Frequency Holdings, Inc

Where It Passes

Where It Falls Short

• Debt & Leverage0% pass✗ 15▾

  All 12 investors flag FRQND's debt & leverage

  LT Debt vs Net Current AssetsLT Debt $1.8M vs NCA $-13.0M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: N/A (negative equity), IC: -3.2x

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

  Total Debt / EquityN/A (negative equity)

  ✗Lynch< 0.33

  Cash - Long-term Debt$-1.5M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change0.00% -> 333.61%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.02

  ✗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 LevelsN/A (non-positive equity)

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

  Interest Coverage & Debt/EBITDAIC=-3.2x, D/EBITDA=N/A (D&A unavailable)

  ✗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
• Verdicts8% pass✓ 1✗ 12▾

  Split decision: 12 FAIL · 3 NEUTRAL · 1 PASS

  Overall verdict

  ✗GrahamFAIL (0/9)✗BuffettFAIL (1/9)✗LynchFAIL (1/7)•GreenblattNot ranked✓PiotroskiPASS (F-Score 5)✗DremanFAIL (2/11)✗MungerFAIL (1/4)•PabraiNEUTRAL (2/3)✗AkreFAIL (0/6)✗MarksFAIL (1/5)✗AckmanFAIL (2/9)✗TempletonFAIL (2/8)✗SleepFAIL (1/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (0/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow10% pass✓ 1✗ 11▾

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

  Free Cash Flow Proxy

  ✗BuffettPositive and growing

  FCF Positive and Growing$-0.8M

  ✗LynchPositive and growing

  Operating Cash Flow$-0.9M

  ✗PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=-171.99%, ROA=814.58%

  ✗PiotroskiCFO/Assets > ROA

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

  ✗Dreman< 8x

  P/E or FCF YieldP/E=2.0x

  ✓PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive0/1 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 frequency0/7 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
• Profitability13% pass✓ 8✗ 27▾

  14 of 16 flag FRQND's profitability — Graham, Buffett, Lynch +11 more

  Positive EPS (10 years)1/9 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)1/9 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-18.4%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)-117.6% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy

  ✗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)P/E 2.0x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

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

  ROEN/A (negative equity)

  ✗Lynch> 15%

  EBIT / Enterprise Value-56.0%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-56.0%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets814.58%

  ✓PiotroskiROA > 0

  ROA Change YoY-441.05% -> 814.58% (delta: +1255.63%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=-171.99%, ROA=814.58%

  ✗PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY32.1% -> 61.8%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity

  ✗Dreman> 12%

  Margin of SafetyP/E=2.0x

  ✓PabraiP/B < 1.5 or P/E < 15

  Return on Equity-18.4% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency1/7 years positive

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

  Operating Income / Revenue-344.2%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trend

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

  Net income / market capitalization+145.18%; #81/6340 (top 1.3%)

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

  Gross profit / total assets+1353.00%; #4/3702 (top 0.1%)

  ✓AsnessTop 30% of eligible cross-section

  Net income / positive book equity

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-4.7064; #5622/5884 (top 95.5%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years1/6 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Growth13% pass✓ 4✗ 9▾

  7 of 8 flag FRQND's growth — Graham, Lynch, Dreman +4 more

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

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)P/E 2.0x (growth N/A)

  ✗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$-0.01 (2015) -> $0.01 (2024)

  ✓DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency1/7 years positive

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

  3yr Median Revenue Growth1617.7%

  ✓Ackman>= 5%

  Positive EPS Growth Frequency3/4 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 trend

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

  5-year Revenue CAGR

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency13% pass✓ 2✗ 9▾

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

  Current Ratio0.02

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)

  ✗Buffett> 10%

  ROIC - WACC

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)N/A (invested capital <= 0)

  ✗Greenblatt> 25%

  Current Ratio Change YoY0.04 -> 0.04

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.73x -> 8.92x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities0.02

  ✗Dreman> 1.5

  Return on Invested CapitalN/A (non-positive invested capital)

  ✗Munger> 15%

  ROIC (high and growing)FY2022: ROIC=unavailable; FY2023: ROIC=unavailable; FY2024: 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
• Valuation15% pass✓ 8✗ 20▾

  11 of 13 flag FRQND's valuation — Graham, Lynch, Greenblatt +8 more

  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)P/E 2.0x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value-56.0%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-56.0%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS2.0x

  ✓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 ShareN/A (negative BVPS)

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

  Valuation ReasonablenessP/E=2.0x

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

  P/E or FCF YieldP/E=2.0x

  ✓PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=2.0x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low400% of trailing low ($0.00)

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

  Net income / market capitalization+145.18%; #81/6340 (top 1.3%)

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

  Positive book equity / market capitalization-0.7764; #6004/6449 (top 93.1%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS2.0x

  ✓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 ShareN/A (non-positive TBVPS)

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

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

  Revenue / market capitalization+0.2534; #3541/5247 (top 67.5%)

  ✗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-60.00%; #5401/6202 (top 87.1%)

  ✗OshaughnessyTop 10% of eligible cross-section