As traditional value investing metrics like price-to-book have lost relevance in an asset-light economy, Lord Abbett contends that free cash flow (FCF) is a more accurate gauge of a company’s true worth. “For investors, normalised free cash flow offers a clearer, long-term view of a company’s operational success and its ability to generate returns,” the asset manager stated, adding that this measure is less prone to manipulation.

In a recent three-part series, Lord Abbett takes a closer look at key metrics for value stocks. Read the first part here.