I see too many guys on here screening for low EV/EBITDA and wondering why their "deep value" play keeps tanking.
EBITDA is management fiction. Depreciation is a real expense, and stock-based compensation (SBC) is real dilution. Ignore them, and your valuation is garbage.
When I tear apart a 10-K, I only care about Owner's Earnings. The hardest part of modeling isn't finding a low multiple—it’s separating growth CapEx from maintenance CapEx. If a business prints $1B in operating cash but burns $900M just to keep the lights on and defend its moat, that's a value trap. I only allocate capital when there is a massive cash surplus left over. That’s the only money that actually belongs to us.
Crossed $1M, sitting at +13% YTD. The 1-month chart is a choppy mess, but I don't trade the noise. Capital preservation just means buying real Owner's Earnings with a wide margin of safety and sitting on your hands.
Curious how the actual modelers here handle maintenance CapEx. Are you just using historical D&A averages or digging into actual asset lifespans?