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Owner Earnings Calculator (Buffett Method)
Calculate Buffett's owner earnings for any stock — the real cash a business generates for shareholders after maintenance capex. Free, live data.
Inputs
From cash flow statement (Yahoo Finance). Used to estimate maintenance CapEx below.
Buffett's key insight: maintenance CapEx ≠ total CapEx. 70% is a common shortcut. Growth companies may be 50–60%; mature businesses 80–100%.
Results
Enter a ticker above to see owner earnings — Buffett's preferred measure of a business's true earning power.
The Buffett formula for what a business really earns
Warren Buffett introduced owner earnings in his 1986 letter to Berkshire Hathaway shareholders, arguing that GAAP earnings are a poor guide to what a business actually earns for its owners. The problem: accounting conflates maintenance capex (spending required to hold current competitive position) with growth capex (spending to expand into new capacity). Owner earnings subtracts only the former.
How to use the owner earnings calculator
Load the ticker
Enter any US ticker. The calculator auto-pulls net income, D&A, working capital changes, and total capex from live Yahoo Finance data.
Estimate maintenance capex
The hardest judgment call. The default uses depreciation as a proxy. For capital-intensive businesses, you may want to increase the estimate; for software companies, decrease it.
Read the yield
Owner earnings yield = owner earnings ÷ market cap. Compare to Treasury yields. Buffett looks for businesses where this yield is attractive relative to bonds.
Feed into intrinsic value
Owner earnings is the correct numerator for Buffett-style intrinsic value. Divide by your discount rate for a perpetuity value, or feed into our DCF calculator.
Why owner earnings beats free cash flow for business quality analysis
The maintenance capex distinction
Standard FCF uses total capex. But a growing company investing heavily in expansion looks cash-poor by FCF even if its core business is extremely profitable. Owner earnings separates the capex you must spend (to maintain current earnings power) from the capex you choose to spend (for growth). A business that only needs 20% of its capex for maintenance is a better business than one that requires 90%.
Comparing to bond yields
Buffett explicitly compares owner earnings yield to Treasury bonds because he views stocks and bonds as competing for the same capital. If a business earns a 7% owner earnings yield and 30-year Treasuries yield 4.5%, you are earning a 2.5-point premium for business risk and inflation protection. The higher the quality of the business (durable moat, low maintenance capex), the more that premium compounds over time.
Why GAAP earnings mislead
Depreciation is not a cash expense — it is an accounting allocation. But the actual capex that replaces depreciating assets is a very real cash expense. GAAP accounting charges depreciation to the income statement (reducing reported earnings) while the replacement capex hits the cash flow statement. Owner earnings adds back depreciation (which is non-cash) and then subtracts actual maintenance capex — giving a cleaner picture of the real economics.
Capital-light businesses vs heavy industries
The owner earnings framework most strongly favors capital-light businesses — software, asset managers, media companies — where maintenance capex is close to zero. For these, owner earnings and FCF converge. For capital-heavy industries (airlines, utilities, oil majors), owner earnings analysis reveals how much of reported profit is really just covering depreciation, and how little is available to owners in a true economic sense.
Frequently asked questions
What are owner earnings?
Owner earnings is Warren Buffett's preferred measure of business profitability, introduced in the 1986 Berkshire Hathaway letter. The formula: Net Income + Depreciation & Amortization + Working Capital Changes − Maintenance Capex. It represents the cash that could be distributed to shareholders every year without impairing the business's competitive position.
Owner earnings vs free cash flow — what's the difference?
Standard free cash flow uses operating cash flow minus total capex. Owner earnings uses net income + non-cash charges minus maintenance capex only (excluding growth capex). The key difference: owner earnings separates spending that maintains the business from spending that grows it. For capital-light businesses they're similar; for heavy capex industries the difference can be significant.
How do you estimate maintenance capex?
There's no perfect formula. Common approaches: (1) use depreciation as a proxy — if capex roughly equals depreciation, most capex is maintenance; (2) look for management disclosures about maintenance vs growth capex in earnings calls; (3) for capital-light businesses (software, services), most capex is growth capex, so maintenance is very low. The tool defaults to an estimate based on depreciation; adjust it for your judgment of the specific business.
What is a good owner earnings yield?
Buffett compares owner earnings yield to Treasury bond yields. If a company generates a 7% owner earnings yield and 10-year Treasuries pay 4.5%, you're getting a 2.5-point risk premium for owning the stock — before any growth. Quality businesses at 5–8% owner earnings yield with 10-15% earnings growth historically generate excellent long-term returns.
Why did Buffett invent owner earnings?
Buffett was frustrated that GAAP accounting conflated growth capex (productive spending that builds future earnings) with maintenance capex (spending just to stay in place). He created owner earnings to give investors a cleaner view of what a business truly earns after subtracting only the capital required to sustain its current position — not the capital being deployed for future growth.
Can owner earnings be negative?
Yes. A company with high maintenance capex requirements (airlines, oil & gas, heavy industrials) can show positive net income but negative owner earnings once required reinvestment is subtracted. This is a signal that the business is economically less attractive than accounting earnings suggest. Negative owner earnings sustained over multiple years is a serious red flag.
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