you mean by that? Like the gap between where their operating margin currently is and where it could be over the next few years? I agree that PANW has more room to expand that figure than FTNT does, simply because Fortinet's operating margin is currently almost 3x higher.
That said, PANW is just simply a much more expensive stock right now. Higher price to sales, higher EV/FCF (way higher if you account for SBC), higher EV/EBIT... It's a larger and more powerful company than FTNT all else equal, but that doesn't always equate to shareholder returns. PANW issues a lot of SBC, relies on acquisitions to grow (which is a much more expensive method of doing things and brings down the ROIC), and usually trades at a premium for "market leader" status.
I don't think you'll do badly with PANW over the long term or anything, but I don't understand the large valuation premium PANW currently commands over FTNT.

Here's a highlight from Gemini's summing up of my healthcare picks (BTW I'm not sure about ISRG):
Final Healthcare/Bio-Tech Tier List (January 2026)
|**Status**|**Ticker**|**Role**|**The "Mandate" Win**|
|:-|:-|:-|:-|
|**Direct Buy**|**GMAB**|Oncology Leader|**41% ROIC**; 70% P/E discount; No debt.|
|**Direct Buy**|**CPRX**|Rare Disease|**21% ROIC**; 20% P/E discount; No debt.|
|**Direct Buy**|**DOCS**|Health-Tech|**68% ROIC**; 40% P/E discount; No debt.|
|**Direct Buy**|**MCK**|Distribution|Elite FCF; consistent GARP valuation.|
|**Direct Buy**|**DXCM**|Med-Device|Market leader; strong 2026 growth.|
|**Watchlist**|**TMDX**|Organ Care|Revolutionary tech; waiting for **P/E < 45x**.|
|**Watchlist**|**LLY, ISRG**|High-Quality|Waiting for a sector-wide correction.|

**NVDA CES Keynote speech (Summary from BofA):**
* NVDA - bofA maintain buy PT 275 after CES keynote:
* "CEO Jensen Huang outlined continued “very high” demand for AI computing and announced the new Vera Rubin AI platform.
* Highlights include:
* (1) AI scaling remains on track, with 5x token generation and 10x token cost reduction per year; (2) six new AI chips announced (more below) for the Vera Rubin platform slated for 2H26; (3) a new pod-level context memory storage platform; (4) NVDA continues to run every single major LLM today; (5) AI to be funded by modernization of AI (repurposing $10tn of computing funding last decade) and shifting of R&D methods; (6) Groq/SRAM deal could be beneficial for extremely low-latency workloads; (7) AI is scaling beyond LLMs into physical AI (Alpamayo announced for AV); and (8) China H200 demand is there, but still awaiting licenses.
* We continue to highlight NVDA’s continued dominance in AI compute, networking, system, and ecosystem, trading at just \~19x CY27E P/E or in-line with the broader S&P 500 despite its superior >35% EPS CAGR and >40% FCF. Maintain Buy."

**AMD keynote speech:**
* AMD also highlighted robotics as Lisa Su brought Generative Bionics CEO Daniele Pucci on stage to debut the GENE.01 humanoid robot. It’s powered by AMD CPUs and GPUs and is aimed at industrial environments. AMD is an investor.
* AMD also leaned into the “space is the ultimate edge environment” message. Blue Origin’s John Couluris said they’re using AMD’s hardened, high-temp embedded hardware, including Versal, for a next-gen flight computer that’s intended to scale to future lunar landing missions.
**GENERAL NEWS:**
* US PRESIDENT TRUMP'S ENVOY TO GREENLAND: I DO NOT THINK TRUMP IS READY TO SEIZE GREENLAND; TRUMP BACKS INDEPENDENT GREENLAND
* Trump: May subsidize oil companies rebuilding in Venezuela; U.S. may reimburse oil companies for rebuilding Venezuela infrastructure. Project could take less than 18 months, per NBC.

