1803 · Shimizu

Will it survive?

• Can it pay its interest? 15.7×
  Comfortable
  Operating income ¥118.7B ÷ interest expense ¥7.6B
  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? ¥69.5B · 0.6× operating profit
  Modest net debt
  Cash ¥354.5B + ST investments ¥118.0B − debt ¥542.0B
  What this means

  Netting ¥472.5B of cash and short-term investments against ¥542.0B of debt leaves ¥69.5B owed, about 0.6× a year's operating profit (4.6× 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 10%
  Solid through the cycle
  10-yr median, range -2%–20%; 10% latest = NOPAT ¥93.7B ÷ invested capital ¥971.1B
  Industry peers: median 16%
  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 10% 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 4%
  Thin through the cycle
  10-yr median margin, range -3%–9%; latest ¥8.1B = operating cash ¥41.6B − maintenance capex ¥33.5B
  Industry peers: median 2%
  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 0% of revenue this year, a 4% median across 10 years. It chose to put ¥65.1B more into growth, so free cash flow this year was (¥57.0B) — the gap is investment, not weakness.

• Are earnings backed by cash? 0.33×
  Thinly cash-backed
  Cash from ops ¥41.6B ÷ net income ¥126.6B
  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? 478%
  Returned more than it generated
  Dividends + buybacks ¥38.9B ÷ Owner Earnings ¥8.1B
  What this means

  The company returned more than it generated: against ¥8.1B of Owner Earnings, ¥38.9B (478%) went back to shareholders, ¥28.9B dividends, ¥10.0B buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands.

• Investing or harvesting? 2.94×
  Expanding
  Capex ¥98.7B ÷ depreciation ¥33.5B
  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.

Durability & moat, 2017–2026

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% 3 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 8% → 3% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 8% early to 3% lately, median 6% — competition or costs are biting in.

• Reinvestment, incremental ROIC −16%
  What this means

  Reinvested capital came back at a negative incremental return over this window — the invested base grew while operating profit did not. The filings show where it went.

• Owner earnings growth −5%/yr
  What this means

  Owner earnings shrank about 5% a year over the record.

• Worst year 2024 · −1.2% op. margin
  What this means

  Operations went underwater in 2024, understand why before trusting the good years.

• Share count −1.1%/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.