I extend the financial economic literature by presenting and testing a model that expresses a firm's expected stock return as a function of its expected free cash flow growth. Results suggest that cash flow growth is positively associated with stock returns. Furthermore, additional information is reflected through cash flow growth relative to cash flow, profits, and dividends. Evidence additionally suggests that operating activities explain more than investment activities of the firm. I find that $1 invested in the long–short cash flow growth portfolio grows to $15.30 over the sample period, whereas $1 invested in the stock market grows to $9.85.

中文翻译：

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现金流增长和股票回报

我通过展示和测试一个模型来扩展金融经济文献，该模型将公司的预期股票回报作为其预期自由现金流增长的函数。结果表明，现金流增长与股票回报呈正相关。此外，额外的信息通过与现金流、利润和股息相关的现金流增长来反映。证据还表明，经营活动不仅仅解释了公司的投资活动。我发现在样本期内，投资于多空现金流增长投资组合的 1 美元增长至 15.30 美元，而投资于股票市场的 1 美元增长至 9.85 美元。