**MAG7:**
* TSLA sales in Germany fell 48% YoY in December to 2,032 units. Full-year sales in Germany dropped 48.4% to 19,390 units. Note: That’s against a stronger backdrop, with Germany’s EV registrations up 43.2% in 2025 to 545,142.
* AAPL - BofA on AAPL, PT 325. While global growth was solid in December, we note China experienced weaker y/y performance (Fig 11), which was likely affected by tougher comps, slower usage (weaker overall economy), and possible lower commission. Maintain Buy on strong capital returns, eventual leadership in AI at the edge, and optionality from new products/markets.
**OTHER COMPANIES:**
* VST - shares are trading higher after agreeing to buy Cogentrix Energy from Quantum Capital funds for about $4B, adding 10 modern natural gas plants totaling \~5,500 MW of capacity.
* CDNS - to integrate Cuda X technology into chip design software - Huang at CES
* ZETA - teaming up with OPenAI to power Athena
* NBIS - will deploy \~80MW of new data center capacity in Israel.The buildout ramps from Q3 through early 2027 and implies roughly a 10x expansion of Nebius’ Israel footprint within about a year.
* LMT signed a framework deal with the US Department of War to ramp PAC-3 MSE interceptor output from about 600 a year to 2,000 a year over the next seven years.
* AIG - CEO Peter Zaffino will step down by mid 2026 and move to executive chair.
* SHAK - Deutsche Bank upgrades to Buy from Hold, PT 105 from 115. We are constructive on the food distributors broadly with a path to upside to numbers and undemanding valuations. We are also upgrading SHAK to Buy given what we see as a compelling catalyst path in 1H26, a still strong growth outlook, and a near-trough valuation."
* DLR, EQIX - Deutsche initiates coverage with Buy Rating, and PT of 180 and 915 respectively. We are constructive on both Digital Realty and Equinix, as major beneficiaries of (1) the continued expansion of the digital economy broadly, and (2) the emergence of AI as a potential driver of meaningfully higher demand for digital infrastructure over time. Digital Realty (Buy, $180) is our top pick, based on strong thematic tailwinds around AI, with upside from lease renewals and a robust pipeline of capacity, which should lead to sustainable double-digit returns
* CMG - named top pick at Deutsche. CMG a top pick, with a more aggressive sales playbook to support improving fundamentals, sentiment and valuation. SBUX is also a top (and out-of-consensus) call, as we believe SBUX could surprise to the upside on SSS, think sentiment has become overly negative on the brand's prospects, and give more credibility to expectations to return to historical margins.
* DRUG - reported Phase 2 data for BMB-101 in drug-resistant epilepsy. In 11 evaluable absence-seizure patients, median absence seizures fell 73.1% (p=0.012); in 6 evaluable developmental/ encephalopathic epilepsy patients, major motor seizures fell 63.3%. 18 of 24 completed maintenance; no treatment-related serious AEs.
* LCID - says the Gravity SUV won MotorTrend’s 2026 “Best Public Charging Experience” award.
* QBTS - says it hit an “industry-first” by demonstrating scalable on-chip cryogenic control for gate-model qubits, cutting the wiring needed to scale systems while maintaining fidelity.
* RDW - completed payload integration for ESA’s Σyndeo-3 satellite in Belgium, packing 10 EU-funded tech demo payloads focused on debris monitoring, deorbiting, and thermal control. Launch is slated for Q4 2026 from Andøya (Norway) on Isar Aerospace’s Spectrum.
* GRMN - said it’s expanding its partnership with Qualcomm to build the Nexus automotive High Performance Compute platform, powered by Qualcomm’s Snapdragon Elite Platform for automotive, targeting vehicle programs starting in 2029.
* INTC - has confirmed that the first 18A products will be shipped by the end of 2025.
* CMPS - announced a strategic collaboration with Radial Health to develop delivery models for investigational COMP360 psilocybin treatment, pending FDA approval.
* xAI bought five 380MW natural gas turbines from South Korea’s Doosan Enerbility to help power its Memphis AI campus, with Elon Musk confirming the report by replying “True” to a SemiAnalysis post.
* VIAV - launched a bidirectional test + certification platform for hollow core fiber, built on OneAdvisor 800 with 8100 Series OTDR modules, dispersion modules, and ReportPRO software tuned for HCF. VIAVI says it’s the first all-in-one medium/long-range solution for HCF and has been validated with 3 hyperscale data center operators.
* ULCC - BofA downgrades to udnereprform from Neutral, lowers PT to 4 from 5.
* UPST - Trust initiates coverage with buy rating, Pt 59. "Upstart runs an AI-driven underwriting platform that matches borrowers with 100+ bank and credit union partners, using non-traditional data to predict credit risk more accurately than traditional FICO-based systems. From the company’s inception, Upstart’s core offering is anchored around GenAI, including its underwriting model. While its model offers significant improvements to traditional credit models, it is still highly exposed to the credit cycle, and in our view offers investors a levered way to play U.S. easing rates and stable/improving consumer credit."
* PLTR - Trust initiates with buy rating, PT 223. We acknowledge the significant valuation premium PLTR commands, but continue to see a Buy opportunity given its significant opportunity to drive GenAI adoption for governments and enterprises. PLTR has seen material improvement in its momentum driven by the release of AIP, with top-line growth accelerating to 63% y/y from 13% y/y since 2Q23, with a larger portion of this growth flowing down to operating margins, reaching 50%+ margins. While much of the momentum has come from its U.S. business, we see international as a significant opportunity. We view PLTR as a best-in-class AI asset."
* MU - reportedly plans to ramp HBM4 capacity to \~15k wafers/month this year, about 30% of its \~55k total HBM capacity, as NVDA Vera Rubin moves into production.
* Airlines -The FAA proposed new rules that would force airlines to upgrade or replace radio altimeters to prevent interference tied to an FCC upper C band spectrum sale. The FAA estimates $4.49B in total undiscounted retrofit costs. VEEV - board approved a $2B Class A share repurchase program. Runs 2 years and can be executed via open market, private deals, or 10b5-1 plans. CFO Brian Van Wagener cited “robust cash generation” and “financial outperformance.”
* MCHP pre announced Q3 sales above previous guidance. CEO says recovery is showing up across most end markets as channel/customer inventory correction improves, bookings were strong, and March-quarter backlog started higher.

