9022 · Central Japan Railway (JR Central)

Will it survive?

• Can it pay its interest? 18.1×
  Comfortable
  Operating income ¥830.2B ÷ interest expense ¥46.0B
  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? ¥914.6B · 1.1× operating profit
  Modest net debt
  Cash ¥370.6B + ST investments ¥22.9B − debt ¥1.31T
  What this means

  Netting ¥393.5B of cash and short-term investments against ¥1.31T of debt leaves ¥914.6B owed, about 1.1× a year's operating profit (1.6× 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 -3%–14%; 11% latest = NOPAT ¥655.8B ÷ invested capital ¥5.84T
  Industry peers: median 7%
  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 11% 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 9%
  Solid through the cycle
  10-yr median margin, range -78%–18%; latest ¥254.8B = operating cash ¥748.2B − maintenance capex ¥493.3B
  Industry peers: median 7%
  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 13% of revenue this year, a 9% median across 10 years.

• Are earnings backed by cash? 1.35×
  Cash-backed
  Cash from ops ¥748.2B ÷ net income ¥552.9B
  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? 55%
  Returns about half
  Dividends + buybacks ¥141.3B ÷ Owner Earnings ¥254.8B
  What this means

  Of ¥254.8B Owner Earnings, ¥141.3B (55%) went back to shareholders, ¥31.3B dividends, ¥110.0B 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? 2.40×
  Expanding
  Capex ¥493.3B ÷ depreciation ¥205.9B
  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 8 of 10
  What this means

  Lost money in 2 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 36% → 38% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 36% early, 38% lately, median 36%.

• Reinvestment, incremental ROIC 3%
  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 −4%/yr
  What this means

  Owner earnings shrank about 4% a year over the record.

• Worst year 2021 · −22.4% op. margin
  What this means

  Operations went underwater in 2021, 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.