Mistras Group, Inc.

Where It Passes

Where It Falls Short

• Valuation models0% pass✗ 10▾

  MG overvalued: all 10 models price fair value below $20.20 (median $6.30)

  Graham fair value$9.42

  ✗Graham-114.4% margin vs $20.20

  Buffett fair value$6.06

  ✗Buffett-233.3% margin vs $20.20

  Lynch fair value$13.25

  ✗Lynch-52.5% margin vs $20.20

  Greenblatt fair value$6.54

  ✗Greenblatt-208.9% margin vs $20.20

  Dreman fair value$2.75

  ✗Dreman-634.5% margin vs $20.20

  Munger fair value$2.93

  ✗Munger-589.4% margin vs $20.20

  Pabrai fair value$7.16

  ✗Pabrai-182.1% margin vs $20.20

  Akre fair value$7.38

  ✗Akre-173.7% margin vs $20.20

  Ackman fair value$3.77

  ✗Ackman-435.8% margin vs $20.20

  Templeton fair value$2.67

  ✗Templeton-656.6% margin vs $20.20
• Profitability6% pass✓ 9✗ 26▾

  15 of 16 flag MG's profitability — Graham, Buffett, Lynch +12 more

  Positive EPS (10 years)8/18 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)2.5%

  ✗Buffett> 15% arithmetic mean (app rule)

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

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$23.2M

  ✗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)0.91

  ✓Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR42.1%

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

  ROE8.4%

  ✗Lynch> 15%

  EBIT / Enterprise Value5.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=5.7%, ROC=23.1%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets2.91%

  ✓PiotroskiROA > 0

  ROA Change YoY3.62% -> 2.91% (delta: -0.72%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=5.70%, ROA=2.91%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY26.3% -> 28.2%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue3.9%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity8.4%

  ✗Dreman> 12%

  Margin of SafetyP/E=38.1x, P/B=2.7x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity2.5% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-634.5% (IV=$2.75 vs Price=$20.20)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency14/17 years positive

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

  Operating Income / Revenue6.1%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity8.4%

  ✗Ackman>= 15%

  5-Year EPS CAGR42.1% CAGR over 4 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-0.3% (2023) -> 5.6% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 26.1% -> 28.2%, operating margin -0.3% -> 5.6%

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

  Net income / market capitalization+3.23%; #2294/6340 (top 36.2%)

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

  Gross profit / total assets+35.93%; #1129/3702 (top 30.5%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+8.39%; #2049/5226 (top 39.2%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0240; #1652/5884 (top 28.1%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR42.1% over 4 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years6/9 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Valuation8% pass✓ 2✗ 26▾

  12 of 13 flag MG's valuation — Graham, Greenblatt, Dreman +9 more

  Price / 3-yr avg EPS110.2x

  ✗Graham<= 15x

  Price-to-Book Ratio2.7x

  ✗Graham<= 1.5x

  P/E x P/B299.10

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)0.91

  ✓Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value5.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=5.7%, ROC=23.1%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS38.1x

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

  Price / (CFO / Shares)19.4x

  ✗Dreman< 8x

  Price / Book Value per Share2.7x

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

  Valuation ReasonablenessP/E=38.1x, OE Yield=3.6%

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

  P/E or FCF YieldP/E=38.1x, FCF Yield=1.3%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=38.1x, P/B=2.7x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-634.5% (IV=$2.75 vs Price=$20.20)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share76.8x

  ✗Ackman<= 25

  Price vs. Trailing Low268% of trailing low ($7.55)

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

  Net income / market capitalization+3.23%; #2294/6340 (top 36.2%)

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

  Positive book equity / market capitalization+0.3856; #3337/6449 (top 51.7%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS38.1x

  ✗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 Share53.78x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+10.4%

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

  Revenue / market capitalization+1.1624; #1608/5247 (top 30.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+5.23%; #1543/4519 (top 34.1%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+20.96%; #1296/6202 (top 20.9%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Efficiency13% pass✓ 2✗ 9▾

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

  Current Ratio1.74

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)5.0%

  ✗Buffett> 10%

  ROIC - WACC-5.0%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)23.1%

  ✗Greenblatt> 25%

  Current Ratio Change YoY1.50 -> 1.74

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY1.40x -> 1.25x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities1.74

  ✓Dreman> 1.5

  Return on Invested Capital8.5%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-0.4%; FY2024: ROIC=8.5%; FY2025: ROIC=7.8%

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

  Reinvestment Rate x ROIC7.8% (RR=100% x ROIC=7.8%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 7.8%)

  ✗SleepROIC > 12% in a majority of years
• Verdicts20% pass✓ 3✗ 12▾

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

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (0/9)✗LynchFAIL (3/7)✗GreenblattRank #1047•PiotroskiNEUTRAL (F-Score 6)✗DremanFAIL (2/11)✗MungerFAIL (0/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (3/5)✓AckmanPASS (4/9)✓TempletonPASS (4/8)✗SleepFAIL (2/6)✓AsnessBUY (Rank #305/2370 (Top 12.9%))✗NeffFAIL (2/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)
• Growth25% pass✓ 5✗ 8▾

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

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)0.91

  ✓Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR42.1%

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

  Inventory Growth vs Revenue GrowthInv: 13.9% vs Rev: 4.6%

  ✗LynchInventory growth < Revenue growth

  EPS Growth Direction$0.54 (2014) -> $0.53 (2025)

  ✗DremanPositive over recent years

  EPS CAGR-0.2% CAGR over 11 years

  ✗Dreman> 5% annualized

  Positive Net Income Frequency14/17 years positive

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

  3yr Median Revenue Growth2.6%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency3/5 years with positive EPS growth

  ✓AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR42.1% CAGR over 4 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 26.1% -> 28.2%, operating margin -0.3% -> 5.6%

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

  5-year Revenue CAGR4.1%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR42.1% over 4 years

  ✗Neff7%-20% annualized
• Debt & Leverage50% pass✓ 8✗ 7▾

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

  LT Debt vs Net Current AssetsLT Debt $161.0M vs NCA $96.4M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.70, IC: 3.2x

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

  Total Debt / Equity0.70

  ✗Lynch< 0.33

  Cash - Long-term Debt$-142.0M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change30.22% -> 28.53%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.74

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

  Total Debt / Shareholders' Equity0.70

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

  Debt Levels0.70

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

  Interest Coverage & Debt/EBITDAIC=3.2x, D/EBITDA=2.2x

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

  Total Debt / Shareholders Equity0.70

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.7000; #2840/4210 (top 67.5%)

  ✗AsnessTop 30% of eligible cross-section
• Cash Flow50% pass✓ 7✗ 5▾

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

  Free Cash Flow Proxy$23.2M

  ✗BuffettPositive and growing

  FCF Positive and Growing$33.7M

  ✓LynchPositive and growing

  Operating Cash Flow$33.0M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=5.70%, ROA=2.91%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)19.4x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=38.1x, FCF Yield=1.3%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive16/16 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap5.3%

  ✓Ackman>= 4%

  Price / FCF per Share76.8x

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency16/16 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$33.7M

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

  (Operating cash flow - capex) / market capitalization+5.23%; #1543/4519 (top 34.1%)

  ✗OshaughnessyTop 10% of eligible cross-section