Concentrix trades at deep-value multiples with strong FCF but elevated leverage and AI risk.
We break down whether the risk/reward now favors patient investors.

Fair point on deceleration—growth's slowed from 100%+ peaks to 23% YoY. Guidance is conservative (FY26 $1.001B, +22%; Q4 $271M, +20%), but they've beaten estimates consistently and raised intra-year. Margins? Actually killing it—non-GAAP op margin hit 7% Q3 (+1200 bps YoY from -5%), FCF positive at 6%. Thesis holds: Undervalued at \~4x sales with AI tailwinds, enterprise wins (1,572 big customers +20%), and rebound potential vs. CRWD. Risks? More slowdown if macros bite...

Not when they’re using almost 100% of FCF on dividend payments.

My flow is pretty simple. Screen for quality first (ROIC, margins, debt levels), then filter for valuation (price to fair value, FCF yield), then manually dig into the 10-15 names that pass.
Valuesense for the screening and fair value calculations. Then I read the actual filings for anything that looks interesting. Most people skip that last step but it's where you actually find the edge.

Why are earnings increasing and trailing twelve month my multiples contracting at the same time?
Sure there will be blood in the streets ala oracle CRWV and CIRCLE. The mag 7 plus AVGO MU and AMD are FCF machines with growing earnings. Only TSLA has expanding 12 month trailing multiples year over year.

