6501 · Hitachi

Will it survive?

• Can it pay its interest? —
  Not the right lens here
  What this means

  This business earns through equity-method affiliates, so interest coverage on its operating line isn't meaningful. Read its solvency on net debt against equity instead.

• How heavy is the debt, net of cash? +¥464.8B
  Net cash
  Cash ¥1.32T + ST investments ¥107.0B − debt ¥965.7B
  What this means

  Cash and short-term investments exceed every dollar of debt by ¥464.8B, on net the company owes nothing, and can act from strength when others can't. 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 —
  Operating income not meaningful here
  Industry peers: median 16%
  What this means

  This business earns mostly through equity-method affiliates, so its operating line understates its earning power and a ROIC built on it would mislead. Read it on return on equity and the record instead.

• Owner-earnings margin 5%
  Solid through the cycle
  9-yr median margin, range 2%–12%; latest ¥1.32T = operating cash ¥1.67T − maintenance capex ¥351.8B
  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 12% of revenue this year, a 5% median across 9 years.

• Are earnings backed by cash? 2.08×
  Cash-backed
  Cash from ops ¥1.67T ÷ net income ¥802.4B
  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? 42%
  Returns about half
  Dividends + buybacks ¥557.2B ÷ Owner Earnings ¥1.32T
  What this means

  Of ¥1.32T Owner Earnings, ¥557.2B (42%) went back to shareholders, ¥204.9B dividends, ¥352.3B 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? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

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% 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 1% → 2% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 1% early, 2% lately, median 1%.

• Reinvestment, incremental ROIC 4%
  What this means

  Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.

• Owner earnings growth +18%/yr
  What this means

  Owner earnings grew about 18% a year over the record.

• Worst year 2017 · −0.1% op. margin
  What this means

  Operations went underwater in 2017, understand why before trusting the good years.

• Share count −0.7%/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.