Buffett · Owner earnings
Uses cash owners can take out without harming long-term competitiveness instead of mechanical accounting earnings, then values its compounding potential.
- Guide level
- Practical
- Output
- Intrinsic value
Core formula
Owner earnings ≈ net income + non-cash charges − maintenance capex − required working capitalHow to interpret it
Uses cash owners can take out without harming long-term competitiveness instead of mechanical accounting earnings, then values its compounding potential.
The output should be read as a scenario or decision aid, not as a guaranteed price target. Compare it with at least one method based on different economic assumptions.
Practical workflow
- Normalize the latest public financial and operating data.
- Choose assumptions that match the company's economics and accounting structure.
- Calculate conservative, base and optimistic cases where the method permits.
- Compare the result with market pricing and an independent valuation method.
- Document the assumptions that drive the largest changes in value.
Key limitation
Maintenance capital expenditure is not directly observable and moat assessment is judgment-heavy.
How Stockinsky uses it
Stockinsky uses this framework only when the company type and available data support it. Professional valuations expose assumptions, sources and warnings instead of presenting false precision.