DIRTT ENVIRONMENTAL SOLUTIONS LTD

Where It Passes

Where It Falls Short

• Profitability0% pass✓ 8✗ 27▾

  No clean pass — all 16 investors flag at least one profitability criterion

  Net income / market capitalization+9.55%; #715/6340 (top 11.3%)

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

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

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-121.2%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)-6.7% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-9.9M

  ✗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

  ROE26.6%

  ✓Lynch> 15%

  EBIT / Enterprise Value-0.4%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-0.4%, ROC=-2.3%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-14.10%

  ✗PiotroskiROA > 0

  ROA Change YoY12.49% -> -14.10% (delta: -26.59%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=-0.19%, ROA=-14.10%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY36.9% -> 32.8%

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue-0.9%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity26.6%

  ✓Dreman> 12%

  Margin of SafetyP/B=4.0x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-73.8% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency2/9 years positive

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

  Operating Income / Revenue-0.3%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity26.6%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-9.1% (2023) -> -6.7% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 32.7% -> 32.8%, operating margin -9.1% -> -6.7%

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

  Gross profit / total assets+56.23%; #537/3702 (top 14.5%)

  ✓AsnessTop 30% of eligible cross-section

  Net income / positive book equity+26.58%; #546/5226 (top 10.4%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.1702; #4058/5884 (top 69.0%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years2/9 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Valuation0% pass✓ 2✗ 26▾

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

  Net income / market capitalization+9.55%; #715/6340 (top 11.3%)

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

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio4.0x

  ✗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-0.4%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-0.4%, ROC=-2.3%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

  ✗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 Share4.0x

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

  Valuation ReasonablenessOE Yield=-8.6%

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

  P/E or FCF YieldFCF Yield=-1.5%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=4.0x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Price vs. Trailing Low112% of trailing low ($0.54)

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

  Positive book equity / market capitalization+0.3595; #3432/6449 (top 53.2%)

  ✗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 Share4.02x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

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

  Revenue / market capitalization+1.5210; #1317/5247 (top 25.1%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization-0.63%; #2621/4519 (top 58.0%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+0.50%; #2640/6202 (top 42.6%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth0% pass✓ 1✗ 12▾

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

  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: -13.9% vs Rev: 6.9%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency2/9 years positive

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

  3yr Median Revenue Growth-3.1%

  ✗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 32.7% -> 32.8%, operating margin -9.1% -> -6.7%

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

  5-year Revenue CAGR-0.3%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency0% pass✓ 1✗ 10▾

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

  Current Ratio1.38

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)-36.0%

  ✗Buffett> 10%

  ROIC - WACC-46.0%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)-2.3%

  ✗Greenblatt> 25%

  Current Ratio Change YoY2.27 -> 1.10

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY1.47x -> 1.65x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities1.38

  ✗Dreman> 1.5

  Return on Invested Capital-0.7%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-20.7%; FY2024: ROIC=5.1%; FY2025: ROIC=-17.2%

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

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

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest -17.2%)

  ✗SleepROIC > 12% in a majority of years
• Valuation models0% pass✗ 2▾

  DRTTF overvalued: all 2 models price fair value below $0.60 (median $0.33)

  Munger fair value$0.25

  ✗Munger-139.2% margin vs $0.60

  Pabrai fair value$0.40

  ✗Pabrai-49.5% margin vs $0.60
• Verdicts6% pass✓ 1✗ 15▾

  Split decision: 14 FAIL · 1 PASS · 1 NEUTRAL

  Overall verdict

  ✗GrahamFAIL (2/9)✗BuffettFAIL (0/9)✗LynchFAIL (3/7)✗GreenblattRank #1859✗PiotroskiFAIL (F-Score 3)✗DremanFAIL (2/11)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (1/5)✗AckmanFAIL (3/9)✓TempletonPASS (4/8)✗SleepFAIL (1/6)✗AsnessFAIL (Rank #802/2370 (Top 33.8%))✗NeffFAIL (0/6)✗SchlossFAIL (1/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow10% pass✓ 2✗ 10▾

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

  Free Cash Flow Proxy$-9.9M

  ✗BuffettPositive and growing

  FCF Positive and Growing$-0.7M

  ✗LynchPositive and growing

  Operating Cash Flow$-0.2M

  ✗PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=-0.19%, ROA=-14.10%

  ✓PiotroskiCFO/Assets > ROA

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

  ✗Dreman< 8x

  P/E or FCF YieldFCF Yield=-1.5%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive5/9 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 frequency6/9 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$-0.7M

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

  (Operating cash flow - capex) / market capitalization-0.63%; #2621/4519 (top 58.0%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Debt & Leverage42% pass✓ 8✗ 7▾

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

  Debt Levels0.49

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

  LT Debt vs Net Current AssetsLT Debt $8.0M vs NCA $17.0M

  ✓GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.49, IC: -0.3x

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

  Total Debt / Equity0.49

  ✗Lynch< 0.33

  Cash - Long-term Debt$11.3M

  ✓LynchPositive preferred

  LT Debt / Total Assets Change18.60% -> 0.21%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.38

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

  Total Debt / Shareholders' Equity0.49

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

  Interest Coverage & Debt/EBITDAIC=-0.3x, D/EBITDA=3.9x

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

  Total Debt / Shareholders Equity0.49

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.4891; #2443/4210 (top 58.0%)

  ✗AsnessTop 30% of eligible cross-section