ALLIANCE ENTERTAINMENT HOLDING CORP

Where It Passes

Where It Falls Short

• Growth0% pass✗ 13▾

  All 8 investors flag AENT's growth

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

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)P/E 16.5x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-20.6%

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

  Inventory Growth vs Revenue GrowthInv: 24.9% vs Rev: -66.4%

  ✗LynchInventory growth < Revenue growth

  EPS Growth Direction$0.60 (2021) -> $0.30 (2024)

  ✗DremanPositive over recent years

  EPS CAGR-20.6% CAGR over 3 years

  ✗Dreman> 5% annualized

  Positive Net Income Frequency3/4 years positive

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

  3yr Median Revenue Growth-67.9%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency2/3 years with positive EPS growth

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

  5-Year EPS CAGR-20.6% CAGR over 3 years

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 50.6% -> 100.0%, operating margin -194.9% -> 1116.1%

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

  5-year Revenue CAGR

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR-20.6% over 3 years

  ✗Neff7%-20% annualized
• Profitability6% pass✓ 9✗ 26▾

  15 of 16 flag AENT's profitability — Graham, Buffett, Lynch +12 more

  Net income / market capitalization+6.28%; #1343/6340 (top 21.2%)

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

  Positive EPS (10 years)3/5 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)3/5 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)0.4%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)1116.1% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$20.4M

  ✗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)P/E 16.5x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-20.6%

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

  ROE12.7%

  ✗Lynch> 15%

  EBIT / Enterprise Value9.8%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=9.8%, ROC=54.3%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets4.17%

  ✓PiotroskiROA > 0

  ROA Change YoY1.34% -> 4.17% (delta: +2.83%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=7.42%, ROA=4.17%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY88.1% -> 100.0%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue8.0%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity12.7%

  ✓Dreman> 12%

  Margin of SafetyP/E=16.5x, P/B=2.4x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-8.2% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency3/4 years positive

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

  Operating Income / Revenue9.7%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity12.7%

  ✗Ackman>= 15%

  5-Year EPS CAGR-20.6% CAGR over 3 years

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-194.9% (2022) -> 1116.1% (2024)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 50.6% -> 100.0%, operating margin -194.9% -> 1116.1%

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

  Gross profit / total assets+0.75%; #3374/3702 (top 91.1%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+12.70%; #1430/5226 (top 27.4%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0585; #2780/5884 (top 47.2%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR-20.6% over 3 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Debt & Leverage8% pass✓ 1✗ 14▾

  11 of 12 flag AENT's debt & leverage — Graham, Buffett, Lynch +8 more

  LT Debt vs Net Current Assets

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 1.13, IC: 6.1x

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

  Total Debt / Equity1.13

  ✗Lynch< 0.33

  Cash - Long-term Debt

  ✗LynchPositive preferred

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

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.32

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

  Total Debt / Shareholders' Equity1.13

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

  Debt Levels1.13

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

  Interest Coverage & Debt/EBITDAIC=6.1x, D/EBITDA=4.8x

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

  Total Debt / Shareholders Equity1.13

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-1.1300; #3346/4210 (top 79.5%)

