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Q, Qnity Electronics Inc.

Qnity is one of the largest global leaders in materials and solutions for the semiconductor and electronics industries.

We empower our customers' technology roadmaps to enable advancements in megatrends such as artificial intelligence, high-performance computing and advanced connectivity.

We partner with leading semiconductor and advanced device manufacturers to address complex challenges and develop solutions that facilitate next-generation technological innovations.

Latest annual: FY2025 10-K

Q · Qnity Electronics Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$4.8B

+9.7% YoY

Vital signs · TTM, with 3-yr average

Revenue $5.0B 3-yr avg $4.4B

Gross margin 46% 3-yr avg 45%

Operating margin 20.6% 3-yr avg 18.6%

ROIC 7% 3-yr avg 6%

Owner-earnings margin 18% 3-yr avg 19%

Free cash flow margin 18% 3-yr avg 19%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is Semiconductor Technologies (56%) and Interconnect Solutions (44%).
What moves the needle: Gross margin has run about 46% and operating margin about 20% through the cycle, a solid spread between what it charges and what the product costs to make. That margin has stayed fairly steady relative to where it runs (15%–21% over the years), so unit growth and cost discipline, not a moving line, are the lever. Inventory runs near 14% of sales, so how fast it turns back into cash — and the risk of writing it down when demand softens — sits alongside the margin. Read this kind of business on process leadership and the capex cycle. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median 7%, above 15% in 0 of 3 years). The steadier read is owner earnings: roughly 20% of revenue reaches owners as cash, consistently. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

Revenue spreads across 2 segments, the largest Semiconductor Technologies at 56%.

Revenue by reportable segment, FY2025

Semiconductor Technologies56%$2.6B
Interconnect Solutions44%$2.1B

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2023–2025

realized figures from each filing · older years to the left

2023’23	2024’24	2025’25	TTMTTMMar 2026
				Income statement
$4.0B	$4.3B	$4.8B	$5.0B	RevenueRevenue
43%	46%	46%	46%	Gross marginGross mgn
13%	14%	13%	13%	SG&A / revenueSG&A/rev
8%	7%	7%	7%	R&D / revenueR&D/rev
$606M	$870M	$990M	$1.0B	Operating incomeOp. inc.
15.0%	20.1%	20.8%	20.6%	Operating marginOp. mgn
$507M	$693M	$692M	$650M	Net incomeNet inc.
16%	20%	25%	27%	Effective tax rateTax rate
				Cash flow & returns
$882M	$1.1B	$1.3B	$1.2B	Operating cash flowOp. cash
$403M	$394M	$376M	$380M	DepreciationDeprec.
($41M)	($39M)	$185M	$145M	Working capital & otherWC & other
$231M	$200M	$285M	$303M	CapexCapex
5.7%	4.6%	6.0%	6.1%	Capex / revenueCapex/rev
$651M	$861M	$988M	$898M	Owner earningsOwner earn.
16.1%	19.9%	20.8%	18.1%	Owner earnings marginOE mgn
$651M	$861M	$988M	$898M	Free cash flowFCF
16.1%	19.9%	20.8%	18.1%	Free cash flow marginFCF mgn
$0	$0	$13M	$13M	Dividends paidDiv. paid
5%	7%	7%	7%	ROICROIC
5%	7%	10%	9%	Return on equityROE
5%	7%	10%	9%	Retained to equityRetained/eq
				Balance sheet
—	$166M	$915M	$857M	Cash & investmentsCash+inv
—	$580M	$656M	$1.0B	ReceivablesReceiv.
—	$597M	$661M	$696M	InventoryInvent.
—	$528M	$680M	$699M	Accounts payablePayables
—	$649M	$637M	$1.0B	Operating working capitalOper. WC
—	$1.5B	$2.6B	$2.7B	Current assetsCur. assets
—	$839M	$1.4B	$1.3B	Current liabilitiesCur. liab.
—	1.8×	1.9×	2.1×	Current ratioCurr. ratio
$7.5B	$7.4B	$7.5B	$7.5B	GoodwillGoodwill
—	$12.3B	$14.1B	$14.1B	Total assetsAssets
—	$0	$4.1B	$4.1B	Total debtDebt
—	($166M)	$3.2B	$3.3B	Net debt / (cash)Net debt
—	—	15.2×	8.1×	Interest coverageInt. cov.
$11.2B	$10.6B	$7.1B	$7.2B	Shareholders’ equityEquity
0.3%	0.3%	0.4%	0.5%	Stock comp / revenueSBC/rev
				Per share
209M	209M	210M	210M	Shares out (diluted)Shares
$19.27	$20.70	$22.66	$23.54	Revenue / shareRev/sh
$2.42	$3.31	$3.30	$3.09	EPS (diluted)EPS
$3.11	$4.11	$4.71	$4.27	Owner earnings / shareOE/sh
$3.11	$4.11	$4.71	$4.27	Free cash flow / shareFCF/sh
$0.00	$0.00	$0.06	$0.06	Dividends / shareDiv/sh
$1.10	$0.96	$1.36	$1.44	Cap. spending / shareCapex/sh
$53.41	$50.83	$33.82	$34.17	Book value / shareBVPS

