KONINKLIJKE PHILIPS NV

Where It Passes

Where It Falls Short

• Valuation models0% pass✗ 7▾

  PHG overvalued: all 7 models price fair value below $30.34 (median $14.96)

  Graham fair value$18.13

  ✗Graham-67.3% margin vs $30.34

  Buffett fair value$25.24

  ✗Buffett-20.2% margin vs $30.34

  Greenblatt fair value$5.73

  ✗Greenblatt-429.5% margin vs $30.34

  Pabrai fair value$14.11

  ✗Pabrai-115.0% margin vs $30.34

  Akre fair value$18.33

  ✗Akre-65.5% margin vs $30.34

  Marks fair value$14.96

  ✗Marks-102.8% margin vs $30.34

  Templeton fair value$5.80

  ✗Templeton-423.1% margin vs $30.34
• Profitability6% pass✓ 7✗ 28▾

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

  Positive EPS (10 years)8/12 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)-107.0%

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)8/12 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)1.9%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)8.0% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$2.1B

  ✓BuffettPositive and growing

  Earnings Variance (10-yr CoV)1.58

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

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

  Basic earnings-growth PEG (dividends excluded)P/E 27.8x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-7.2%

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

  ROE8.2%

  ✗Lynch> 15%

  EBIT / Enterprise Value4.8%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=4.8%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets3.32%

  ✓PiotroskiROA > 0

  ROA Change YoY-2.42% -> 3.32% (delta: +5.74%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROA

  ✗PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY43.1% -> 45.2%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue6.6%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity8.2%

  ✗Dreman> 12%

  Margin of SafetyP/E=27.8x, P/B=2.3x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-0.5% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency8/11 years positive

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

  Operating Income / Revenue8.0%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity8.2%

  ✗Ackman>= 15%

  5-Year EPS CAGR-7.2% CAGR over 5 years

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-0.6% (2023) -> 8.0% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 41.0% -> 45.2%, operating margin -0.6% -> 8.0%

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

  Net income / market capitalization+3.54%; #2193/6340 (top 34.6%)

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

  Gross profit / total assets+29.91%; #1436/3702 (top 38.8%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+8.17%; #2075/5226 (top 39.7%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0561; #2718/5884 (top 46.2%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR-7.2% over 5 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years7/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Valuation8% pass✓ 1✗ 27▾

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

  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)P/E 27.8x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value4.8%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=4.8%, ROC=None

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS27.8x

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

  Price / (CFO / Shares)

  ✗Dreman< 8x

  Price / Book Value per Share2.3x

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

  Valuation ReasonablenessP/E=27.8x, OE Yield=7.0%

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

  P/E or FCF YieldP/E=27.8x

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=27.8x, P/B=2.3x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low132% of trailing low ($23.04)

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

  Net income / market capitalization+3.54%; #2193/6340 (top 34.6%)

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

  Positive book equity / market capitalization+0.4340; #3123/6449 (top 48.4%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS27.8x

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

  (EPS CAGR % + Dividend Yield %) / P/E-0.21

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

  Price / Tangible Book Value per ShareN/A (non-positive TBVPS)

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-17.1%

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

  Revenue / market capitalization+0.7063; #2191/5247 (top 41.8%)

  ✗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+14.97%; #1601/6202 (top 25.8%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Cash Flow10% pass✓ 1✗ 11▾

  9 of 10 flag PHG's cash flow — Lynch, Piotroski, Dreman +6 more

  Free Cash Flow Proxy$2.1B

  ✓BuffettPositive and growing

  FCF Positive and Growing

  ✗LynchPositive and growing

  Operating Cash Flow

  ✗PiotroskiCFO > 0

  (CFO / Total Assets) vs ROA

  ✗PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)

  ✗Dreman< 8x

  P/E or FCF YieldP/E=27.8x

  ✗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 frequency

  ✗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
• Efficiency13% pass✓ 2✗ 9▾

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

  Current Ratio1.32

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)1.1%

  ✗Buffett> 10%

  ROIC - WACC-8.9%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)

  ✗Greenblatt> 25%

  Current Ratio Change YoY1.23 -> 1.32

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.62x -> 0.66x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities1.32

  ✗Dreman> 1.5

  Return on Invested Capital6.3%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-0.5%; FY2024: ROIC=2.2%; FY2025: ROIC=6.3%

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

  Reinvestment Rate x ROIC4.0% (RR=63% x ROIC=6.3%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 6.3%)

  ✗SleepROIC > 12% in a majority of years
• Debt & Leverage25% pass✓ 5✗ 10▾

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

  LT Debt vs Net Current AssetsLT Debt $8.1B vs NCA $2.8B

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.64, IC: 4.9x

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

  Total Debt / Equity0.64

  ✗Lynch< 0.33

  Cash - Long-term Debt$-4.9B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change24.55% -> 25.73%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.32

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

  Total Debt / Shareholders' Equity0.64

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

  Debt Levels0.64

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

  Interest Coverage & Debt/EBITDAIC=4.9x, D/EBITDA=2.7x

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

  Total Debt / Shareholders Equity0.64

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.6376; #2728/4210 (top 64.8%)

  ✗AsnessTop 30% of eligible cross-section
• Growth25% pass✓ 5✗ 8▾

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

  EPS Growth (3-yr avg, 10-yr window)-107.0%

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)P/E 27.8x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-7.2%

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

  Inventory Growth vs Revenue GrowthInv: 1.3% vs Rev: 11.7%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction$0.74 (2015) -> $1.09 (2025)

  ✓DremanPositive over recent years

  EPS CAGR3.9% CAGR over 10 years

  ✗Dreman> 5% annualized

  Positive Net Income Frequency8/11 years positive

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

  3yr Median Revenue Growth5.8%

  ✓Ackman>= 5%

  Positive EPS Growth Frequency3/5 years with positive EPS growth

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

  5-Year EPS CAGR-7.2% CAGR over 5 years

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 41.0% -> 45.2%, operating margin -0.6% -> 8.0%

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

  5-year Revenue CAGR-0.3%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR-7.2% over 5 years

  ✗Neff7%-20% annualized
• Verdicts27% pass✓ 4✗ 11▾

  Split decision: 11 FAIL · 4 PASS · 1 NEUTRAL

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (1/9)✗LynchFAIL (1/7)•GreenblattNot ranked✓PiotroskiPASS (F-Score 5)✗DremanFAIL (3/11)✓MungerPASS (2/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (2/5)✓AckmanPASS (5/9)✓TempletonPASS (4/8)✗SleepFAIL (1/6)✗AsnessFAIL (Rank #1200/2370 (Top 50.6%))✗NeffFAIL (1/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)