MIDDLESEX WATER CO

Where It Passes

Where It Falls Short

• Efficiency0% pass✗ 11▾

  All 8 investors flag MSEX's efficiency

  Current Ratio0.51

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)4.7%

  ✗Buffett> 10%

  ROIC - WACC-5.3%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)5.5%

  ✗Greenblatt> 25%

  Current Ratio Change YoY0.52 -> 0.45

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.15x -> 0.14x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities0.51

  ✗Dreman> 1.5

  Return on Invested Capital5.4%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=4.0%; FY2024: ROIC=5.3%; FY2025: ROIC=4.9%

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

  Reinvestment Rate x ROIC2.6% (RR=48% x ROIC=5.4%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 4.9%)

  ✗SleepROIC > 12% in a majority of years
• Valuation models0% pass✗ 7▾

  MSEX overvalued: all 7 models price fair value below $57.40 (median $31.65)

  Graham fair value$37.63

  ✗Graham-52.5% margin vs $57.40

  Lynch fair value$3.77

  ✗Lynch-1422.5% margin vs $57.40

  Greenblatt fair value$20.87

  ✗Greenblatt-175.0% margin vs $57.40

  Dreman fair value$32.95

  ✗Dreman-74.2% margin vs $57.40

  Akre fair value$31.65

  ✗Akre-81.4% margin vs $57.40

  Marks fair value$29.94

  ✗Marks-91.7% margin vs $57.40

  Templeton fair value$33.15

  ✗Templeton-73.2% margin vs $57.40
• Valuation8% pass✓ 4✗ 24▾

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

  Net income / market capitalization+4.74%; #1766/6340 (top 27.9%)

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

  Price / 3-yr avg EPS26.1x

  ✗Graham<= 15x

  Price-to-Book Ratio2.2x

  ✗Graham<= 1.5x

  P/E x P/B56.20

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)15.21

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value4.3%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=4.3%, ROC=5.5%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS24.3x

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

  Price / (CFO / Shares)17.0x

  ✗Dreman< 8x

  Price / Book Value per Share2.2x

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

  Valuation ReasonablenessP/E=24.3x, OE Yield=7.1%

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

  P/E or FCF YieldP/E=24.3x

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=24.3x, P/B=2.2x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-74.2% (IV=$32.95 vs Price=$57.40)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low115% of trailing low ($50.13)

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

  Positive book equity / market capitalization+0.4987; #2895/6449 (top 44.9%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS24.3x

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E0.16

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per Share2.16x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+34.6%

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

  Revenue / market capitalization+0.1933; #3817/5247 (top 72.7%)

  ✗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+9.27%; #1894/6202 (top 30.5%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Profitability19% pass✓ 13✗ 22▾

  13 of 16 flag MSEX's profitability — Graham, Buffett, Lynch +10 more

  Net income / market capitalization+4.74%; #1766/6340 (top 27.9%)

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

  Positive EPS (10 years)17/24 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)23/24 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)9.3%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)27.9% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$44.4M

  ✓BuffettPositive and growing

  Earnings Variance (10-yr CoV)0.37

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)15.21

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR1.6%

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

  ROE9.5%

  ✗Lynch> 15%

  EBIT / Enterprise Value4.3%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=4.3%, ROC=5.5%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets3.14%

  ✓PiotroskiROA > 0

  ROA Change YoY3.53% -> 3.14% (delta: -0.40%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=4.58%, ROA=3.14%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue27.5%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity9.5%

  ✗Dreman> 12%

  Margin of SafetyP/E=24.3x, P/B=2.2x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity8.7% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-74.2% (IV=$32.95 vs Price=$57.40)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency23/23 years positive

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

  Operating Income / Revenue30.5%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity9.5%

  ✗Ackman>= 15%

  5-Year EPS CAGR1.6% CAGR over 5 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend23.6% (2023) -> 27.9% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 23.6% -> 27.9%

  ✓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+9.50%; #1889/5226 (top 36.1%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0048; #466/5884 (top 7.9%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR1.6% over 5 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years10/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts23% pass✓ 3✗ 10▾

  Split decision: 9 FAIL · 4 NEUTRAL · 3 PASS

  Overall verdict

  ✗GrahamFAIL (2/9)✗BuffettFAIL (1/9)✗LynchFAIL (2/7)✗GreenblattRank #1571✓PiotroskiPASS (F-Score 4)✓DremanPASS (5/11)✓MungerPASS (2/4)✗PabraiFAIL (0/3)✗AkreFAIL (0/6)✗MarksFAIL (1/5)✗AckmanFAIL (3/9)•TempletonNEUTRAL (6/8)✗SleepFAIL (2/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)•SchlossNEUTRAL (4/7)•OshaughnessyNEUTRAL (Not ranked)
• Debt & Leverage25% pass✓ 5✗ 10▾

  9 of 12 flag MSEX's debt & leverage — Graham, Buffett, Lynch +6 more

  LT Debt vs Net Current AssetsLT Debt $392.2M vs NCA $-53.7M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.73, IC: 4.3x

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

  Total Debt / Equity0.73

  ✗Lynch< 0.33

  Cash - Long-term Debt$-390.5M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change28.11% -> 27.74%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.51

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

  Total Debt / Shareholders' Equity0.73

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

  Debt Levels0.73

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

  Interest Coverage & Debt/EBITDAIC=4.3x, D/EBITDA=4.2x

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

  Total Debt / Shareholders Equity0.73

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.7298; #2897/4210 (top 68.8%)

  ✗AsnessTop 30% of eligible cross-section
• Cash Flow30% pass✓ 4✗ 8▾

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

  Free Cash Flow Proxy$44.4M

  ✓BuffettPositive and growing

  FCF Positive and Growing$-15.9M

  ✗LynchPositive and growing

  Operating Cash Flow$62.6M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=4.58%, ROA=3.14%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)17.0x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=24.3x

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive0/5 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 frequency20/20 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
• Growth38% pass✓ 7✗ 6▾

  5 of 8 flag MSEX's growth — Graham, Lynch, Ackman +2 more

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

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)15.21

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR1.6%

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

  Inventory Growth vs Revenue GrowthN/A (no inventory)

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction$0.72 (2009) -> $2.36 (2025)

  ✓DremanPositive over recent years

  EPS CAGR7.7% CAGR over 16 years

  ✓Dreman> 5% annualized

  Positive Net Income Frequency23/23 years positive

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

  3yr Median Revenue Growth2.5%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency2/5 years with positive EPS growth

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

  5-Year EPS CAGR1.6% CAGR over 5 years

  ✓Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 23.6% -> 27.9%

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

  5-year Revenue CAGR6.6%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR1.6% over 5 years

  ✗Neff7%-20% annualized