The year, in the company's words

the filing →

Verbatim from the 10-K's management discussion. Each sentence is shown only because its subject, direction, and stated figures check out against the filed numbers on this page. The words are the company's; the arithmetic is the record's.

Revenue+9.7%
“Net sales increased primarily due to a 9% increase in volume partially offset by a 1% decline in local price and product mix.”
✓ figure matches the filed record

The record, charted

FY2023–2025

Each measure over its full record; the current point and the worst year marked.

Share count

210Mpeak FY2025

ROIC

7%low FY2023

Gross margin

46%low FY2023

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$988Mowner earningsvs.$692Mnet incomelow FY2023

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2023FY2025

Owner-earnings bridge

FY2023–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned $692M of profit into $988M of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

Reported net income$692M

Owner earnings$988M · 21% of revenue

	FY2025	FY2024	FY2023
Reported net income	$692M	$693M	$507M
Depreciation & amortizationnon-cash charge added back	+$376M	+$394M	+$403M
Stock-based compensationreal costnon-cash, but a real cost	+$20M	+$13M	+$13M
Working capital & othertiming of cash in and out, other non-cash items	+$185M	−$39M	−$41M
Cash from operations	$1.3B	$1.1B	$882M
Capital expenditurecash put back in to keep running and to grow	−$285M	−$200M	−$231M
Owner earnings	$988M	$861M	$651M
Owner-earnings marginowner earnings ÷ revenue	21%	20%	16%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $20M), owner earnings is nearer $968M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 15.2×

Comfortable

Operating income $990M ÷ interest expense $65M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? $3.2B · 3.2× operating profit

Meaningful net debt

Cash $915M − debt $4.1B

What this means
Netting $915M of cash and short-term investments against $4.1B of debt leaves $3.2B owed, about 3.2× a year's operating profit (4.2× 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? 48d

Tight

DSO 50 + DIO 94 − DPO 97 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 7%

Below average through the cycle

3-yr median, range 5%–7%; 7% latest = NOPAT $741M ÷ invested capital $10.3B

Industry peers: median 14%

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 3 years (it ran 7% 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 20%

High through the cycle

3-yr median margin, range 16%–21%; latest $988M = operating cash $1.3B − maintenance capex $285M

Industry peers: median 19%

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 21% of revenue this year, a 20% median across 3 years. Treating stock comp as the real expense it is (less $20M of SBC) leaves $968M.
Are earnings backed by cash? 1.84×

Cash-backed

Cash from ops $1.3B ÷ net income $692M

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? 1%

Reinvests most of it

Dividends + buybacks $13M ÷ Owner Earnings $988M

What this means
Of $988M Owner Earnings, $13M (1%) went back to shareholders, $13M dividends, $0 buybacks. 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? 0.76×

Harvesting

Capex $285M ÷ depreciation $376M

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 · 1 of 3 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 Pass

Revenue ≥ $2B · $4.8B

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 Near

Current ratio ≥ 2× · 1.95×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $4.1B vs $1.3B WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
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 $3.01/share (latest year $3.31), the averaged base the calculator's gate runs on, and book value is $33.89/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.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

In its own filing Raised, but not as a competitor

The filing raises AI among its risks, but in other terms (security, regulation, energy or the like), not as a competitor to its product; it frames AI mainly as a capability.

