Magnolia Oil & Gas Corp

Where It Passes

Where It Falls Short

• Profitability0% pass✓ 8✗ 27▾

  No clean pass — all 16 investors flag at least one profitability criterion

  Net income / market capitalization+6.46%; #1294/6340 (top 20.4%)

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

  Positive EPS (10 years)1/10 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)7/10 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)29.4%

  ✓Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)33.5% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy

  ✗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

  ROE10.1%

  ✗Lynch> 15%

  EBIT / Enterprise Value6.5%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.5%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets11.20%

  ✓PiotroskiROA > 0

  ROA Change YoY12.98% -> 11.20% (delta: -1.77%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=30.27%, ROA=11.20%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue32.8%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity10.1%

  ✗Dreman> 12%

  Margin of SafetyP/B=2.3x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity18.5% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency7/8 years positive

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

  Operating Income / Revenue36.9%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity10.1%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend43.6% (2023) -> 33.5% (2025)

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 43.6% -> 33.5%

  ✗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+10.13%; #1793/5226 (top 34.3%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0886; #3328/5884 (top 56.6%)

  ✗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)
• Valuation8% pass✓ 5✗ 23▾

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

  Net income / market capitalization+6.46%; #1294/6340 (top 20.4%)

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

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio2.3x

  ✗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 Value6.5%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.5%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

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

  Price / (CFO / Shares)5.2x

  ✓Dreman< 8x

  Price / Book Value per Share2.3x

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

  Valuation ReasonablenessOE Yield=16.8%

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

  P/E or FCF Yield

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=2.3x

  ✗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 Low120% of trailing low ($20.53)

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

  Positive book equity / market capitalization+0.6376; #2393/6449 (top 37.1%)

  ✗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 Share2.28x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+113.4%

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

  Revenue / market capitalization+0.2502; #3549/5247 (top 67.6%)

  ✗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-17.93%; #3859/6202 (top 62.2%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth13% pass✓ 3✗ 10▾

  7 of 8 flag MGY'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 GrowthN/A (no inventory)

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency7/8 years positive

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

  3yr Median Revenue Growth-0.3%

  ✗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 43.6% -> 33.5%

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

  5-year Revenue CAGR19.4%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency25% pass✓ 4✗ 7▾

  6 of 8 flag MGY's efficiency — Graham, Greenblatt, Piotroski +3 more

  Current Ratio0.51

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)32.2%

  ✓Buffett> 10%

  ROIC - WACC+22.2%

  ✓BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)

  ✗Greenblatt> 25%

  Current Ratio Change YoY1.42 -> 1.54

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.47x -> 0.45x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities0.51

  ✗Dreman> 1.5

  Return on Invested Capital7.9%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=18.6%; FY2024: ROIC=17.1%; FY2025: ROIC=14.5%

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

  Reinvestment Rate x ROIC5.5% (RR=69% x ROIC=7.9%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)5/5 years above 12% (latest 14.5%)

  ✓SleepROIC > 12% in a majority of years
• Verdicts27% pass✓ 3✗ 8▾

  Split decision: 8 FAIL · 5 NEUTRAL · 3 PASS

  Overall verdict

  ✗GrahamFAIL (1/9)✓BuffettPASS (5/9)✗LynchFAIL (1/7)•GreenblattNot ranked•PiotroskiNEUTRAL (F-Score 6)✗DremanFAIL (4/11)•MungerNEUTRAL (3/4)✗PabraiFAIL (0/3)✗AkreFAIL (0/6)✗MarksFAIL (2/5)✓AckmanPASS (4/9)✓TempletonPASS (4/8)•SleepNEUTRAL (4/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow30% pass✓ 4✗ 8▾

  7 of 10 flag MGY's cash flow — Buffett, Lynch, Pabrai +4 more

  Free Cash Flow Proxy

  ✗BuffettPositive and growing

  FCF Positive and Growing

  ✗LynchPositive and growing

  Operating Cash Flow$878.6M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=30.27%, ROA=11.20%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)5.2x

  ✓Dreman< 8x

  P/E or FCF Yield

  ✗PabraiP/E < 15 or FCF Yield > 10%

  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 frequency8/8 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
• Debt & Leverage50% pass✓ 8✗ 7▾

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

  Debt Levels0.46

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

  LT Debt vs Net Current AssetsLT Debt $1.9B vs NCA $-365.0M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.20, IC: 14.8x

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

  Total Debt / Equity0.46

  ✗Lynch< 0.33

  Cash - Long-term Debt$-1.9B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change13.91% -> 13.55%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.51

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

  Total Debt / Shareholders' Equity0.46

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

  Interest Coverage & Debt/EBITDAIC=14.8x, D/EBITDA=0.4x

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

  Total Debt / Shareholders Equity0.46

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.4556; #2379/4210 (top 56.5%)

  ✗AsnessTop 30% of eligible cross-section
• Valuation models50% pass✓ 2✗ 2▾

  Models split on MGY at $24.54 — fair values range $0.30–$62.25

  Greenblatt fair value$21.08

  ✗Greenblatt-16.4% margin vs $24.54

  Pabrai fair value$49.03

  ✓Pabrai+49.9% margin vs $24.54

  Akre fair value$62.25

  ✓Akre+60.6% margin vs $24.54

  Marks fair value$0.30

  ✗Marks-8080.0% margin vs $24.54