AECOM

Where It Passes

Where It Falls Short

• Efficiency13% pass✓ 3✗ 8▾

  7 of 8 flag ACM's efficiency — Graham, Greenblatt, Piotroski +4 more

  Current Ratio1.06

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)15.9%

  ✓Buffett> 10%

  ROIC - WACC+5.9%

  ✓BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)N/A (invested capital <= 0)

  ✗Greenblatt> 25%

  Current Ratio Change YoY1.11 -> 1.14

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY1.34x -> 1.32x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities1.06

  ✗Dreman> 1.5

  Return on Invested Capital10.2%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=5.8%; FY2024: ROIC=13.9%; FY2025: ROIC=15.6%

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROIC4.9% (RR=48% x ROIC=10.2%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)2/5 years above 12% (latest 15.6%)

  ✗SleepROIC > 12% in a majority of years
• Debt & Leverage17% pass✓ 2✗ 13▾

  10 of 12 flag ACM's debt & leverage — Graham, Buffett, Lynch +7 more

  LT Debt vs Net Current Assets

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 1.24, IC: 3.1x

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity1.24

  ✗Lynch< 0.33

  Cash - Long-term Debt

  ✗LynchPositive preferred

  LT Debt / Total Assets Change0.00% -> 0.00%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.06

  ✗Dreman> 1.5✗SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity1.24

  ✗Dreman< 0.8✗Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✗SchlossD/E < 1.00x

  Debt Levels1.24

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDAIC=3.1x, D/EBITDA=3.2x

  ✓MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity1.24

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-1.2378; #3444/4210 (top 81.8%)

  ✗AsnessTop 30% of eligible cross-section
• Profitability19% pass✓ 15✗ 20▾

  13 of 16 flag ACM's profitability — Graham, Buffett, Lynch +10 more

  Positive EPS (10 years)14/23 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)19/23 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)12.5%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)6.4% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$601.0M

  ✓BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)0.44

  ✓Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR38.0%

  ✓Lynch15-30% (Fast Grower); > 0% to pass

  ROE13.1%

  ✗Lynch> 15%

  EBIT / Enterprise Value10.1%

  ✓Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=10.1%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets4.60%

  ✓PiotroskiROA > 0

  ROA Change YoY3.34% -> 4.60% (delta: +1.27%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=6.73%, ROA=4.60%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY6.7% -> 7.5%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue3.4%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity13.1%

  ✓Dreman> 12%

  Margin of SafetyP/E=16.7x, P/B=3.7x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity14.5% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-86.8% (IV=$37.75 vs Price=$70.50)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency19/23 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue4.1%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity13.1%

  ✗Ackman>= 15%

  5-Year EPS CAGR38.0% CAGR over 4 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend2.3% (2023) -> 6.4% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 6.6% -> 7.5%, operating margin 2.3% -> 6.4%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  Net income / market capitalization+3.17%; #2312/6340 (top 36.5%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets+7.27%; #2979/3702 (top 80.5%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+13.13%; #1359/5226 (top 26.0%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0143; #1100/5884 (top 18.7%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR38.0% over 4 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years8/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Valuation23% pass✓ 6✗ 22▾

  10 of 13 flag ACM's valuation — Graham, Greenblatt, Dreman +7 more

  Price / 3-yr avg EPS28.0x

  ✗Graham<= 15x

  Price-to-Book Ratio3.7x

  ✗Graham<= 1.5x

  P/E x P/B104.50

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)0.44

  ✓Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value10.1%

  ✓Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=10.1%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS16.7x

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)11.3x

  ✗Dreman< 8x

  Price / Book Value per Share3.7x

  ✗Dreman< 1.2x✗Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Valuation ReasonablenessP/E=16.7x, OE Yield=6.5%

  ✓MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldP/E=16.7x, FCF Yield=7.5%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=16.7x, P/B=3.7x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-86.8% (IV=$37.75 vs Price=$70.50)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share13.6x

  ✓Ackman<= 25

  Price vs. Trailing Low120% of trailing low ($58.85)

  ✓Templeton<= 120% of trailing low (certified split-adjusted live window)

  Net income / market capitalization+3.17%; #2312/6340 (top 36.5%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization+0.2417; #3968/6449 (top 61.5%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS16.7x

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E2.36

  ✓Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per ShareN/A (non-positive TBVPS)

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-13.4%

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+1.6966; #1217/5247 (top 23.2%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+2.24%; #2217/4519 (top 49.1%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-15.66%; #3756/6202 (top 60.6%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Valuation models27% pass✓ 3✗ 8▾

  Models split on ACM at $70.50 — fair values range $17.54–$122.41

  Graham fair value$42.32

  ✗Graham-66.6% margin vs $70.50

  Buffett fair value$53.88

  ✗Buffett-30.8% margin vs $70.50

  Lynch fair value$105.25

  ✓Lynch+33.0% margin vs $70.50

  Greenblatt fair value$43.51

  ✗Greenblatt-62.0% margin vs $70.50

  Dreman fair value$37.75

  ✗Dreman-86.8% margin vs $70.50

  Munger fair value$94.86

  ✓Munger+25.7% margin vs $70.50

  Pabrai fair value$49.53

  ✗Pabrai-42.3% margin vs $70.50

  Akre fair value$24.71

  ✗Akre-185.3% margin vs $70.50

  Marks fair value$17.54

  ✗Marks-301.9% margin vs $70.50

  Ackman fair value$122.41

  ✓Ackman+42.4% margin vs $70.50

  Templeton fair value$32.67

  ✗Templeton-115.8% margin vs $70.50
• Verdicts29% pass✓ 4✗ 10▾

  Split decision: 10 FAIL · 3 PASS · 2 NEUTRAL · 1 BUY

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (3/9)✗LynchFAIL (3/7)•GreenblattNot ranked✓PiotroskiBUY (F-Score 8)✗DremanFAIL (2/11)✓MungerPASS (2/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (3/5)✓AckmanPASS (5/9)•TempletonNEUTRAL (5/8)✓SleepPASS (3/6)✗AsnessFAIL (Rank #1780/2370 (Top 75.1%))•NeffNEUTRAL (4/6)✗SchlossFAIL (2/7)✗OshaughnessyFAIL (Rank #704/963 (Top 73.1%))
• Cash Flow50% pass✓ 7✗ 5▾

  5 of 10 pass — Lynch, Dreman, Pabrai +2 more object

  Free Cash Flow Proxy$601.0M

  ✓BuffettPositive and growing

  FCF Positive and Growing$203.4M

  ✗LynchPositive and growing

  Operating Cash Flow$821.6M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=6.73%, ROA=4.60%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)11.3x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=16.7x, FCF Yield=7.5%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive18/21 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap2.2%

  ✗Ackman>= 4%

  Price / FCF per Share13.6x

  ✓Ackman<= 25

  Positive Operating Cash Flow frequency21/21 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$203.4M

  ✓Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization+2.24%; #2217/4519 (top 49.1%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth50% pass✓ 7✗ 6▾

  4 of 8 pass — Graham, Dreman, Sleep +1 more object

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)0.44

  ✓Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR38.0%

  ✓Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthN/A (no inventory)

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency19/23 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth9.4%

  ✓Ackman>= 5%

  Positive EPS Growth Frequency4/5 years with positive EPS growth

  ✓AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR38.0% CAGR over 4 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 6.6% -> 7.5%, operating margin 2.3% -> 6.4%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR4.0%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR38.0% over 4 years

  ✗Neff7%-20% annualized