Buffett Brain · Research note
Score updated 23 Oct 2026 · analysis from 2 Jun 2026
HSBC· Financial Services
HSBC Holdings
HSBC is a sprawling global bank trading at a cheap 14.3 times earnings precisely because its balance sheet carries 2.4 turns of debt to equity.
Buffett fit
Weak fit
Owner
35
Durability
98
Management
77
Price
72
Score updated 23 Oct 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Financial Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of HSBC outright, I would lie awake over the things I cannot see.
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The durability score of 98 reflects something real. HSBC has stood for over a century and a half, and its scale across Asia is genuinely hard to replicate.
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Management earns a respectable 77 here, and I will give them their due.
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Here is where the bulls will point, and they are not entirely wrong. At 14.3 times earnings with an owner-earnings yield of 7.86 percent, HSBC is plainly not expensive, and that is why the valuation score sits at a respectable 72.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
7- 1Trades cheaply at 14.3 times earnings with an owner-earnings yield of 7.86 percent, so the price is not the problem here.
- 2Management has shrunk the share count by 3.6 percent annually, returning capital rather than empire-building, earning a 77 management score.
- 3 runs at 1.12 times net income, a sign the reported earnings are backed by real cash.
- 4A durability score of 98 reflects a 150-year-old franchise whose scale across Asia is genuinely hard to replicate.
Concerns
7- 1Financial health scores a dismal 18, the worst part of this business, with and coverage that leave almost no cushion for a bad year.
- 2Interest coverage of just 0.46 means operating earnings do not cover the interest bill on a straight reading, an alarming figure for any enterprise.
- 3 sits at 2.4 turns and net debt to EBITDA at 6.66, the kind of leverage that turns an ordinary recession into a solvency question.
- 4 is a feeble 0.65 percent over the trailing year and only 3.84 percent over five, so the bank earns almost nothing on the capital it deploys.
Price history
$91.89+205.6%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
HSBC earns its keep the way every bank does, by borrowing money cheaply and lending it out dearer, then collecting fees on trade finance, wealth management, and moving money across the borders it straddles between Asia and the West. The of 22.5 percent looks respectable, but for a bank that headline number hides how thin the real spread is once you account for funding costs and loan losses. Revenue has grown at a brisk 18.9 percent and earnings per share at 18.2 percent, though a bank's reported growth in a few good years tells you little about what happens when the credit cycle turns.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 23, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Financial Services
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