CASS, Cass Information Systems Inc

Will it survive?

• Can it pay its interest? 3.6×
  Adequate
  Operating income $59M ÷ interest expense $16M
  What this means

  Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.

• How heavy is the debt, net of cash? +$758M
  Net cash, debt-free
  Cash $392M + ST investments $366M − debt $0
  What this means

  Cash and short-term investments exceed every dollar of debt by $758M, 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 —
  Not enough data
  Industry peers: median -8%
  What this means

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

• Owner-earnings margin 26%
  High through the cycle
  10-yr median margin, range 17%–46%; latest $32M = operating cash $37M − maintenance capex $6M
  Industry peers: median 8%
  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 17% of revenue this year, a 26% median across 10 years. Treating stock comp as the real expense it is (less $4M of SBC) leaves $28M.

• Are earnings backed by cash? 1.07×
  Cash-backed
  Cash from ops $37M ÷ net income $35M
  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? 134%
  Returned more than it generated
  Dividends + buybacks $42M ÷ Owner Earnings $32M — this fiscal year
  What this means

  The company returned more than it generated: against $32M of Owner Earnings, $42M (134%) went back to shareholders, $17M dividends, $26M buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Net of $4M stock comp, the real buyback was about $22M. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands. This year's proportion is 134%; across the record (2016–2025) it is 68%, the capital-allocation section below.

• Investing or harvesting? 0.94×
  Maintaining
  Capex $6M ÷ property depreciation $6M
  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.

Graham’s defensive tests · 2 of 4 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Miss
  Revenue ≥ $2B · $191M
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity —
  Current ratio ≥ 2× · —
  What this means

  Current assets / liabilities not in the data yet.

• Earnings stability Pass
  A profit every year (10-yr record) · no losses
  What this means

  Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.

• Dividend record Pass
  Uninterrupted dividends · paid every year (10)
  What this means

  An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.

• Earnings growth Near
  Earnings +33% over the record · +6%
  What this means

  At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $2.20/share (latest year $2.74), the averaged base the calculator's gate runs on, and book value is $18.98/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

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.

• Operating margin 27% → 28% (3-yr avg ends)
  What this means

  Through the cycle the operating margin held roughly steady — about 27% early, 28% lately, median 27%.

• Owner earnings growth −0%/yr
  What this means

  Owner earnings shrank about 0% a year over the record.

• Worst year 2024 · 24.5% op. margin
  What this means

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

• Share count −1.1%/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.