Berkshire requires a 25–50% discount to intrinsic value before buying.
Buffett Quality Checklist
✗ROE >15% consistently (≥7 of last 10 years)
✓Free cash flow positive (≥8 of last 10 years)
✓Conservative leverage — Debt/Equity below 1
✗Revenue growing at CAGR >5%
✓EPS growing at CAGR >5%
10-Year Financial History — SEC EDGAR 10-K Filings
Year▲
Revenue▲
Net Income▲
FCF▲
Owner Earnings▲
ROE▲
Net Margin▲
LT Debt▲
Cash▲
2016
$2.8B
$330.8M
$750.9M
$365.8M
15.4%
11.7%
$3.3B
$548.4M
2017
$3.1B
$755.5M
-$49.5M
$787.3M
27.1%
24.7%
$3.3B
$540.6M
2018
$3.2B
-$111.3M
$674.5M
-$68.1M
-4.6%
-3.5%
$3.3B
$666.7M
2019
$3.4B
-$203.6M
$592.5M
-$168.1M
-9.6%
-6.0%
$3.1B
$601.8M
2020
$3.8B
$1.1B
$798.3M
$1.1B
41.2%
29.5%
$3.0B
$701.0M
2021
$5.6B
$1.9B
$2.2B
$1.8B
44.4%
33.2%
$3.0B
$1.2B
2022
$4.9B
$1.3B
$2.1B
$1.3B
26.7%
26.8%
$2.8B
$2.3B
2023
$4.0B
$456.0M
$959.4M
$453.8M
9.1%
11.3%
$2.8B
$2.7B
2024
$4.0B
$789.5M
$1.2B
$816.4M
15.4%
19.6%
$2.5B
$2.2B
2025
$4.1B
$565.7M
$998.3M
$615.8M
11.2%
13.8%
$2.5B
$2.0B
Warren & Charlie
Buffett / Munger — quality, moat & valuation
HOLOGIC INC (HOLX) — Investment Memo
🐂 The Bull Case (Warren's voice)
The "Toll Bridge" Model: Hologic doesn't just sell machines; they sell a dependency. By installing proprietary hardware in hospitals, they create a recurring revenue stream of high-margin consumables. Once the machine is in the wall, the "blade" sales are almost automatic.
The Female Health Fortress: They operate in a specialized niche with high barriers to entry. FDA approvals aren't just paperwork; they are legal moats that prevent generic entrants from stealing market share overnight.
Cash Flow Quality: The fact that FCF consistently exceeds Net Income suggests the earnings are high quality and not merely the result of accounting gymnastics.
Attractive Entry: This becomes a Berkshire-style "wonderful business at a fair price" if we can acquire it at a steep discount to its $67.01 intrinsic value, effectively getting the "razors" for free and being paid for the "blades."
🐻 The Bear Case (Charlie inverts)
The M&A Treadmill: The history of impairment charges is a massive red flag. Management is addicted to buying growth to mask organic stagnation. If they continue to overpay for "empire building," they will incinerate shareholder capital regardless of the moat.
Structural Obsolescence: The "razor" only works if the technology remains the gold standard. A breakthrough in non-invasive, non-proprietary diagnostics (AI-driven or liquid biopsy) could render their installed base of hardware obsolete overnight.
The COVID Hangover: There is a risk that the business is structurally smaller than the pandemic-era numbers suggested, and management is fighting a losing battle to return to those inflated peaks.
Most Likely Failure: Capital misallocation via M&A. This is an ongoing process; the "death" here isn't a sudden crash, but a slow bleed of value through bad acquisitions over the next 5–10 years.
💰 Valuation & Margin of Safety
The DCF is conservative on growth (3.2%), which is appropriate given the post-COVID slump.
Intrinsic value estimate: $67.01 per share
25% margin of safety entry: $50.26(conservative)
50% margin of safety entry: $33.51(Buffett's ideal)
Current Status: Fairly valued to slightly overvalued depending on the current market price. At $67.01, there is no margin of safety; we are paying for the full projection of success with no room for error.
Verdict: WATCH
The "razor-and-blade" economics are classic, but the management's M&A track record is too undisciplined for a high-conviction buy at current levels. We will wait for a market dislocation to bring the price closer to $50.00. Until then, the risk of capital destruction via acquisition outweighs the durability of the moat.
Other Analyst Views· Lynch · Damodaran
Research Notes· Money Model · Moat · Financials · Management
Data sourced from SEC EDGAR XBRL filings (10-K only). For educational purposes — not investment advice.