Look-Through Earnings

AAA

DEFINITION of 'Look-Through Earnings'

Look-through earnings include the profits that a company pays to its shareholders in the form of dividends and the retained earnings that the company uses to expand its operations. This concept was popularized by Warren Buffet to analyze the overall earnings-generating capabilities of the firm. The idea is that all of these profits have value to investors - the dividends provide an immediate benefit, while the retained earnings should increase the stock's value in the future.

INVESTOPEDIA EXPLAINS 'Look-Through Earnings'

The investor should consider all of these profits - the look-through earnings - in assessing the value of a stock. Look-through earnings also account for the taxes that would have been paid if the retained earnings had been distributed as dividends.

RELATED TERMS
  1. Corporate Profit

    A statistic reported quarterly by the Bureau of Economic Analysis ...
  2. Warren Buffett

    Known as "the Oracle of Omaha", Buffett is Chairman of Berkshire ...
  3. Retained Earnings

    The percentage of net earnings not paid out as dividends, but ...
  4. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  5. Berkshire Hathaway

    A holding company for a multitude of businesses run by Chairman ...
  6. Book Value Reduction

    Reducing the value at which an asset is carried on the books ...
Related Articles
  1. Insurance

    Warren Buffett's Best Buys

  2. Insurance

    Warren Buffett's Bear Market Maneuvers

  3. Active Trading

    Warren Buffett: How He Does It

  4. Active Trading

    What Is Warren Buffett's Investing Style?

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center