H World Group Ltd

Where It Passes

Where It Falls Short

• Valuation0% pass✓ 1✗ 27▾

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

  Net income / market capitalization+4.57%; #1819/6340 (top 28.7%)

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

  Price / 3-yr avg EPS282.0x

  ✗Graham<= 15x

  Price-to-Book Ratio84.2x

  ✗Graham<= 1.5x

  P/E x P/B23,741.7

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value6.4%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.4%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS220.3x

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

  Price / (CFO / Shares)128.7x

  ✗Dreman< 8x

  Price / Book Value per Share84.2x

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

  Valuation ReasonablenessP/E=220.3x, OE Yield=0.6%

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

  P/E or FCF YieldP/E=220.3x

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=220.3x, P/B=84.2x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-1779.8% (IV=$2.68 vs Price=$50.39)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low161% of trailing low ($31.22)

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

  Positive book equity / market capitalization+0.1152; #4664/6449 (top 72.3%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS220.3x

  ✗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 Share459.15x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

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

  Revenue / market capitalization+0.2276; #3650/5247 (top 69.6%)

  ✗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+12.25%; #1738/6202 (top 28.0%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Valuation models0% pass✗ 5▾

  HTHT overvalued: all 5 models price fair value below $50.39 (median $2.02)

  Graham fair value$1.75

  ✗Graham-2779.4% margin vs $50.39

  Greenblatt fair value$2.02

  ✗Greenblatt-2394.6% margin vs $50.39

  Dreman fair value$2.68

  ✗Dreman-1780.2% margin vs $50.39

  Pabrai fair value$4.33

  ✗Pabrai-1063.7% margin vs $50.39

  Akre fair value$1.38

  ✗Akre-3551.4% margin vs $50.39
• Growth25% pass✓ 5✗ 8▾

  6 of 8 flag HTHT'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

  Inventory Growth vs Revenue GrowthInv: -0.9% vs Rev: 10.5%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency14/17 years positive

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

  3yr Median Revenue Growth10.5%

  ✓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 21.5% -> 26.9%

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

  5-year Revenue CAGR18.3%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Cash Flow30% pass✓ 4✗ 8▾

  7 of 10 flag HTHT's cash flow — Lynch, Dreman, Pabrai +4 more

  Free Cash Flow Proxy$28.1M

  ✓BuffettPositive and growing

  FCF Positive and Growing$-45.3M

  ✗LynchPositive and growing

  Operating Cash Flow$1.2B

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=12.94%, ROA=7.84%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)128.7x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=220.3x

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive2/4 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 frequency17/17 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
• Profitability31% pass✓ 17✗ 18▾

  11 of 16 flag HTHT's profitability — Graham, Buffett, Lynch +8 more

  Net income / market capitalization+4.57%; #1819/6340 (top 28.7%)

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

  Positive EPS (10 years)14/18 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)14/18 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)14.7%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)26.9% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$28.1M

  ✓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

  ROE39.7%

  ✓Lynch> 15%

  EBIT / Enterprise Value6.4%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.4%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets7.84%

  ✓PiotroskiROA > 0

  ROA Change YoY4.87% -> 7.84% (delta: +2.97%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=12.94%, ROA=7.84%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue28.9%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity39.7%

  ✓Dreman> 12%

  Margin of SafetyP/E=220.3x, P/B=84.2x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity32.8% (3-yr avg)

  ✓AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-1779.8% (IV=$2.68 vs Price=$50.39)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency14/17 years positive

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

  Operating Income / Revenue26.9%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity39.7%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend21.5% (2023) -> 26.9% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 21.5% -> 26.9%

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

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+39.68%; #291/5226 (top 5.6%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0420; #2348/5884 (top 39.9%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years7/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts36% pass✓ 4✗ 7▾

  Split decision: 7 FAIL · 5 NEUTRAL · 3 PASS · 1 BUY

  Overall verdict

  ✗GrahamFAIL (1/9)✓BuffettPASS (5/9)✗LynchFAIL (3/7)•GreenblattNot ranked•PiotroskiNEUTRAL (F-Score 7)✓DremanPASS (5/11)•MungerNEUTRAL (3/4)✗PabraiFAIL (1/3)✓AkrePASS (3/6)✗MarksFAIL (2/5)•AckmanNEUTRAL (6/9)✗TempletonFAIL (3/8)✓SleepBUY (5/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)
• Efficiency38% pass✓ 6✗ 5▾

  5 of 8 flag HTHT's efficiency — Graham, Greenblatt, Piotroski +2 more

  Current Ratio0.91

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)28.1%

  ✓Buffett> 10%

  ROIC - WACC+18.1%

  ✓BuffettPositive (WACC = 10%)

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

  ✗Greenblatt> 25%

  Current Ratio Change YoY0.99 -> 0.91

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.38x -> 0.39x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities0.91

  ✗Dreman> 1.5

  Return on Invested Capital28.9%

  ✓Munger> 15%

  ROIC (high and growing)FY2023: ROIC=21.3%; FY2024: ROIC=23.3%; FY2025: ROIC=28.9%

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

  Reinvestment Rate x ROIC6.7% (RR=23% x ROIC=28.9%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)3/5 years above 12% (latest 28.9%)

  ✓SleepROIC > 12% in a majority of years
• Debt & Leverage50% pass✓ 9✗ 6▾

  6 of 12 pass — Graham, Lynch, Dreman +3 more object

  Debt Levels0.45

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

  LT Debt vs Net Current AssetsLT Debt $68.5M vs NCA $-241.8M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.45, IC: 40.3x

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

  Total Debt / Equity0.45

  ✗Lynch< 0.33

  Cash - Long-term Debt$1.4B

  ✓LynchPositive preferred

  LT Debt / Total Assets Change7.27% -> 0.74%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.91

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

  Total Debt / Shareholders' Equity0.45

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

  Interest Coverage & Debt/EBITDAIC=40.3x, D/EBITDA=0.7x

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

  Total Debt / Shareholders Equity0.45

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.4542; #2375/4210 (top 56.4%)

  ✗AsnessTop 30% of eligible cross-section