Buffett Owner-Earnings DCF
Intrinsic value via owner earnings & margin of safety
Use Your Own Alpha Vantage API Key // shared key (rate-limited)
// Stored in localStorage on this device only.
Your Buffett Thesis // judgment inputs
ⓘ How to set growth + duration
Buffett wants predictable compounders. Anchor on the last 10y owner-earnings CAGR, management guidance, and your moat assessment.
Rough benchmarks:
- Wide-moat consumer staples (KO, PG): 5–8%
- Wide-moat networks (V, MA, MCO): 9–12%
- Cyclical / commodity (steady-state): 3–5%
- Growth compounders (post-IPO mature SaaS): 12–15%
10 years is the Buffett default. Shorten to 5–7y for narrower moats, lengthen only for the truly exceptional.
ⓘ What this is
The perpetual growth rate after Stage 1. Anchor on long-run inflation — no business compounds faster than the economy forever. Buffett uses 2–3% for almost everything.
Must stay below the discount rate or the formula breaks.
ⓘ The Buffett way to pick a hurdle rate
Buffett famously rejects CAPM, beta, and country premia. He compares cash flows to the long bond as the opportunity cost — if a business can't beat that risk-adjusted, it's not worth owning.
Common Buffett-style anchors:
- 10Y Treasury floor: ~4.5%
- 10Y + 3% (predictable wide-moat): ~7.5%
- 10Y + 5% (typical large-cap): ~9.5%
- 10Y + 7% (narrow moat / cyclical): ~11.5%
- Flat 10% (Buffett-style "common-sense" hurdle)
Higher rate = more conservative valuation. Live US 10Y on FRED →
ⓘ The Graham/Buffett MoS rule
The discount to intrinsic value you demand before buying. Protects you from being wrong on the forecast.
Rule of thumb:
- Wide moat, predictable: 15–25%
- Typical large-cap: 25–35%
- Cyclical / less predictable: 40–50%
Owner Earnings Adjustments
// blank → defaults to 5y median capex after a fetch (D&A as fallback).
ⓘ The hardest number in the whole model
Buffett's 1986 letter calls this out as the most subjective input. Three practical approaches:
- Default = D&A. Works for steady-state businesses where growth capex is small.
- 5–10y average CapEx, if total capex is choppy.
- Bottom-up: read the 10-K segment-by-segment "maintenance vs growth" breakdown when management provides it (rare but increasingly common).
Over-estimating maintenance capex = lower owner earnings = more conservative valuation. When in doubt, lean high.
ⓘ When to use this
Buffett's "(d) any additional working capital that might be needed for current volume". Often zero or trivially small for asset-light businesses.
Read it off the cash flow statement — the structural piece of working-capital change, not seasonal noise.
Owner Earnings Build-up
$M · LATEST FYProjected Owner Earnings
IN MILLIONS USDLive Data // API-fetched
Auto-populated from the API fetch. Override only if the latest filing isn't yet indexed, or if you want to use normalized numbers.
Sensitivity — Growth × Discount
IV per share at ±2pp Stage-1 growth and ±1pp discount rate. The diagonal is your central case.
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