Cronos Group Inc.

Where It Passes

Where It Falls Short

• Valuation models0% pass✗ 2▾

  CRON overvalued: all 2 models price fair value below $3.38 (median $0.01)

  Munger fair value$0.01

  ✗Munger-33700.0% margin vs $3.38

  Ackman fair value$0.01

  ✗Ackman-33700.0% margin vs $3.38
• Profitability6% pass✓ 7✗ 28▾

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

  Net income / market capitalization+4.67%; #1788/6340 (top 28.2%)

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

  Positive EPS (10 years)2/11 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)2/11 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-9.6%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)-11.9% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-9.4M

  ✗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)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

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

  ROE5.4%

  ✗Lynch> 15%

  EBIT / Enterprise Value-3.9%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-3.9%, ROC=-7.0%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-0.79%

  ✗PiotroskiROA > 0

  ROA Change YoY3.52% -> -0.79% (delta: -4.31%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=2.16%, ROA=-0.79%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY21.4% -> 42.8%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue29.2%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity5.4%

  ✗Dreman> 12%

  Margin of SafetyP/B=1.2x

  ✓PabraiP/B < 1.5 or P/E < 15

  Return on Equity-1.2% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency2/10 years positive

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

  Operating Income / Revenue3.4%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity5.4%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-97.2% (2023) -> -11.9% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 13.7% -> 42.8%, operating margin -97.2% -> -11.9%

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

  Gross profit / total assets+8.02%; #2932/3702 (top 79.2%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+5.39%; #2414/5226 (top 46.2%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.1121; #3624/5884 (top 61.6%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR-49.4% over 5 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years2/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts7% pass✓ 1✗ 13▾

  Split decision: 12 FAIL · 3 NEUTRAL · 1 PASS

  Overall verdict

  ✗GrahamFAIL (3/9)✗BuffettFAIL (1/9)✗LynchFAIL (2/7)✗GreenblattRank #2009•PiotroskiNEUTRAL (F-Score 7)✗DremanFAIL (4/11)✗MungerFAIL (1/4)✗PabraiFAIL (1/3)✗AkreFAIL (1/6)✗MarksFAIL (1/5)✓AckmanPASS (4/9)✗TempletonFAIL (3/8)✗SleepFAIL (2/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (1/7)•OshaughnessyNEUTRAL (Not ranked)
• Debt & Leverage8% pass✓ 3✗ 12▾

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

  LT Debt vs Net Current Assets

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest Coverage

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

  Total Debt / Equity

  ✗Lynch< 0.33

  Cash - Long-term Debt

  ✗LynchPositive preferred

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

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities12.71

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

  Total Debt / Shareholders' Equity

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

  Debt Levels

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

  Interest Coverage & Debt/EBITDA

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

  Total Debt / Shareholders Equity

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)

  ✗AsnessTop 30% of eligible cross-section
• Valuation8% pass✓ 6✗ 22▾

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

  Price / Book Value per Share1.2x

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

  Net income / market capitalization+4.67%; #1788/6340 (top 28.2%)

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

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio1.2x

  ✓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 Value-3.9%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-3.9%, ROC=-7.0%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

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

  Price / (CFO / Shares)49.5x

  ✗Dreman< 8x

  Valuation ReasonablenessOE Yield=-1.6%

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

  P/E or FCF YieldFCF Yield=0.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=1.2x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share8598.6x

  ✗Ackman<= 25

  Price vs. Trailing Low187% of trailing low ($1.81)

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

  Positive book equity / market capitalization+0.8654; #1760/6449 (top 27.3%)

  ✓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 Share1.26x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-39.2%

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

  Revenue / market capitalization+0.1665; #3952/5247 (top 75.3%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+5.28%; #1534/4519 (top 33.9%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+31.01%; #997/6202 (top 16.1%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth13% pass✓ 4✗ 9▾

  7 of 8 flag CRON'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: 13.2% vs Rev: 55.8%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency2/10 years positive

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

  3yr Median Revenue Growth24.6%

  ✓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 13.7% -> 42.8%, operating margin -97.2% -> -11.9%

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

  5-year Revenue CAGR25.7%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR-49.4% over 5 years

  ✗Neff7%-20% annualized
• Cash Flow30% pass✓ 5✗ 7▾

  7 of 10 flag CRON's cash flow — Buffett, Dreman, Pabrai +4 more

  Free Cash Flow Proxy$-9.4M

  ✗BuffettPositive and growing

  FCF Positive and Growing$65.4M

  ✓LynchPositive and growing

  Operating Cash Flow$25.9M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=2.16%, ROA=-0.79%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)49.5x

  ✗Dreman< 8x

  P/E or FCF YieldFCF Yield=0.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive2/10 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap5.1%

  ✓Ackman>= 4%

  Price / FCF per Share8598.6x

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency2/10 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$65.4M

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

  (Operating cash flow - capex) / market capitalization+5.28%; #1534/4519 (top 33.9%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Efficiency38% pass✓ 4✗ 7▾

  5 of 8 flag CRON's efficiency — Buffett, Greenblatt, Munger +2 more

  Current Ratio12.71

  ✓Graham>= 2.0

  ROIC (3-5 yr avg)-13.0%

  ✗Buffett> 10%

  ROIC - WACC-23.0%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)-7.0%

  ✗Greenblatt> 25%

  Current Ratio Change YoY18.84 -> 19.59

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.10x -> 0.12x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities12.71

  ✓Dreman> 1.5

  Return on Invested Capital

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=unavailable; FY2024: ROIC=unavailable; FY2025: ROIC=unavailable

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

  Reinvestment Rate x ROIC

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)

  ✗SleepROIC > 12% in a majority of years