DTE, DTE Energy Company

The allowed return, earned and credited

• Earned return on equity 11.0%
  Earning the allowed return
  Median over 10 readable years · latest FY2025: 11.9% (net income $1.5B ÷ equity $12.3B)
  What this means

  A commission caps what a regulated utility may earn on shareholders' capital, so the question is not whether the return is high but whether the company actually earns what it is allowed — persistent under-earning means costs the regulator will not put in rates, and a return above the band usually means unregulated businesses in the mix. Read through the record, because a single year carries rate-case timing noise.

• AFUDC in earnings 7.2%
  Construction credit in earnings
  Equity allowance for funds used during construction $105M ÷ net income $1.5B
  What this means

  While a plant is under construction the commission lets the utility credit itself the allowed return on the capital tied up — a real, allowed profit that arrives as a bookkeeping entry now and as cash only after the plant enters rates. A large share means heavy reinvestment at the allowed return, the thing Berkshire's utility letters prize; it also means that much of this year's earnings has not yet been collected from anyone.

The invested base and the regulatory ledger

• Net utility plant —
  Not enough data
  What this means

  No undimensioned utility-plant figure is tagged in this filer's structured data.

• Regulatory assets & liabilities $7.5B / $3.0B
  Owed recovery from ratepayers
  Regulatory assets $7.5B · regulatory liabilities $3.0B · net $4.6B asset position, as filed
  What this means

  The ledger of the regulatory relationship: assets are costs the commission has agreed the utility may collect from ratepayers in future rates, liabilities are amounts it must give back. Both are promises whose worth depends entirely on the commissions that made them — which is why they are shown as filed and never netted into earnings adjustments here.

Graham’s defensive tests · 4 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 Pass
  Revenue ≥ $2B · $15.8B
  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× (waived for utilities) · exempt
  What this means

  Graham exempted public utilities from this test: their working capital “takes care of itself” through the continuous bond-and-share financing of growth, so a thin current ratio is the industry's structure, not a warning. His substitute test — debt no more than twice book equity — is the next line.

• Conservative debt Near
  Debt ≤ 2× equity (Graham's utility test) · $25.8B vs $12.3B equity
  What this means

  Graham's own substitution for public utilities: debt not exceeding twice the stock equity at book value, in place of the working-capital tests an industrial faces. A utility finances its plant with bonds by design; the question is whether the borrowing stays inside the equity behind it.

• 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 Pass
  Earnings +33% over the record · +37%
  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 $6.83/share (latest year $7.03), the averaged base the calculator's gate runs on, and book value is $59.12/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.

• Return on capital ≥ 15% 0 of 10 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 13% → 16% (3-yr avg ends)
  What this means

  Through the cycle the operating margin widened — about 13% early to 16% lately, median 14% — pricing power intact or improving.

• Reinvestment, incremental ROIC 6%
  What this means

  Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.

• Worst year 2022 · 9.1% op. margin
  What this means

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

• Share count +1.6%/yr
  What this means

  The share count is rising, dilution works against you on a per-share basis.

• Dividend record rising
  What this means

  Paid and raised the dividend across the record, the continuity Graham prized.

• How management talks about it Owner’s terms
  What this means

  The record and the register agree: capital is compounding and the filing reasons in an owner’s terms — per-share value, return on capital, the long term — not a promoter’s.