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Owner Earnings

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60.99
Price
Fair Value
Upside
44.50 - 66.50
52-week range

Analysis

How does Cisco's Owner Earnings benchmark against competitors?

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Metric Usage: Owner Earnings

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owner_earnings
Slug
number
Datatype
text
Format
current
Default Period
FY, Q, LTM, YTD
Periods Supported
Free
Plan

To view the full list of supported financial metrics please see Complete Metrics Listing.

Similar Metrics

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Metrics similar to Owner Earnings in the financials category include:

  • Salaries and Other Emply. Benefits - This item represents the salaries and other benefits provided to the employees.
  • Cash from Financing - The net amount of cash transactions used in funding activities
  • As Reported, Operating Income - This item represents the operating income or operating profit as reported by the company in its financial statement.
  • Normalized Net Income - This item is EBT, Excl. Unusual Items * (1 - Statutory Tax Rate) + Minority Int. in Earnings. Note: this metric assumes a statutory tax rate of 37.5% for all companies.
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Owner Earnings

A measure of free cash flow made famous by Warren Buffett when he wrote about it in Berkshire Hathaway's annual report in 1986. Mr. Buffett stated tha...

Definition of Owner Earnings

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We use the owner’s earnings calculation described with Warren Buffett’s 1986 letter to shareholders.

If we think through these questions, we can gain some insights about what may be called "owner earnings." These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges such as Company N's items (1) and (4) less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume. (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))

The general formula can be summarized as follows:

(+) Net Income
(+) Depreciation & Amortization
(-) Maintenance Capital Expenditures
(-) Change in Working Capital
(=) Owner Earnings

Note, for financial companies like banks, the net working capital change is ignored given their business model.


Click the link below to download a spreadsheet with an example Owner Earnings calculation for Cisco Systems Inc below:

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