Nick Train
Few businesses, held for a very long time, that need little to grow.
| Measure | Formula | Median | Middle half | Reporting it |
|---|---|---|---|---|
| Return on equity | Net income ÷ shareholders’ equity | 11.7% | 6.3% – 20.4% | 537 |
| Operating margin | Operating income ÷ revenue | 15.0% | 6.0% – 24.7% | 516 |
| Cash conversion | Operating cash flow ÷ net income | 1.77x | 1.36x – 2.41x | 414 |
| Debt to equity | Total debt ÷ shareholders’ equity | 0.79x | 0.39x – 1.45x | 442 |
Where each comes from
| Return on equity | Durable franchises earning high returns on the equity in them, which is the type of business the funds concentrate in. |
|---|---|
| Operating margin | The margin a strong brand sustains, described repeatedly as the evidence of pricing power. |
| Cash conversion | Profits that arrive as cash, in businesses that need little reinvestment to keep growing. |
| Debt to equity | Low capital needs, which show up as a balance sheet that does not lean on borrowing. |
Source: Lindsell Train annual reports and Nick Train’s published commentaries.
What this cannot tell you
Holding periods measured in decades, and a judgement that a brand will still matter then, are the core of the approach and are not in any filing.
This page describes a published method and applies its measures to filings. It is not a score, not a ranking and not a recommendation, and no page here aggregates these into a verdict. · All 11 metrics