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Owner Earnings for Flex Ltd

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FLEX: Flex Ltd

Flex Ltd. provides manufacturing solutions to various brands in Asia, the Americas, and Europe. It operates through two segments, Flex Agility Solutions (FAS) and Flex Reliability Solutions (FRS). The...

- USD
Price
USD
Fair Value
Upside
- - -
52-week range

Analysis

How does Flex'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.

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Owner Earnings

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 Flex Ltd below:

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