CHEGG, INC

Where It Passes

Where It Falls Short

• Valuation0% pass✓ 9✗ 19▾

  No clean pass — all 13 investors flag at least one valuation criterion

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio0.5x

  ✓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 Value-135.0%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-135.0%, ROC=-180.6%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

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

  Price / (CFO / Shares)4.2x

  ✓Dreman< 8x

  Price / Book Value per Share0.5x

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

  Valuation ReasonablenessOE Yield=-81.6%

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

  P/E or FCF YieldFCF Yield=-19.8%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=0.5x

  ✓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 ($0.58)

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

  Net income / market capitalization-62.89%; #5174/6340 (top 81.6%)

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

  Positive book equity / market capitalization+1.8077; #748/6449 (top 11.6%)

  ✓AsnessTop 30% of eligible cross-section

  Price / Diluted EPS

  ✗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 Share0.57x

  ✓SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-77.3%

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

  Revenue / market capitalization+3.6631; #684/5247 (top 13.0%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization-0.81%; #2643/4519 (top 58.5%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-27.50%; #4302/6202 (top 69.4%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth0% pass✓ 2✗ 11▾

  No clean pass — all 8 investors flag at least one growth criterion

  EPS Growth (3-yr avg, 10-yr window)N/A (negative base EPS)

  ✗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 GrowthN/A (no inventory)

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction$-4.39 (2012) -> $-0.96 (2025)

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency2/14 years positive

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

  3yr Median Revenue Growth-13.8%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency3/5 years with positive EPS growth

  ✓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 68.5% -> 59.6%, operating margin -9.5% -> -31.0%

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

  5-year Revenue CAGR-10.2%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Profitability6% pass✓ 4✗ 31▾

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

  Positive EPS (10 years)1/15 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)N/A (negative base EPS)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)2/15 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-98.9%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)-31.0% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-52.9M

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)N/A (negative mean EPS)

  ✗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

  ROE-34.8%

  ✗Lynch> 15%

  EBIT / Enterprise Value-135.0%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-135.0%, ROC=-180.6%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-37.20%

  ✗PiotroskiROA > 0

  ROA Change YoY-96.33% -> -37.20% (delta: +59.13%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=5.57%, ROA=-37.20%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY70.7% -> 59.6%

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue-17.2%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity-34.8%

  ✗Dreman> 12%

  Margin of SafetyP/B=0.5x

  ✓PabraiP/B < 1.5 or P/E < 15

  Return on Equity-172.8% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency2/14 years positive

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

  Operating Income / Revenue-18.6%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity-34.8%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-9.5% (2023) -> -31.0% (2025)

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 68.5% -> 59.6%, operating margin -9.5% -> -31.0%

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

  Net income / market capitalization-62.89%; #5174/6340 (top 81.6%)

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

  Gross profit / total assets+70.24%; #336/3702 (top 9.1%)

  ✓AsnessTop 30% of eligible cross-section

  Net income / positive book equity-34.79%; #3987/5226 (top 76.3%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.3954; #4795/5884 (top 81.5%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years1/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts7% pass✓ 1✗ 14▾

  Split decision: 13 FAIL · 2 NEUTRAL · 1 PASS

  Overall verdict

  ✗GrahamFAIL (2/9)✗BuffettFAIL (0/9)✗LynchFAIL (2/7)✗GreenblattRank #2947•PiotroskiNEUTRAL (F-Score 6)✗DremanFAIL (3/11)✗MungerFAIL (1/4)✗PabraiFAIL (1/3)✗AkreFAIL (2/6)✗MarksFAIL (2/5)✗AckmanFAIL (3/9)✓TempletonPASS (4/8)✗SleepFAIL (1/6)✗AsnessFAIL (Rank #1371/2370 (Top 57.8%))✗NeffFAIL (0/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)
• Efficiency13% pass✓ 2✗ 9▾

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

  Current Ratio1.35

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)-54.4%

  ✗Buffett> 10%

  ROIC - WACC-64.4%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)-180.6%

  ✗Greenblatt> 25%

  Current Ratio Change YoY0.83 -> 0.86

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.71x -> 1.36x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities1.35

  ✗Dreman> 1.5

  Return on Invested Capital-29.8%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-4.1%; FY2024: ROIC=-105.6%; FY2025: ROIC=-53.2%

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

  Reinvestment Rate x ROICN/A (non-positive net income)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/4 years above 12% (latest -53.2%)

  ✗SleepROIC > 12% in a majority of years
• Cash Flow40% pass✓ 5✗ 7▾

  6 of 10 flag CHGG's cash flow — Buffett, Lynch, Pabrai +3 more

  Free Cash Flow Proxy$-52.9M

  ✗BuffettPositive and growing

  FCF Positive and Growing$-0.5M

  ✗LynchPositive and growing

  Operating Cash Flow$15.5M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=5.57%, ROA=-37.20%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)4.2x

  ✓Dreman< 8x

  P/E or FCF YieldFCF Yield=-19.8%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive11/14 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap-0.8%

  ✗Ackman>= 4%

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency13/14 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-0.81%; #2643/4519 (top 58.5%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Debt & Leverage50% pass✓ 9✗ 6▾

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

  LT Debt vs Net Current Assets

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.00, IC: -399.9x

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

  Total Debt / Equity0

  ✓Lynch< 0.33

  Cash - Long-term Debt

  ✗LynchPositive preferred

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

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.35

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

  Total Debt / Shareholders' Equity0

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

  Debt Levels0

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

  Interest Coverage & Debt/EBITDAIC=-521.7x, D/EBITDA=N/A

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

  Total Debt / Shareholders Equity0

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.0000; #1/4210 (top 0.0%)

  ✓AsnessTop 30% of eligible cross-section