Owner earnings yield (Owner earn yld)
Buffett's owner earnings (profit plus depreciation, less capital spending) as a percentage of market value.
It is an explicit attempt to state the cash a business throws off to its owners after keeping itself intact.
How it is computed here
(Net income + depreciation and amortisation - capital expenditure) / market capitalisation x 100
Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business. Filed under value. Higher is the stronger reading, other things equal.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- The published definition subtracts MAINTENANCE capital spending. Filed statements do not separate maintenance from growth spending, so total capital expenditure is used and a company investing to expand is understated.
- Withheld entirely when the exchange rate needed to state it in one currency is unavailable, rather than mixing currencies.
Not meaningful for banks, insurers: the product prints n/m with the reason rather than a number for them.
Questions
How is owner earnings yield calculated?
(Net income + depreciation and amortisation - capital expenditure) / market capitalisation x 100. Today's market price against the latest available fundamentals. Combines today's market price with the most recently filed fundamentals. It moves whenever the price moves, with nothing having changed in the business.
What does owner earnings yield tell a value investor?
It is an explicit attempt to state the cash a business throws off to its owners after keeping itself intact.
When does owner earnings yield mislead?
The published definition subtracts MAINTENANCE capital spending. Filed statements do not separate maintenance from growth spending, so total capital expenditure is used and a company investing to expand is understated. Withheld entirely when the exchange rate needed to state it in one currency is unavailable, rather than mixing currencies.