  ✗AsnessTop 30% of eligible cross-section
• Valuation models10% pass✓ 1✗ 9▾

  Models split on AENT at $4.94 — fair values range $1.65–$6.11

  Graham fair value$3.70

  ✗Graham-33.5% margin vs $4.94

  Buffett fair value$4.72

  ✗Buffett-4.7% margin vs $4.94

  Greenblatt fair value$3.85

  ✗Greenblatt-28.3% margin vs $4.94

  Dreman fair value$3.45

  ✗Dreman-43.2% margin vs $4.94

  Munger fair value$4.37

  ✗Munger-13.0% margin vs $4.94

  Pabrai fair value$2.19

  ✗Pabrai-125.6% margin vs $4.94

  Akre fair value$6.11

  ✓Akre+19.1% margin vs $4.94

  Marks fair value$1.65

  ✗Marks-199.4% margin vs $4.94

  Ackman fair value$4.34

  ✗Ackman-13.8% margin vs $4.94

  Templeton fair value$1.65

  ✗Templeton-199.4% margin vs $4.94
• Efficiency13% pass✓ 2✗ 9▾

  7 of 8 flag AENT's efficiency — Graham, Buffett, Piotroski +4 more

  Current Ratio1.32

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)5.3%

  ✗Buffett> 10%

  ROIC - WACC-4.7%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)54.3%

  ✓Greenblatt> 25%

  Current Ratio Change YoY1.33 -> 1.26

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.02x -> 0.01x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities1.32

  ✗Dreman> 1.5

  Return on Invested Capital8.1%

  ✗Munger> 15%

  ROIC (high and growing)FY2022: ROIC=-11.8%; FY2023: ROIC=4.9%; FY2024: ROIC=14.7%

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

  Reinvestment Rate x ROIC14.7% (RR=100% x ROIC=14.7%)

  ✓AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)2/4 years above 12% (latest 14.7%)

  ✗SleepROIC > 12% in a majority of years
• Verdicts13% pass✓ 2✗ 13▾

  Split decision: 13 FAIL · 2 NEUTRAL · 1 PASS

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (1/9)✗LynchFAIL (0/7)✓GreenblattRank #225•PiotroskiNEUTRAL (F-Score 7)✗DremanFAIL (1/11)✗MungerFAIL (1/4)✗PabraiFAIL (1/3)✗AkreFAIL (2/6)✗MarksFAIL (1/5)✗AckmanFAIL (1/9)✗TempletonFAIL (2/8)✓SleepPASS (3/6)✗AsnessFAIL (Rank #1668/2370 (Top 70.4%))✗NeffFAIL (0/6)✗SchlossFAIL (0/7)•OshaughnessyNEUTRAL (Not ranked)
• Valuation23% pass✓ 4✗ 24▾

  10 of 13 flag AENT's valuation — Graham, Lynch, Greenblatt +7 more

  Net income / market capitalization+6.28%; #1343/6340 (top 21.2%)

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

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio2.4x

  ✗Graham<= 1.5x

  P/E x P/B

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)P/E 16.5x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value9.8%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=9.8%, ROC=54.3%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS16.5x

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

  Price / (CFO / Shares)9.4x

  ✗Dreman< 8x

  Price / Book Value per Share2.4x

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

  Valuation ReasonablenessP/E=16.5x, OE Yield=8.1%

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

  P/E or FCF YieldP/E=16.5x, FCF Yield=10.6%

  ✓PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=16.5x, P/B=2.4x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share9.4x

  ✓Ackman<= 25

  Price vs. Trailing Low175% of trailing low ($2.83)

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

  Positive book equity / market capitalization+0.4944; #2911/6449 (top 45.1%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS16.5x

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

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗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-11.7%

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

  Revenue / market capitalization+1.1148; #1649/5247 (top 31.4%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization-0.42%; #2602/4519 (top 57.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-18.48%; #3890/6202 (top 62.7%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Cash Flow40% pass✓ 6✗ 6▾

  6 of 10 flag AENT's cash flow — Buffett, Lynch, Dreman +3 more

  Free Cash Flow Proxy$20.4M

  ✗BuffettPositive and growing

  FCF Positive and Growing$-1.1M

  ✗LynchPositive and growing

  Operating Cash Flow$26.8M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=7.42%, ROA=4.17%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)9.4x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=16.5x, FCF Yield=10.6%

  ✓PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive3/4 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap-0.4%

  ✗Ackman>= 4%

  Price / FCF per Share9.4x

  ✓Ackman<= 25

  Positive Operating Cash Flow frequency3/4 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$-1.1M

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

  (Operating cash flow - capex) / market capitalization-0.42%; #2602/4519 (top 57.6%)

  ✗OshaughnessyTop 10% of eligible cross-section