How does Warren Buffett calculate the intrinsic value of a stock?
He looks at the Owner’s Earnings.
Today, I'll teach you everything you should know 👇 x.com
He looks at the Owner’s Earnings.
Today, I'll teach you everything you should know 👇 x.com
1. Formula
Owner’s Earnings = Earnings Per Share (EPS) + Dividend Per Share
It reflects the real cash flow available to investors after all expenses are covered. x.com
Owner’s Earnings = Earnings Per Share (EPS) + Dividend Per Share
It reflects the real cash flow available to investors after all expenses are covered. x.com
2. Importance
In the long run, stock prices always follow a company’s Owner’s Earnings. 📈
By focusing on this metric, you can:
- Avoid market noise
- See a company’s true performance
In the long run, stock prices always follow a company’s Owner’s Earnings. 📈
By focusing on this metric, you can:
- Avoid market noise
- See a company’s true performance
3. Owner's Earnings growth > 12%
We want to invest in companies that can grow their Owner’s Earnings by at least 12% annually.
The higher the growth, the better your returns.
We want to invest in companies that can grow their Owner’s Earnings by at least 12% annually.
The higher the growth, the better your returns.
4. Example
Growth in Owner's Earnings = EPS Growth + Dividend Yield
Apple as an example:
If EPS grows 11.3%
Dividend yield is 0.4%
➡️ Growth in Owner’s Earnings = 11.7% x.com
Growth in Owner's Earnings = EPS Growth + Dividend Yield
Apple as an example:
If EPS grows 11.3%
Dividend yield is 0.4%
➡️ Growth in Owner’s Earnings = 11.7% x.com
5. Conclusion
Focusing on Owner's Earnings gives you clarity.
No noise from short-term market swings
A true picture of long-term profitability x.com
Focusing on Owner's Earnings gives you clarity.
No noise from short-term market swings
A true picture of long-term profitability x.com
That's it for today. Did you enjoy this?
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Grab this PDF with more than 100 (!) examples of Quality Stocks: compounding-quality.ck.page
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