6594 · Nidec

Will it survive?

• Can it pay its interest? 10.1×
  Comfortable
  Operating income ¥238.1B ÷ interest expense ¥23.7B
  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? ¥962.4B · 4.0× operating profit
  Heavy net debt
  Cash ¥246.2B − debt ¥1.21T
  What this means

  Netting ¥246.2B of cash and short-term investments against ¥1.21T of debt leaves ¥962.4B owed, about 4.0× a year's operating profit (5.1× 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 6%
  Below average through the cycle
  10-yr median, range -0%–11%; 7% latest = NOPAT ¥188.1B ÷ invested capital ¥2.68T
  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 7% 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 6%
  Solid, recently turned positive
  latest ¥163.7B = operating cash ¥284.4B − maintenance capex ¥120.7B; positive each of the last 3 years, after an earlier loss stretch (8-yr median 3%)
  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 6% of revenue this year, a 3% median across 8 years.

• Are earnings backed by cash? 1.73×
  Cash-backed
  Cash from ops ¥284.4B ÷ net income ¥164.4B
  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? 33%
  Reinvests most of it
  Dividends + buybacks ¥53.8B ÷ Owner Earnings ¥163.7B
  What this means

  Of ¥163.7B Owner Earnings, ¥53.8B (33%) went back to shareholders, ¥46.0B dividends, ¥7.8B 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, 2016–2025

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 4% → 7% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 4% early to 7% lately, median 7% — pricing power intact or improving.

• Reinvestment, incremental ROIC 6%
  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 +16%/yr
  What this means

  Owner earnings grew about 16% 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.

• Dividend record rising
  What this means

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