4307 · Nomura Research Institute

Will it survive?

• Can it pay its interest? 13.8×
  Comfortable
  Operating income ¥58.3B ÷ interest expense ¥4.2B
  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? ¥103.5B · 1.8× operating profit
  Modest net debt
  Cash ¥132.6B − debt ¥236.1B
  What this means

  Netting ¥132.6B of cash and short-term investments against ¥236.1B of debt leaves ¥103.5B owed, about 1.8× a year's operating profit (4.1× 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 17%
  High through the cycle
  10-yr median, range 9%–23%; 9% latest = NOPAT ¥46.0B ÷ invested capital ¥537.4B
  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 9% 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 15%
  Solid through the cycle
  10-yr median margin, range 10%–20%; latest ¥141.8B = operating cash ¥147.6B − maintenance capex ¥5.8B
  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 17% of revenue this year, a 15% median across 10 years.

• Are earnings backed by cash? 9.68×
  Cash-backed
  Cash from ops ¥147.6B ÷ net income ¥15.3B
  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? 28%
  Reinvests most of it
  Dividends + buybacks ¥39.5B ÷ Owner Earnings ¥141.8B
  What this means

  Of ¥141.8B Owner Earnings, ¥39.5B (28%) went back to shareholders, ¥39.5B 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? 0.11×
  Harvesting
  Capex ¥5.8B ÷ depreciation ¥51.3B
  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% 7 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 14% → 14% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 14% early, 14% lately, median 15%.

• Reinvestment, incremental ROIC 18%
  What this means

  Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.

• Owner earnings growth +11%/yr
  What this means

  Owner earnings grew about 11% a year over the record.

• Worst year 2026 · 7.2% op. margin
  What this means

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

• Dividend record rising
  What this means

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