BC · Brunello Cucinelli S.p.A.

Will it survive?

• Can it pay its interest? 3.1×
  Adequate
  Operating income €212M ÷ interest expense €68M
  What this means

  Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.

• How heavy is the debt, net of cash? €98M · 0.5× operating profit
  Modest net debt
  Cash €182M − debt €280M
  What this means

  Netting €182M of cash and short-term investments against €280M of debt leaves €98M owed, about 0.5× a year's operating profit (1.3× 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 23%
  High through the cycle
  5-yr median, range -3%–29%; 25% latest = NOPAT €151M ÷ invested capital €604M
  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 5 years (it ran 25% 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 13%
  Solid through the cycle
  5-yr median margin, range -1%–23%; latest €99M = operating cash €189M − maintenance capex €90M
  Industry peers: median 7%
  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 8% of revenue this year, a 13% median across 5 years.

• Are earnings backed by cash? 1.47×
  Cash-backed
  Cash from ops €189M ÷ net income €129M

  In the filing’s words The filing leans on adjusted, non-GAAP earnings, but the GAAP profit is itself cash-backed — the adjustments are not papering over a cash shortfall here.

  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? 67%
  Returns about half
  Dividends + buybacks €66M ÷ Owner Earnings €99M
  What this means

  Of €99M Owner Earnings, €66M (67%) went back to shareholders, €66M 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? 0.59×
  Harvesting
  Capex €90M ÷ depreciation €153M
  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 —
  Revenue ≥ $2B (a dollar floor) · €1.3B
  What this means

  Big enough to weather a storm. Graham's floor is a dollar figure — about $2B of revenue as a conservative modern stand-in. This company reports in its home currency and we carry no exchange rate, so we show the figure and leave the size bar for you to apply rather than convert it with a number we don't have.

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

  Current assets / liabilities not in the data yet.

• Earnings stability Near
  A profit every year (6-yr record) · 1 loss year
  What this means

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

• Dividend record Miss
  Uninterrupted dividends · 5 of 7 yrs
  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 Pass
  Earnings +33% over the record · +282%
  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 €1.76/share (latest year €1.76), the averaged base the calculator's gate runs on, and book value is €6.93/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, 2020–2024

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

• Profitable years 4 of 5
  What this means

  Lost money in 1 year(s), look at what happened there before trusting the average.

• Return on capital ≥ 15% 4 of 5 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 4% → 17% (2-yr avg ends)

  In the filing’s words The record and the words agree: the margin widened and the filing attributes the gain to its own pricing, not volume alone.

  What this means

  Through the cycle the operating margin widened — about 4% early to 17% lately, median 15% — pricing power intact or improving.

• Reinvestment, incremental ROIC —
  What this means

  The reinvested base moved too little against the change in profit to read a reliable return on it here — the figure would be a small-denominator artifact, not a moat. Judge this one on the owner-earnings record and the cash it returns instead.

• Owner earnings growth +10%/yr
  What this means

  Owner earnings grew about 10% a year over the record.

• Worst year 2020 · −2.7% op. margin
  What this means

  Operations went underwater in 2020, understand why before trusting the good years.

• Share count +1.8%/yr
  What this means

  The share count is rising, dilution works against you on a per-share basis.

• 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

  The record and the register agree: capital is compounding and the filing reasons in an owner’s terms — per-share value, return on capital, the long term — not a promoter’s.