Ambow Education Holding Ltd.

Where It Passes

Where It Falls Short

• Cash Flow0% pass✓ 1✗ 11▾

  No clean pass — all 10 investors flag at least one cash flow criterion

  Free Cash Flow Proxy$0.9M

  ✗BuffettPositive and growing

  FCF Positive and Growing$-0.5M

  ✗LynchPositive and growing

  Operating Cash Flow$0.1M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=0.66%, ROA=6.53%

  ✗PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)555.4x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=55.9x, FCF Yield=-12.3%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive6/12 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap-0.6%

  ✗Ackman>= 4%

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency9/17 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$-0.5M

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

  (Operating cash flow - capex) / market capitalization-12.26%; #3315/4519 (top 73.4%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Valuation models0% pass✗ 3▾

  AMBO overvalued: all 3 models price fair value below $1.32 (median $0.17)

  Graham fair value$0.28

  ✗Graham-371.4% margin vs $1.32

  Buffett fair value$0.17

  ✗Buffett-676.5% margin vs $1.32

  Akre fair value$0.10

  ✗Akre-1220.0% margin vs $1.32
• Valuation8% pass✓ 4✗ 24▾

  12 of 13 flag AMBO's valuation — Graham, Lynch, Greenblatt +9 more

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio9.2x

  ✗Graham<= 1.5x

  P/E x P/B

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value1.8%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.8%, ROC=1.5%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS55.9x

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

  Price / (CFO / Shares)555.4x

  ✗Dreman< 8x

  Price / Book Value per Share9.2x

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

  Valuation ReasonablenessP/E=55.9x, OE Yield=1.1%

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

  P/E or FCF YieldP/E=55.9x, FCF Yield=-12.3%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=55.9x, P/B=9.2x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Price vs. Trailing Low100% of trailing low ($1.32)

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

  Net income / market capitalization+35.99%; #171/6340 (top 2.7%)

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

  Positive book equity / market capitalization+2.0791; #656/6449 (top 10.2%)

  ✓AsnessTop 30% of eligible cross-section

  Price / Diluted EPS55.9x

  ✗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 Share11.55x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-71.1%

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

  Revenue / market capitalization+2.5079; #925/5247 (top 17.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization-12.26%; #3315/4519 (top 73.4%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-43.10%; #4923/6202 (top 79.4%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Profitability13% pass✓ 13✗ 22▾

  14 of 16 flag AMBO's profitability — Graham, Buffett, Lynch +11 more

  Positive EPS (10 years)5/18 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)9/18 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-41.6%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)1.2% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$0.9M

  ✗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)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

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

  ROE16.5%

  ✓Lynch> 15%

  EBIT / Enterprise Value1.8%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.8%, ROC=1.5%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets6.53%

  ✓PiotroskiROA > 0

  ROA Change YoY1.78% -> 6.53% (delta: +4.76%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=0.66%, ROA=6.53%

  ✗PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY53.1% -> 54.8%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue14.4%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity16.5%

  ✓Dreman> 12%

  Margin of SafetyP/E=55.9x, P/B=9.2x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-9.4% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency9/17 years positive

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

  Operating Income / Revenue1.2%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity16.5%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-47.0% (2023) -> 1.2% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 27.2% -> 54.8%, operating margin -47.0% -> 1.2%

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

  Net income / market capitalization+35.99%; #171/6340 (top 2.7%)

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

  Gross profit / total assets+24.93%; #1730/3702 (top 46.7%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+16.47%; #1030/5226 (top 19.7%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.2297; #4366/5884 (top 74.2%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years5/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Growth13% pass✓ 1✗ 12▾

  7 of 8 flag AMBO's growth — Graham, Lynch, Dreman +4 more

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

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

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

  Inventory Growth vs Revenue GrowthInv: new vs Rev: 0.8%

  ✗LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency9/17 years positive

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

  3yr Median Revenue Growth0.8%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency

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

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 27.2% -> 54.8%, operating margin -47.0% -> 1.2%

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

  5-year Revenue CAGR-12.5%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency13% pass✓ 2✗ 9▾

  7 of 8 flag AMBO's efficiency — Graham, Buffett, Greenblatt +4 more

  Current Ratio1.98

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)-53.6%

  ✗Buffett> 10%

  ROIC - WACC-63.6%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)1.5%

  ✗Greenblatt> 25%

  Current Ratio Change YoY1.70 -> 2.20

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.54x -> 0.46x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities1.98

  ✓Dreman> 1.5

  Return on Invested Capital0.8%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-44.6%; FY2024: ROIC=-6.0%; FY2025: ROIC=0.8%

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

  Reinvestment Rate x ROIC0.8% (RR=100% x ROIC=0.8%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 0.8%)

  ✗SleepROIC > 12% in a majority of years
• Verdicts13% pass✓ 2✗ 14▾

  Split decision: 13 FAIL · 2 PASS · 1 NEUTRAL

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (1/9)✗LynchFAIL (1/7)✗GreenblattRank #1748✓PiotroskiPASS (F-Score 5)✗DremanFAIL (4/11)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (1/5)✗AckmanFAIL (3/9)✓TempletonPASS (4/8)✗SleepFAIL (0/6)✗AsnessFAIL (Rank #1286/2370 (Top 54.3%))✗NeffFAIL (0/6)✗SchlossFAIL (2/7)•OshaughnessyNEUTRAL (Not ranked)
• Debt & Leverage50% pass✓ 8✗ 7▾

  6 of 12 pass — Buffett, Lynch, Piotroski +3 more object

  Debt Levels0.41

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

  LT Debt vs Net Current AssetsLT Debt $2.7M vs NCA $3.9M

  ✓GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.39, IC: 0.7x

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

  Total Debt / Equity0.41

  ✗Lynch< 0.33

  Cash - Long-term Debt$-0.3M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change0.00% -> 12.98%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.98

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

  Total Debt / Shareholders' Equity0.41

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

  Interest Coverage & Debt/EBITDAIC=0.7x, D/EBITDA=16.9x

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

  Total Debt / Shareholders Equity0.41

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.4076; #2267/4210 (top 53.8%)

  ✗AsnessTop 30% of eligible cross-section