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat, and the company is using it that way.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$2.7B

Cash & short-term investments$857M
Receivables$1.0B
Inventory$696M
Other current assets$90M

Current liabilities$1.3B

Debt due within a year$23M
Accounts payable$699M
Other current liabilities$541M

Current ratio2.12×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.57×stricter: inventory excluded

Cash ratio0.68×strictest: cash alone against what's due

Working capital$1.4Bthe cushion left after near-term bills

Debt due this year vs. cash$23M due · $857M cash covered by cash on hand, no refinancing forced · both figures from the Mar 31, 2026 balance sheet

Revenue, latest quarter vs. a year ago+17.6%the freshest read on whether the business is still growing

Current ratio, recent quarters1.8× → 2.1×

Deeper floors

Tangible book value($1.4B)equity stripped of goodwill & intangibles

Net current asset value($3.9B)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$4.6B$510M of it operating leases; with finance leases, “total fixed claims” below reaches $4.6B (annual-report basis)

Deferred revenue$48Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'26$24M

'27$24M

'28$24M

'29$24M

'30$24M

later$4.0B

Bars scaled to the largest single year; “later” is everything due after 2030, shown apart since it dwarfs the years.

Due in the next 12 months$24Mthe first rung: what must be repaid or rolled over within the year

Within two years$48Mthe near wall, the part most exposed to today’s credit conditions

Biggest single year$24Min 2026the lumpiest maturity, where a refinancing, if needed, is largest

Total scheduled principal$4.1Bevery year plus what lies beyond, as the footnote totals it

Against what the business has and earns

Cash & short-term investments, Mar 31, 2026$857M

One year of owner earnings (FY2025)$988M

Together, against $24M due next year76.9×

Cash on hand as of Mar 31, 2026 plus a year’s owner earnings comes to $1.8B against the $24M due in the twelve months after the Dec 31, 2025 schedule: 77 times it.

Maturity schedule extracted from the company’s Dec 31, 2025 annual report and reconciled to the total the table states.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, and what it adds to the debt on the page above.

'26$65M

'27$57M

'28$49M

'29$45M

'30$44M

later$414M

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$65Ma fixed cash payment, owed whether or not the business has a good year

Total lease payments$674Mevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$498Mthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$4.1B

Lease obligations (present value)$498M

Total fixed claims on the business$4.6B

Counting the leases the way Buffett does, the fixed claims on this business come to $4.6B, of which the leases are 11%. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Dec 31, 2025 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

Acquisitions & goodwill

from the balance sheet & the 3-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$8.6B61% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equityexceeds itgoodwill alone is larger than the company’s entire book equity; stripped of the acquisition premium, there is no net book worth

Cash spent acquiring$0over 3 years buying other businesses, against $716M of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 3-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid.

Insider ownership<1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
Stock-based compensation$20M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 2% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Income taxes, Inventory, Contingencies as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Semiconductors

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
MRVLMarvell Technology Inc.	$8.2B	50%	-8.7%	-2%	19%
ONON Semiconductor Corporation	$6.0B	37%	13.4%	14%	15%
QQnity Electronics Inc.	$4.8B	46%	20.1%	7%	20%
MCHPMicrochip Technology Incorporated	$4.7B	61%	15.9%	7%	31%
SWKSSkyworks Solutions Inc.	$4.1B	47%	27.8%	23%	28%
QRVOQorvo Inc.	$3.7B	40%	6.1%	3%	19%
NXTNextpower Inc.	$3.6B	26%	16.4%	59%	11%
MPWRMonolithic Power Systems Inc.	$2.8B	55%	20.6%	23%	27%
Group median	—	47%	16.1%	11%	19%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Qnity Electronics Inc. has delivered.

Today’s price $

Base Normalize · through-cycle ($833M) Net of stock comp (−$26M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · since FY2023+23%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Owner earnings $898M on 209M shares outstanding, per the 10-Q cover, as of 2026-05-08; net debt $3.3B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh Q against another business →

The owners of Q: the meeting and the votes →

Cite: Owner Scorecard, "Qnity Electronics Inc. (Q), the owner's record," https://ownerscorecard.com/c/Q, data as of 2026-07-09.

Manual order: ← PZZA its page in the Manual QBTS →

Industry order: ← POWI the Semiconductors chapter QRVO →