CompanyGraph
Use to find companies where this pattern is active.
Three observations describe the present configuration: drawdown from the trailing peak is significant, free cash flow has been positive in each of the last three annual periods, and operating cash flow exceeded net income in the most recent annual period.
State
Significant drawdown from peak with three years of positive free cash flow and an elevated OCF-to-net-income reading
Emergence
Three observations co-occur: drawdown from the trailing peak is significant, free cash flow has been positive in each of the last three annual reporting periods, and operating cash flow exceeds net income for the most recent annual period. The configuration records present price-side position alongside two annual cash-flow readings.
Limits
This interpretation records a co-occurring configuration, not a contrarian buying call. The drawdown obs measures distance from the trailing peak with no time qualifier; a drawdown can persist for extended periods. The 'fcf-positive-3y' obs counts how many of the last three annual periods had positive FCF; magnitude and trajectory are not constrained. The 'ocf-to-net-income' obs measures only the OCF/Net-Income ratio for one annual period; it does not assess audit quality, revenue recognition aggression, or accruals composition. A drawdown can coincide with these cash-flow readings without the configuration containing any information about future price direction.
Screen for Drawdown With FCF And Cash Backing
Find stocks where this pattern is currently active in the screener.
Explanation
Each observation is an independent reading: Drawdown From Peak measures the percentage distance of the current close below the trailing peak. A firing score (>= 70) means the close is well below the peak. Free Cash Flow Positive Every Year (3Y) counts how many of the last three annual periods had positive free cash flow. The reading does not constrain magnitude or trajectory. Operating Cash Flow Relative to Net Income is the OCF/Net-Income ratio for the most recent annual period. Score 50 = ratio of 1.0; score 100 = ratio of 2.0 or higher. The legacy 'ocf-to-net-income' label implies a verdict about whether earnings are 'real'; the formula records only the OCF/Net-Income ratio for one annual period. When all three align, the configuration places a price-side drawdown alongside two annual cash-flow readings. The observations do not predict recovery, claim the drawdown is mispriced, or assess investment merit.
Interpretation
This interpretation records a co-occurring configuration of one price-side reading and two annual cash-flow readings, not a contrarian buying call.
Required Observations
Drawdown From Peak Standard
Percentage decline of current close from the highest close in the lookback window
Fcf Positive 3y
Free cash flow positive in each of the last N fiscal years
Ocf To Net Income
How operating cash flow compares to reported net income for the latest year.