Free Owner Earnings Calculator
Value a company on its earnings power. Use normalised earnings per share or Buffett-style owner earnings (operating cash flow minus maintenance capex), times a steady-state multiple.
Owner earnings: $5.00 / share × 15x
The estimate sits 33% below the current price on these assumptions.
Earnings power and owner earnings
Some businesses are stable enough to value on what they earn, without a full cash-flow projection. This calculator offers two ways to do that. Earnings power takes normalised earnings per share and applies a steady-state multiple, a fast read on a settled business. Owner earnings starts from operating cash flow per share, subtracts the maintenance capital spending needed to keep the business running, then applies the multiple. Owner earnings aims to show the cash an owner could actually take out.
How to use this calculator
- Choose a mode. Use earnings power for a quick check, owner earnings for a cash-based view.
- In owner earnings mode, enter operating cash flow per share and your estimate of maintenance capex per share. The difference is owner earnings.
- Apply a steady-state multiple that fits the quality and durability of the earnings.
- Compare the resulting value to the current price to see the margin of safety on your assumptions.
Choosing a multiple
The multiple is where judgment lives. A durable business with steady demand and light reinvestment needs can carry a higher multiple than a cyclical one. A high multiple bakes in years of good results, so be honest about how repeatable the earnings really are. When in doubt, test a lower multiple and see whether the case still holds.
Assumptions and limits
This method suits mature, profitable businesses with predictable cash flow. It is weaker for fast growers and capital-heavy companies, where a single year of earnings says little about the long run. Maintenance capex is an estimate, not a reported line, so treat owner earnings as a considered approximation rather than a precise figure.
Frequently asked questions
- What are owner earnings?
- Owner earnings is the cash a business generates that its owners could take out without harming the business. The common definition is operating cash flow minus the maintenance capital spending needed to keep the business running at its current level. It is meant to be a cleaner picture of earnings than reported net income.
- How is this different from earnings power?
- Earnings power values the company on normalised earnings per share times a steady-state multiple, a quick read on a stable business. Owner earnings starts from cash flow and strips out maintenance capex first. This calculator offers both so you can cross-check one against the other.
- What multiple should I apply?
- The multiple reflects how durable and how fast-growing the earnings are. A stable, slow grower might warrant a low-to-mid teens multiple, while a high-quality compounder can support more. Be honest about quality, and remember a high multiple bakes in years of good results.
- When does owner earnings work best?
- It suits mature, profitable businesses with steady cash flow and modest reinvestment needs. It is less reliable for fast-growing or capital-heavy companies where this year's earnings say little about the long run.
This calculator is for education and research only. It is not investment advice and it does not recommend buying or selling any security. The output depends entirely on the assumptions you enter.