Chatham Lodging Trust

Where It Passes

Where It Falls Short

• Efficiency0% pass✗ 11▾

  All 8 investors flag CLDT's efficiency

  Current Ratio

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)1.7%

  ✗Buffett> 10%

  ROIC - WACC-8.3%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)

  ✗Greenblatt> 25%

  Current Ratio Change YoY

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.25x -> 0.25x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities

  ✗Dreman> 1.5

  Return on Invested Capital3.0%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=1.8%; FY2024: ROIC=2.3%; FY2025: ROIC=3.0%

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

  Reinvestment Rate x ROIC0.0% (RR=0% x ROIC=3.0%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 3.0%)

  ✗SleepROIC > 12% in a majority of years
• Valuation models0% pass✗ 4▾

  CLDT overvalued: all 4 models price fair value below $16.26 (median $7.89)

  Graham fair value$7.03

  ✗Graham-131.4% margin vs $16.26

  Greenblatt fair value$5.72

  ✗Greenblatt-184.1% margin vs $16.26

  Pabrai fair value$8.75

  ✗Pabrai-85.8% margin vs $16.26

  Akre fair value$10.66

  ✗Akre-52.5% margin vs $16.26
• Profitability6% pass✓ 7✗ 28▾

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

  Positive EPS (10 years)9/17 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)11/17 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)13.9% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy

  ✗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

  ROE2.2%

  ✗Lynch> 15%

  EBIT / Enterprise Value3.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=3.7%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets1.29%

  ✓PiotroskiROA > 0

  ROA Change YoY0.33% -> 1.29% (delta: +0.95%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=5.47%, ROA=1.29%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue5.2%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity2.2%

  ✗Dreman> 12%

  Margin of SafetyP/FFO=12.7x

  ✓PabraiP/FFO < 15

  Return on Equity1.0% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency11/16 years positive

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

  Operating Income / Revenue13.4%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity2.2%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend9.2% (2023) -> 13.9% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue flat/down, operating margin 9.2% -> 13.9%

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

  Net income / market capitalization+1.98%; #2740/6340 (top 43.2%)

  ✗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+2.18%; #2745/5226 (top 52.5%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0086; #740/5884 (top 12.6%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years6/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Growth13% pass✓ 3✗ 10▾

  7 of 8 flag CLDT'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 GrowthN/A (no inventory)

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency11/16 years positive

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

  3yr Median Revenue Growth2.0%

  ✗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 trendrevenue flat/down, operating margin 9.2% -> 13.9%

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

  5-year Revenue CAGR15.3%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Debt & Leverage25% pass✓ 5✗ 10▾

  9 of 12 flag CLDT's debt & leverage — Graham, Buffett, Lynch +6 more

  LT Debt vs Net Current Assets

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.56, IC: 1.6x

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

  Total Debt / Equity0.56

  ✗Lynch< 0.33

  Cash - Long-term Debt$-390.5M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change32.43% -> 28.96%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities

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

  Total Debt / Shareholders' Equity0.56

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

  Debt Levels0.56

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

  Interest Coverage & Debt/EBITDAIC=1.6x, D/EBITDA=3.9x

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

  Total Debt / Shareholders Equity0.56

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.5600; #2585/4210 (top 61.4%)

  ✗AsnessTop 30% of eligible cross-section
• Valuation31% pass✓ 8✗ 17▾

  9 of 13 flag CLDT's valuation — Lynch, Greenblatt, Dreman +6 more

  Price / FFO per Share12.7x

  ✓Graham<= 15x✗Dreman< 12x✓Ackman<= 25

  Price / Book Value per Share1.0x

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

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value3.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=3.7%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / (CFO / Shares)12.0x

  ✗Dreman< 8x

  Valuation ReasonablenessP/E=116.1x, OE Yield=9.7%

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

  P/FFO or FFO YieldP/FFO=12.7x, FFO Yield=7.6%

  ✓PabraiP/FFO < 15 or FFO Yield > 10%

  P/B or P/E vs. Historical AverageP/E=116.1x, P/B=1.0x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Price / EPS116.1x

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

  Price vs. Trailing Low254% of trailing low ($6.40)

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

  Net income / market capitalization+1.98%; #2740/6340 (top 43.2%)

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

  Positive book equity / market capitalization+0.9071; #1666/6449 (top 25.8%)

  ✓AsnessTop 30% of eligible cross-section

  Price / Diluted EPS116.1x

  ✗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 Share1.04x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+8.7%

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

  Revenue / market capitalization+0.3943; #2940/5247 (top 56.0%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+49.86%; #655/6202 (top 10.6%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Cash Flow33% pass✓ 3✗ 4▾

  4 of 6 flag CLDT's cash flow — Buffett, Dreman, Neff +1 more

  Free Cash Flow Proxy

  ✗BuffettPositive and growing

  Operating Cash Flow$64.1M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=5.47%, ROA=1.29%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)12.0x

  ✗Dreman< 8x

  Positive Operating Cash Flow frequency15/16 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures

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

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section
• Verdicts36% pass✓ 4✗ 7▾

  Split decision: 7 FAIL · 5 NEUTRAL · 4 PASS

  Overall verdict

  ✓GrahamPASS (3/7)✗BuffettFAIL (0/9)✗LynchFAIL (2/7)•GreenblattNot ranked•PiotroskiNEUTRAL (F-Score 6)✗DremanFAIL (1/10)✓MungerPASS (2/4)•PabraiNEUTRAL (2/3)✗AkreFAIL (0/6)✗MarksFAIL (3/5)✓AckmanPASS (4/9)•TempletonNEUTRAL (5/8)✓SleepPASS (3/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)