ERIE INDEMNITY CO

Where It Passes

Where It Falls Short

• Valuation0% pass✗ 26▾

  All 12 investors flag ERIE's valuation

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio

  ✗Graham<= 1.5x

  P/E x P/B

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  Price / EPS

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

  Price / (CFO / Shares)

  ✗Dreman< 8x

  Price / Book Value per Share

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

  Valuation Reasonableness

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

  P/E or FCF YieldFCF Yield=4.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical Average

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low125% of trailing low ($218.93)

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

  Net income / market capitalization+4.01%; #2009/6340 (top 31.7%)

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

  Positive book equity / market capitalization+0.1777; #4304/6449 (top 66.7%)

  ✗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 Share

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

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

  Revenue / market capitalization+0.2870; #3378/5247 (top 64.4%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+3.86%; #1829/4519 (top 40.5%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+8.26%; #1951/6202 (top 31.5%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Debt & Leverage9% pass✓ 1✗ 12▾

  10 of 11 flag ERIE's debt & leverage — Buffett, Lynch, Dreman +7 more

  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

  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

  Current Assets / Current Liabilities1.31x

  ✗SchlossCurrent ratio >= 1.50x (app cutoff)
• Growth25% pass✓ 4✗ 8▾

  6 of 8 flag ERIE's growth — Graham, Lynch, Dreman +3 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

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency21/21 years positive

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

  3yr Median Revenue Growth15.1%

  ✓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 trendrevenue up, operating margin 15.9% -> 17.6%

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

  5-year Revenue CAGR9.9%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency25% pass✓ 1✗ 4▾

  3 of 4 flag ERIE's efficiency — Piotroski, Munger and Akre

  Revenue / Total Assets Change YoY1.31x -> 1.21x

  ✗PiotroskiImproved YoY

  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)2/2 years above 12% (latest 20.5%)

  ✓SleepROIC > 12% in a majority of years
• Profitability27% pass✓ 15✗ 17▾

  11 of 15 flag ERIE's profitability — Graham, Buffett, Lynch +8 more

  Positive EPS (10 years)3/21 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)21/21 years positive

  ✓BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)24.9%

  ✓Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)17.6% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$559.3M

  ✓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

  ROE22.6%

  ✓Lynch> 15%

  Net Income / Total Assets16.67%

  ✓PiotroskiROA > 0

  ROA Change YoY20.78% -> 16.67% (delta: -4.11%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=20.46%, ROA=16.67%

  ✓PiotroskiCFO/Assets > ROA

  Pre-Tax Income / Revenue17.8%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity22.6%

  ✓Dreman> 12%

  Margin of Safety

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity27.2% (3-yr avg)

  ✓AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency21/21 years positive

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

  Operating Income / Revenue17.9%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity22.6%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend15.9% (2023) -> 17.6% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 15.9% -> 17.6%

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

  Net income / market capitalization+4.01%; #2009/6340 (top 31.7%)

  ✗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+22.57%; #690/5226 (top 13.2%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0287; #1851/5884 (top 31.5%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts29% pass✓ 4✗ 10▾

  Split decision: 10 FAIL · 3 PASS · 2 NEUTRAL · 1 BUY

  Overall verdict

  ✗GrahamFAIL (2/7)✓BuffettPASS (3/7)✗LynchFAIL (1/6)✓PiotroskiPASS (F-Score 4)✗DremanFAIL (3/10)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (2/6)✗MarksFAIL (2/5)✓AckmanPASS (4/9)✗TempletonFAIL (3/8)✓SleepBUY (5/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (1/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow50% pass✓ 6✗ 6▾

  5 of 10 pass — Lynch, Dreman, Pabrai +2 more object

  Free Cash Flow Proxy$559.3M

  ✓BuffettPositive and growing

  FCF Positive and Growing$554.0M

  ✗LynchPositive and growing

  Operating Cash Flow$686.7M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=20.46%, ROA=16.67%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)

  ✗Dreman< 8x

  P/E or FCF YieldFCF Yield=4.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive10/10 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap

  ✗Ackman>= 4%

  Price / FCF per Share

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency21/21 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$554.0M

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

  (Operating cash flow - capex) / market capitalization+3.86%; #1829/4519 (top 40.5%)

  ✗OshaughnessyTop 10% of eligible cross-section