Appreciate this write-up and share many of your points here which I also came to independently. Any outcome from the activism seems positive and coincides with the realization of FCF from the massive amount of bed adds in 24/25. 300mm capex reduction positions 2026 as an inflection year for the stock, and iirc ACHC has an ongoing 300mm buyback program authorized, of which they’ve only repurchased 50mm so far.
Main concerns are around managed Medicaid headwinds impacting volumes as well as the legal bomb…do you believe some of the litigation risk is priced in given the price dip on the announcement of raised PLGL costs? Would also love any context or sources for diligence on the typical timelines of lawsuit and shareholder activism campaigns, as I’m not too familiar with how settlements are sized.

Similar to one of the redditors here, I've just created Canadian and European ports that are both using free cash flow yield as part of the ranking score, mixed with a few quality metrics (eg. margins, debt level). This might not be seen as pure "value".
The blog's article [here](https://thesovereigninvestor.net/free-cash-flow-yield-stock-screener/) explains the reasoning behind the FCF yield and the backtesting results.
There are many ways to calculate the metric. I'm currently using a variation that pulls analysts' estimates for the next fiscal year and substract the dividends paid:
* Estimated Net FCF Yield = (ntm or fwd Median Levered FCF - Total Annual Dividends Paid) / Market Cap

MercadoLibre (MELI), Fortinet (FTNT), and Topicus (TOI).
I just did a longform post on MercadoLibre (check my profile if you're interested) explaining why it's my #1 pick for the year.
Fortinet is a cybersecurity business growing in the teens, founder owned and operated, low SBC, buying back stock, best in class margins, all for under 30x EV/FCF and EV/EBIT. Normally, 30x earnings for 14% growth is nice but not screamingly cheap, but you have to take into account the quality of earnings from a cybersecurity business with 80% gross margins and long term subscriptions.
Topicus is a spin-off of Constellation Software that is running the same playbook in Europe, acquiring VMS businesses. They grow 20% or faster most years, and just deployed a ton of capital in acquisitions this last year. The constellation DNA is still very evident, and they trade for around 30x EV/FCFA2S (management's way of communicating real distributable free cash flow to public shareholders, it actually paints a less rosy picture than the headline number, but management isn't interesting in bullshitting shareholders with inflated metrics).

I guess I come back to the idea that these lawsuits are viewed as cost of doing business and that the valuation has in large part tanked because of declining ROIC combined with increasing capex which tanked FCF. However the capex and in large part FCF yield is controllable by management and if they wanted to, they can use FCF to buyback stock and increase EPS. "If" is the key word. Well thats what the activists want and their actions have already impacted management -- they are reducing capex by 300MM in 2026. I think if they make the activists happy, then stock price goes up. If management fails to take more action, then they likely will lose board seats which can then open up the company to outside control, or at least creation of committee to study the company results etc etc to put pressure to change strategy or CEO... and since management likely are aware , they probably want to make sure at least the stock doesnt tank further in the interim. Combined with a back of envelope sum of the parts valuation, suppose the CTC business is worth 1bn, then remaining EV around 3bn, divided by 12000 beds is about 250K per bed. I think those numbers are very attractive given that a bed per night is charged at around $870 to medicaid....you make back that in a year or two depending on occupancy rates...

