Revenue per Share (RPS) shows how much top-line revenue the company generates for each share outstanding. It helps compare growth while controlling for dilution or buybacks.
Unlike EPS or FCF/share, RPS focuses purely on sales productivity per share and is useful to spot durable revenue growth trends per unit of ownership.
Warren Buffett prefers Free Cash Flow per Share or Owner Earnings per Share over traditional EPS because these metrics reflect the actual cash a company generates that is available to shareholders—not just accounting profits.
While EPS can be influenced by non-cash items like depreciation, accounting adjustments, or one-time gains/losses, free cash flow shows the real money left after necessary expenses and capital expenditures. This cash can be used for dividends, buybacks, or reinvestment.
Buffett believes owner earnings—essentially free cash flow tailored to the business—offer a clearer picture of a company's true profitability and long-term value creation. It helps identify businesses with durable competitive advantages and strong financial discipline.
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Revenue Converted to Free Cash Flow (RCFC%) measures how efficiently a company turns its top-line sales into free cash flow available to shareholders. A consistently high RCFC% means the company has strong operational efficiency, disciplined capital spending, and the ability to fund dividends, buybacks, or reinvestment without heavy reliance on external financing.
Companies with low or declining RCFC% may face cost pressures, inefficient operations, or heavy reinvestment needs. Tracking RCFC% over time helps investors spot trends in cash generation strength.
A company that consistently produces a high Return on Equity (ROE) is generally considered superior because it demonstrates the ability to efficiently generate profits from shareholders’ capital. High and stable ROE indicates that management is effectively using equity to grow the business and deliver strong returns without needing excessive debt or external financing.
Such consistency reflects a durable competitive advantage, disciplined capital allocation, and a strong business model. In contrast, companies with low or fluctuating ROE may struggle with inefficiencies, weak profitability, or poor financial decisions. For long-term investors, a company with consistently high ROE is often a sign of sustainable value creation and superior wealth generation.
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