GATX, Gatx Corp

Will it survive?

• Can it pay its interest? 1.4×
  Thin
  Operating income $534M ÷ interest expense $392M
  What this means

  Operating profit covers interest, but with little room. A bad year, a refinancing at higher rates, or a revenue wobble closes the gap fast.

• How heavy is the debt, net of cash? $11.8B · 22.1× operating profit
  Heavy net debt
  Cash $743M − debt $12.5B
  What this means

  Netting $743M of cash and short-term investments against $12.5B of debt leaves $11.8B owed, about 22.1× a year's operating profit (23.5× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

Is it a good business?

• Return on invested capital 4%
  Below average through the cycle
  10-yr median, range 3%–7%; 3% latest = NOPAT $449M ÷ invested capital $14.5B
  Industry peers: median 6%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 3% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin 10%
  Solid through the cycle
  8-yr median margin, range 8%–23%; latest $196M = operating cash $648M − maintenance capex $452M
  Industry peers: median 5%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 11% of revenue this year, a 10% median across 8 years. It chose to put $1.2B more into growth, so free cash flow this year was ($1.0B) — the gap is investment, not weakness. Treating stock comp as the real expense it is (less $23M of SBC) leaves $173M.

• Are earnings backed by cash? 1.94×
  Cash-backed
  Cash from ops $648M ÷ net income $333M
  What this means

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 79%
  Returns about half
  Dividends + buybacks $155M ÷ Owner Earnings $196M
  What this means

  Of $196M Owner Earnings, $155M (79%) went back to shareholders, $90M dividends, $65M buybacks. Net of $23M stock comp, the real buyback was about $42M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 3.68×
  Expanding
  Capex $1.7B ÷ depreciation $452M
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 2 of 4 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Near
  Revenue ≥ $2B · $1.7B
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity —
  Current ratio ≥ 2× · —
  What this means

  Current assets / liabilities not in the data yet.

• Earnings stability Pass
  A profit every year (10-yr record) · no losses
  What this means

  Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.

• Dividend record Pass
  Uninterrupted dividends · paid every year (10)
  What this means

  An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.

• Earnings growth Miss
  Earnings +33% over the record · −10%
  What this means

  At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $8.23/share (latest year $9.39), the averaged base the calculator's gate runs on, and book value is $77.48/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 10 of 10
  What this means

  Never lost money over the record, the earnings stability Graham insisted on.

• Return on capital ≥ 15% 0 of 10 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 33% → 29% (3-yr avg ends)
  What this means

  The recent-years average (29%) sits below the early years (33%), but the latest year (31%) is back near the early level: a cyclical trough dragging the window down, not a one-way slide. The through-cycle median is 31% — read it across the cycle, not on the dip.

• Reinvestment, incremental ROIC 0%
  What this means

  Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.

• Owner earnings growth −7%/yr
  What this means

  Owner earnings shrank about 7% a year over the record.

• Worst year 2023 · 27.5% op. margin
  What this means

  Stayed profitable even in its hardest year, the resilience that survives recessions.

• Share count −1.4%/yr
  What this means

  The share count is shrinking, buybacks are quietly growing your slice of the business.

• Dividend record rising
  What this means

  Paid and raised the dividend across the record, the continuity Graham prized.

• How management talks about it Owner’s terms
  What this means

  Returns have thinned, but the filing discusses it in an owner’s vocabulary rather than selling past it — candor about a hard stretch counts for more than an adjective.