6473 · JTEKT

Will it survive?

• Can it pay its interest? 1.7×
  Thin
  Operating income ¥24.8B ÷ interest expense ¥14.6B
  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? ¥71.6B · 2.9× operating profit
  Meaningful net debt
  Cash ¥137.6B + ST investments ¥8.0B − debt ¥217.1B
  What this means

  Netting ¥145.6B of cash and short-term investments against ¥217.1B of debt leaves ¥71.6B owed, about 2.9× a year's operating profit (8.7× 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? -9d
  Negative, funded by others
  DSO 66 + DIO 4 − DPO 79 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money.

Is it a good business?

• Return on invested capital 4%
  Below average through the cycle
  10-yr median, range 1%–10%; 2% latest = NOPAT ¥19.6B ÷ invested capital ¥869.8B
  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 2% 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 2%
  Thin through the cycle
  10-yr median margin, range -1%–5%; latest ¥37.3B = operating cash ¥108.5B − maintenance capex ¥71.2B
  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 2% of revenue this year, a 2% median across 10 years.

• Are earnings backed by cash? 9.06×
  Cash-backed
  Cash from ops ¥108.5B ÷ net income ¥12.0B
  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? 47%
  Returns about half
  Dividends + buybacks ¥17.5B ÷ Owner Earnings ¥37.3B
  What this means

  Of ¥37.3B Owner Earnings, ¥17.5B (47%) went back to shareholders, ¥17.5B dividends, ¥2M 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? 1.26×
  Expanding
  Capex ¥89.5B ÷ depreciation ¥71.2B
  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 9 of 10
  What this means

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

• 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 5% → 2% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 5% early to 2% lately, median 3% — competition or costs are biting in.

• Reinvestment, incremental ROIC returns capital
  What this means

  The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.

• Owner earnings growth −8%/yr
  What this means

  Owner earnings shrank about 8% a year over the record.

• Worst year 2021 · 1.0% op. margin
  What this means

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

• Share count −0.8%/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.