CTRN, Citi Trends Inc.

Will it survive?

• Can it pay its interest? 11.3×
  Comfortable
  Operating income $4M ÷ interest expense $342K
  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? +$66M
  Net cash, debt-free
  Cash $66M − debt $0
  What this means

  Cash and short-term investments exceed every dollar of debt by $66M, 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 14%
  What this means

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

• Owner-earnings margin 2%
  Thin through the cycle
  10-yr median margin, range -3%–12%; latest $624K = operating cash $21M − maintenance capex $20M
  Industry peers: median 5%
  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 0% of revenue this year, a 2% median across 10 years. Treating stock comp as the real expense it is (less $5M of SBC) leaves ($5M).

• Are earnings backed by cash? 4.02×
  Cash-backed
  Cash from ops $21M ÷ net income $5M
  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? 1012%
  Returned more than it generated
  Dividends + buybacks $6M ÷ Owner Earnings $624K — this fiscal year
  What this means

  The company returned more than it generated: against $624K of Owner Earnings, $6M (1012%) went back to shareholders, $0 dividends, $6M buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Net of $5M stock comp, the real buyback was about $926K. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands. This year's proportion is 1012%; across the record (2017–2026) it is 178%, the capital-allocation section below.

• Investing or harvesting? 1.10×
  Maintaining
  Capex $20M ÷ depreciation & amortization as filed $18M
  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.

The promise and the pay packet

• Is the buyback buying ownership, or mopping up? 0.7%
  The buyback only stands still
  Stock compensation $5M (fiscal 2026), 0.7% of revenue · repurchases $6M · diluted shares +1.0% since 2023
  What this means

  Stock handed to employees is a real cost paid in the owner's own currency: it is charged against profit, but the shares it creates are permanent. Many companies repurchase stock at the same time, which looks like a return of capital and often is not — if the count barely moves, the cash merely cancelled the pay packet and bought the owner nothing. The three states worth telling apart are a count genuinely shrinking, a count standing still despite large repurchases, and a count rising because the issuance was never offset at all.

Graham’s defensive tests · 0 of 5 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 · $820M
  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 Miss
  Current ratio ≥ 2× · 1.11×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Earnings stability Miss
  A profit every year (10-yr record) · 2 loss years
  What this means

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

• Dividend record Miss
  Uninterrupted dividends · 5 of 10 yrs
  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 Miss
  Earnings +33% over the record · −201%
  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 $-2.00/share (latest year $0.63), the averaged base the calculator's gate runs on, and book value is $13.96/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, 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.

• Operating margin 3% → −2% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 3% early to −2% lately, median 3% — competition or costs are biting in.

• Worst year 2025 · −5.2% op. margin
  What this means

  Operations went underwater in 2025, understand why before trusting the good years.

• Share count −6.1%/yr
  What this means

  The share count is shrinking, buybacks are quietly growing your slice of the business.

• Dividend record paid
  What this means

  Paid a dividend in 5 of the years on record.

• How management talks about it Promotional
  What this means

  The returns have faded, yet the filing reaches for a promoter’s vocabulary — world-class, best-in-class, disruptive — more than an owner’s. When the words sell harder than the results deliver, the gap is the thing to weigh.