What is Owner Earnings (the Buffett method)?
Warren Buffett's cash-generation measure: net income plus depreciation and amortization, minus average capital expenditure — capitalized at a required return.
Owner Earnings asks a simple question: how much cash could the owner take out of this business each year without harming it?
Owner Earnings = Net Income + Depreciation & Amortization − average Capital Expenditure
Intrinsic Investor uses a 5-year average for capital expenditure (a single year's capex can be lumpy) and capitalizes the result at a 10–12% required return to turn the annual figure into a per-share value.
It often disagrees with DCF — Owner Earnings trusts what the business has already demonstrated, while DCF trusts projections. That disagreement is information: it widens the published valuation range instead of being hidden.
Source: Intrinsic Investor (https://www.intrinsic-investor.com)
This answer is for educational purposes only, not investment advice.