KAISER ALUMINUM CORP

Where It Passes

Where It Falls Short

• Valuation8% pass✓ 5✗ 23▾

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

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio2.1x

  ✗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 Value12.9%

  ✓Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=12.9%, ROC=17.1%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS16.0x

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

  Price / (CFO / Shares)15.8x

  ✗Dreman< 8x

  Price / Book Value per Share2.1x

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

  Valuation ReasonablenessP/E=16.0x, OE Yield=5.6%

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

  P/E or FCF YieldP/E=16.0x, FCF Yield=-1.4%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=16.0x, P/B=2.1x

  ✗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 Low179% of trailing low ($60.62)

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

  Net income / market capitalization+12.32%; #484/6340 (top 7.6%)

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

  Positive book equity / market capitalization+0.5499; #2692/6449 (top 41.7%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS16.0x

  ✗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 Share2.30x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+10.0%

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

  Revenue / market capitalization+2.5407; #917/5247 (top 17.5%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+7.04%; #1158/4519 (top 25.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-23.95%; #4161/6202 (top 67.1%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Profitability13% pass✓ 16✗ 19▾

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

  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)4.9%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)5.6% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$112.5M

  ✓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

  ROE22.4%

  ✓Lynch> 15%

  EBIT / Enterprise Value12.9%

  ✓Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=12.9%, ROC=17.1%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets4.39%

  ✓PiotroskiROA > 0

  ROA Change YoY2.73% -> 4.39% (delta: +1.66%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=4.34%, ROA=4.39%

  ✗PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY11.8% -> 13.1%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue6.5%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity22.4%

  ✓Dreman> 12%

  Margin of SafetyP/E=16.0x, P/B=2.1x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity10.7% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency14/18 years positive

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

  Operating Income / Revenue7.7%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity22.4%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend4.0% (2023) -> 5.6% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 11.6% -> 13.1%, operating margin 4.0% -> 5.6%

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

  Net income / market capitalization+12.32%; #484/6340 (top 7.6%)

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

  Gross profit / total assets+17.25%; #2257/3702 (top 61.0%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+22.40%; #700/5226 (top 13.4%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0223; #1567/5884 (top 26.6%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years8/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Growth13% pass✓ 3✗ 10▾

  7 of 8 flag KALU'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: 20.7% vs Rev: 40.4%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency14/18 years positive

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

  3yr Median Revenue Growth-2.0%

  ✗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 11.6% -> 13.1%, operating margin 4.0% -> 5.6%

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

  5-year Revenue CAGR23.5%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Debt & Leverage17% pass✓ 4✗ 11▾

  10 of 12 flag KALU's debt & leverage — Graham, Buffett, Lynch +7 more

  LT Debt vs Net Current AssetsLT Debt $1.0B vs NCA $1.0B

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 1.07, IC: 6.1x

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

  Total Debt / Equity1.07

  ✗Lynch< 0.33

  Cash - Long-term Debt$-921.4M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change43.22% -> 41.31%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities2.63

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

  Total Debt / Shareholders' Equity1.07

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

  Debt Levels1.07

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

  Interest Coverage & Debt/EBITDAIC=6.1x, D/EBITDA=2.2x

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

  Total Debt / Shareholders Equity1.07

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-1.0681; #3290/4210 (top 78.1%)

  ✗AsnessTop 30% of eligible cross-section
• Valuation models20% pass✓ 1✗ 4▾

  Models split on KALU at $108.50 — fair values range $60.97–$171.52

  Graham fair value$88.11

  ✗Graham-23.1% margin vs $108.50

  Buffett fair value$171.52

  ✓Buffett+36.7% margin vs $108.50

  Greenblatt fair value$68.80

  ✗Greenblatt-57.7% margin vs $108.50

  Pabrai fair value$94.75

  ✗Pabrai-14.5% margin vs $108.50

  Akre fair value$60.97

  ✗Akre-78.0% margin vs $108.50
• Verdicts27% pass✓ 4✗ 11▾

  Split decision: 11 FAIL · 2 NEUTRAL · 2 PASS · 1 BUY

  Overall verdict

  ✗GrahamFAIL (3/9)✗BuffettFAIL (2/9)✗LynchFAIL (3/7)✓GreenblattRank #606•PiotroskiNEUTRAL (F-Score 7)✗DremanFAIL (3/11)✓MungerPASS (2/4)✗PabraiFAIL (0/3)✗AkreFAIL (2/6)✗MarksFAIL (3/5)✗AckmanFAIL (3/9)✗TempletonFAIL (3/8)✓SleepPASS (3/6)✓AsnessBUY (Rank #303/2370 (Top 12.8%))✗NeffFAIL (3/6)•SchlossNEUTRAL (4/7)✗OshaughnessyFAIL (Rank #528/963 (Top 54.8%))
• Efficiency38% pass✓ 5✗ 6▾

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

  Current Ratio2.63

  ✓Graham>= 2.0

  ROIC (3-5 yr avg)4.5%

  ✗Buffett> 10%

  ROIC - WACC-5.5%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)17.1%

  ✗Greenblatt> 25%

  Current Ratio Change YoY2.68 -> 2.95

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY1.25x -> 1.32x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities2.63

  ✓Dreman> 1.5

  Return on Invested Capital13.6%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=5.5%; FY2024: ROIC=5.0%; FY2025: ROIC=7.9%

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

  Reinvestment Rate x ROIC10.4% (RR=76% x ROIC=13.6%)

  ✓AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 7.9%)

  ✗SleepROIC > 12% in a majority of years
• Cash Flow50% pass✓ 7✗ 5▾

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

  Free Cash Flow Proxy$112.5M

  ✓BuffettPositive and growing

  FCF Positive and Growing$124.8M

  ✓LynchPositive and growing

  Operating Cash Flow$111.4M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=4.34%, ROA=4.39%

  ✗PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)15.8x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=16.0x, FCF Yield=-1.4%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive14/18 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap7.1%

  ✓Ackman>= 4%

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency17/18 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$124.8M

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

  (Operating cash flow - capex) / market capitalization+7.04%; #1158/4519 (top 25.6%)

  ✗OshaughnessyTop 10% of eligible cross-section