Headquartered in Switzerland, Alcon (ALC) is a global leader in optical healthcare solutions. Notably, a considerable portion of total company sales are recurring in nature. The business operates through 2 segments:
## Surgical Care - 55% of sales
* 16% - surgical equipment for treating cataracts, glaucoma, refractive & retinal procedures
* 31% - intraocular lens (IOL) implantables for monofocal, glaucoma, and other conditions
* 53% - consumables such as surgical packs, eye drops, and tools
## Vision Care - 45% of sales
* 39% - eye drops for dry eye, allergies, glaucoma, and contact lens care
* 61% - contact lenses - daily, reusable, and cosmetic lenses
## Metrics
* P/E - 24x, P/FCF - 25x
* ~56% gross margins, ~15% FCF margins
* $9.9B revenue, has grown at almost 6% over the last 5 years, margins have been expanding
* Forecasted EPS growth: 11% in '26, 16% in '27
* $39B market cap, $3.7B of net debt, 1.3x debt/EBITDA
## Peers and Competitors
* Johnson & Johnson (JNJ) - Contact lenses, ophthalmic technologies for cataract and laser refractive surgery. Eye care is ~10% of JNJ total sales
* Cooper Companies (COO) - Contact lenses. Eye care is about 2/3 of sales.
* Bausch + Lomb Corporation (BLCO) - Contact lenses, ophthalmic pharmaceuticals, surgical equipment.
* Carl Zeiss Meditec (CZMWY) - Ophthalmology examination, surgical, and care products. Eye care is about 3/4 of sales.
* STAAR Surgical (STAA) - implantable intraocular lenses (IOL) for vision disorders *- Alcon has been trying to acquire*
## Global Trends
About 1/3 of the global population currently has myopia (nearsightedness), with projections suggesting as much as 50% of the population by 2050.
Contacts in particular are a $10B+ oligopolistic market with Alcon having about 25% market share, Johnson & Johnson having around 35-40%, and Cooper having another 25%. Alcon and Cooper's market share have trended slightly up over time, while JNJ's has slightly declined. The contact lens market has reliably grown at mid-single digits over the last decade, with recent years around 7%.
Cataract surgery volume has grown at a 4% rate over the last decade. Global population for 65+ has grown at a 3.5% rate over the last decade.
## Warning Flags to Consider
* Low returns on invested capital, although improving
* Moderately high capex, although has been declining in recent years
* Almost 10% of sales spent on R&D, suggesting a steady demand for innovation
* No share buybacks, negligible insider ownership
* Uncertainty around STAAR Surgical acquisition
## Why Alcon?
Alcon is the largest pure play in the optical healthcare space, an industry expected to grow in excess of GDP. Its business generates significant recurring revenue through contact lenses and care products, as well as surgical consumables. Consumers tend to stick with the same contact brand, so long as it's comfortable, functional, and recommended by their ophthalmologist. While there isn't strong brand loyalty or high switching costs, churn is relatively low. Alcon's CEO estimates the average patient keeps the same contact lens type for 4.5 years, but many patients stick with the same ones for 20+ years. On the surgical side, once surgical equipment is installed, those machines create a stream of recurring revenue over the life of the machine.
Compared to contact lenses, surgical equipment has higher switching costs, both in terms of the actual equipment as well as surgeon comfort and familiarity with the system. If successful in acquiring STAAR, Alcon will have **the** dominant, globally leading position in IOL implantables. Contact lenses require specialized manufacturing as well as FDA approval and regulation, creating some barriers to entry on the production side. Surgical equipment is also highly technical, creating a limited number of globally accredited manufacturers. Proprietary lens technology for both contacts and implantables also protect the business. Together, these dynamics give Alcon somewhere between a narrow and wide moat, although probably closer to wide.
## Stock
In terms of valuation, the stock isn't a bargain at today's prices but given the long-term growth potential, isn't totally unreasonable either. Eye care is an essential and recession-resistant industry, which should provide steady returns, although explosive/rapidly accelerating growth is unlikely. There are several key tailwinds for the company, such as growing myopia rates and aging populations, providing a potentially safer way to play demographics trends compared to other healthcare industries such as pharmaceuticals.
Margins should also continue to trend upward over time. 6-7% organic top line growth seems attainable over the long-term, perhaps closer to 7% if they can continue to take market share. The company has also done several acquisitions over the last 5 years and is currently trying to complete another. M&A could contribute another 1-2% of revenue growth over a longer timeline. Combine with some margin expansion and low double-digit EPS growth looks reasonable. The company also pays a small dividend of around 0.4% and could potentially buyback shares in the future.
Altogether, somewhere around $70/share would be an attractive buy price to me, which equates to LDD EPS + small dividend + long-term secular trends and recession-resistence for ~22x earnings.
**While Alcon isn't necessarily cheap today, does the company or vision care industry in general look like a compelling long-term opportunity?**