Carlyle Group Inc.

Where It Passes

Where It Falls Short

• Valuation8% pass✓ 4✗ 24▾

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

  Price / 3-yr avg EPS36.5x

  ✗Graham<= 15x

  Price-to-Book Ratio2.0x

  ✗Graham<= 1.5x

  P/E x P/B74.30

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)1.04

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value6.9%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.9%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS18.2x

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

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  Price / Book Value per Share2.0x

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

  Valuation ReasonablenessP/E=18.2x, OE Yield=6.3%

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

  P/E or FCF YieldP/E=18.2x, FCF Yield=-24.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=18.2x, P/B=2.0x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-143.2% (IV=$16.35 vs Price=$39.77)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Price vs. Trailing Low103% of trailing low ($38.64)

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

  Net income / market capitalization+2.52%; #2540/6340 (top 40.1%)

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

  Positive book equity / market capitalization+0.4687; #3005/6449 (top 46.6%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS18.2x

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

  (EPS CAGR % + Dividend Yield %) / P/E1.16

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

  Price / Tangible Book Value per Share2.19x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+136.2%

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

  Revenue / market capitalization+0.2567; #3525/5247 (top 67.2%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization-15.68%; #3416/4519 (top 75.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-12.46%; #3567/6202 (top 57.5%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Cash Flow10% pass✓ 1✗ 11▾

  9 of 10 flag CG's cash flow — Buffett, Lynch, Piotroski +6 more

  Free Cash Flow Proxy$901.4M

  ✗BuffettPositive and growing

  FCF Positive and Growing$-2.2B

  ✗LynchPositive and growing

  Operating Cash Flow$-3.3B

  ✗PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=-11.25%, ROA=2.78%

  ✗PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  P/E or FCF YieldP/E=18.2x, FCF Yield=-24.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive9/16 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap-15.4%

  ✗Ackman>= 4%

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency9/16 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$-2.2B

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

  (Operating cash flow - capex) / market capitalization-15.68%; #3416/4519 (top 75.6%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Valuation models13% pass✓ 1✗ 7▾

  Models split on CG at $39.77 — fair values range $13.15–$44.46

  Graham fair value$30.96

  ✗Graham-28.5% margin vs $39.77

  Buffett fair value$29.49

  ✗Buffett-34.9% margin vs $39.77

  Lynch fair value$38.33

  ✗Lynch-3.8% margin vs $39.77

  Greenblatt fair value$13.15

  ✗Greenblatt-202.4% margin vs $39.77

  Dreman fair value$16.35

  ✗Dreman-143.2% margin vs $39.77

  Pabrai fair value$14.63

  ✗Pabrai-171.8% margin vs $39.77

  Akre fair value$28.96

  ✗Akre-37.3% margin vs $39.77

  Templeton fair value$44.46

  ✓Templeton+10.5% margin vs $39.77
• Profitability25% pass✓ 12✗ 23▾

  12 of 16 flag CG's profitability — Graham, Buffett, Lynch +9 more

  Positive EPS (10 years)11/17 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)14/17 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)17.4%

  ✓Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)21.8% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$901.4M

  ✗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)1.04

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR17.6%

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

  ROE5.4%

  ✗Lynch> 15%

  EBIT / Enterprise Value6.9%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.9%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets2.78%

  ✓PiotroskiROA > 0

  ROA Change YoY4.42% -> 2.78% (delta: -1.64%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=-11.25%, ROA=2.78%

  ✗PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue13.3%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity5.4%

  ✗Dreman> 12%

  Margin of SafetyP/E=18.2x, P/B=2.0x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity5.7% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-143.2% (IV=$16.35 vs Price=$39.77)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency14/16 years positive

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

  Operating Income / Revenue21.8%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity5.4%

  ✗Ackman>= 15%

  5-Year EPS CAGR17.6% CAGR over 5 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-20.5% (2023) -> 21.8% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin -20.5% -> 21.8%

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

  Net income / market capitalization+2.52%; #2540/6340 (top 40.1%)

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

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+5.39%; #2417/5226 (top 46.2%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0545; #2682/5884 (top 45.6%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR17.6% over 5 years

  ✓Neff7%-20% annualized

  Positive Diluted-EPS Years8/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Efficiency25% pass✓ 3✗ 8▾

  6 of 8 flag CG's efficiency — Graham, Greenblatt, Piotroski +3 more

  Current Ratio

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)18.9%

  ✓Buffett> 10%

  ROIC - WACC+8.9%

  ✓BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)

  ✗Greenblatt> 25%

  Current Ratio Change YoY

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.23x -> 0.16x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities

  ✗Dreman> 1.5

  Return on Invested Capital8.2%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-6.0%; FY2024: ROIC=12.7%; FY2025: ROIC=8.2%

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

  Reinvestment Rate x ROIC3.1% (RR=38% x ROIC=8.2%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)3/5 years above 12% (latest 8.2%)

  ✓SleepROIC > 12% in a majority of years
• Verdicts27% pass✓ 3✗ 8▾

  Split decision: 8 FAIL · 5 NEUTRAL · 2 PASS · 1 BUY

  Overall verdict

  ✗GrahamFAIL (1/9)✓BuffettPASS (4/9)✗LynchFAIL (2/7)•GreenblattNot ranked✗PiotroskiFAIL (F-Score 3)✗DremanFAIL (4/11)•MungerNEUTRAL (3/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (3/5)✓AckmanPASS (4/9)•TempletonNEUTRAL (6/8)✓SleepBUY (5/6)•AsnessNEUTRAL (Not ranked)•NeffNEUTRAL (4/6)•SchlossNEUTRAL (4/7)✗OshaughnessyFAIL (Rank #804/963 (Top 83.5%))
• Debt & Leverage42% pass✓ 7✗ 8▾

  7 of 12 flag CG's debt & leverage — Graham, Buffett, Lynch +4 more

  Debt Levels0.46

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

  LT Debt vs Net Current Assets

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.46, IC: 4.1x

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

  Total Debt / Equity0.46

  ✗Lynch< 0.33

  Cash - Long-term Debt

  ✗LynchPositive preferred

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

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities

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

  Total Debt / Shareholders' Equity0.46

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

  Interest Coverage & Debt/EBITDAIC=4.1x, D/EBITDA=3.6x

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

  Total Debt / Shareholders Equity0.46

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.4573; #2382/4210 (top 56.6%)

  ✗AsnessTop 30% of eligible cross-section
• Growth50% pass✓ 7✗ 6▾

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

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

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)1.04

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR17.6%

  ✓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 Frequency14/16 years positive

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

  3yr Median Revenue Growth-11.9%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency2/5 years with positive EPS growth

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

  5-Year EPS CAGR17.6% CAGR over 5 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin -20.5% -> 21.8%

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

  5-year Revenue CAGR10.2%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR17.6% over 5 years

  ✓Neff7%-20% annualized