TMUS — T-Mobile US Inc.

Will it survive?

• Can it pay its interest? 21.9×
  Comfortable
  Operating income $18.3B ÷ interest expense $835M

  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? 4.7×
  Heavy
  Total debt $86.3B ÷ operating income $18.3B

  Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.

• How long is cash tied up? -68d
  Negative — funded by others
  DSO 20 + DIO 76 − DPO 164 days

  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 10%
  Solid
  NOPAT $14.1B ÷ invested capital $139.9B (debt + equity − cash)

  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; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high — pair this with Owner Earnings.

• Owner Earnings (free cash) margin 20%
  Cash machine
  Owner Earnings $18.0B = operating cash $27.9B − capex $10.0B

  What an owner could take out without starving the business. That's 20% of revenue. Treating stock comp as the real expense it is (less $829M of SBC) leaves $17.2B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).

• Are earnings backed by cash? 2.54×
  Cash-backed
  Cash from ops $27.9B ÷ net income $11.0B

  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? 78%
  Returns about half
  Dividends + buybacks $14.1B ÷ Owner Earnings $18.0B

  Of $18.0B Owner Earnings, $14.1B (78%) went back to shareholders — $4.1B dividends, $10.0B buybacks. Net of $829M stock comp, the real buyback was about $9.1B. Returning most of it signals a mature cash machine; 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? 0.74×
  Harvesting
  Capex $10.0B ÷ depreciation $13.5B

  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 — 2016–2025

A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says — judgments, not another chart of the numbers.

• Profitable years 10 of 10

  Never lost money over the record — the earnings stability Graham insisted on.

• Return on capital ≥ 15% 0 of 10 yrs

  A moat shows up as a high return on invested capital that holds year after year — not one good vintage.

• Operating margin 11% → 21%

  Margins are widening — pricing power intact or improving.

• Reinvestment — incremental ROIC 9%

  Reinvested capital earned only a modest return — growth is getting expensive.

• Worst year 2022 · 8.2% op. margin

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

• Share count +3.5%/yr

  The share count is rising — dilution works against you on a per-share basis.

• Dividend record rising

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