Great article. I agree that owner’s earnings, along with CFO and FCF, can be fantastic predictors of future company performance. I think P/E is overused and over-quoted, when it really just gives you a picture of the past. Even forward P/E is linked to upcoming earnings which have already been determined. Excellent insight, thank you!
why is maintainence capex formula is 0.7 * capex? Is it just a rule of thumb? And won't it be different for different types of companies like software companies and then more capex intensive companies that need more to maintain.
Great article. I agree that owner’s earnings, along with CFO and FCF, can be fantastic predictors of future company performance. I think P/E is overused and over-quoted, when it really just gives you a picture of the past. Even forward P/E is linked to upcoming earnings which have already been determined. Excellent insight, thank you!
Thanks a lot! Exactly, 1-year Forward P/E is many times already priced-in and too short-sided.
why is maintainence capex formula is 0.7 * capex? Is it just a rule of thumb? And won't it be different for different types of companies like software companies and then more capex intensive companies that need more to maintain.
Thanks for the observation. That's the commonly used rule of thumb that's applicable for this type of asset-light companies.