- Entry
- $772.21
- Now
- $767.00 -0.7%
- Target
- —
- Score
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Standard equity risk premium analysis compares the S&P 500 earnings yield (inverse of CAPE or forward P/E) against the 10-year treasury yield. That comparison is useful but it uses GAAP net income as the numerator, which includes items that don't represent cash available to shareholders. True FCF yield substitutes operating cash flow minus CapEx minus stock-based compensation for the earnings numerator. The deductions matter: * CapEx: capital expenditures represent real cash leaving the business to fund physical or technological infrastructure. …
— ORIGINAL POST ·
True FCF yield vs earnings yield gap widened 1.4% in 2026 as CapEx and SBC ballooned across the S&P 500. Combined with the -1.11% earnings-to-treasury spread, the real equity risk premium looks like it's arou -2.5%. Historical comparisons to 1987, 1992, 2000, 2008.
· r/SecurityAnalysis
· Aug 4, 2026