Purple Innovation, Inc.

Where It Passes

Where It Falls Short

• Debt & Leverage0% pass✗ 15▾

  All 12 investors flag PRPL's debt & leverage

  LT Debt vs Net Current AssetsLT Debt $126.7M vs NCA $35.2M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: N/A (negative equity), IC: -281.2x

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

  Total Debt / EquityN/A (negative equity)

  ✗Lynch< 0.33

  Cash - Long-term Debt$-102.3M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change22.96% -> 42.76%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.47

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

  Total Debt / Shareholders' Equity

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

  Debt LevelsN/A (non-positive equity)

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

  Interest Coverage & Debt/EBITDAIC=-281.2x, D/EBITDA=N/A

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

  Total Debt / Shareholders Equity

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)

  ✗AsnessTop 30% of eligible cross-section
• Efficiency0% pass✓ 1✗ 10▾

  No clean pass — all 8 investors flag at least one efficiency criterion

  Current Ratio0.47

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)-50.7%

  ✗Buffett> 10%

  ROIC - WACC-60.7%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)-48.4%

  ✗Greenblatt> 25%

  Current Ratio Change YoY1.25 -> 1.35

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY1.58x -> 1.58x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities0.47

  ✗Dreman> 1.5

  Return on Invested Capital-35.0%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-52.4%; FY2024: ROIC=-80.1%; FY2025: ROIC=-35.0%

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

  Reinvestment Rate x ROICN/A (non-positive net income)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest -35.0%)

  ✗SleepROIC > 12% in a majority of years
• Profitability6% pass✓ 8✗ 27▾

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

  Positive EPS (10 years)3/11 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)N/A (negative base EPS)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)1/11 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-198.5%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)-9.2% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-35.4M

  ✗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)0.07

  ✓Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR43.1%

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

  ROEN/A (negative equity)

  ✗Lynch> 15%

  EBIT / Enterprise Value-39.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-39.7%, ROC=-48.4%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-17.35%

  ✗PiotroskiROA > 0

  ROA Change YoY-31.80% -> -17.35% (delta: +14.45%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=-11.42%, ROA=-17.35%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY37.1% -> 40.2%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue-8.9%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity

  ✗Dreman> 12%

  Margin of SafetyP/E=2.8x

  ✓PabraiP/B < 1.5 or P/E < 15

  Return on Equity-214.1% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency1/10 years positive

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

  Operating Income / Revenue-7.7%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-22.3% (2023) -> -9.2% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 33.7% -> 40.2%, operating margin -22.3% -> -9.2%

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

  Net income / market capitalization-645.73%; #5973/6340 (top 94.2%)

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

  Gross profit / total assets+72.71%; #315/3702 (top 8.5%)

  ✓AsnessTop 30% of eligible cross-section

  Net income / positive book equity

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.1172; #3674/5884 (top 62.4%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR43.1% over 5 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years3/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Cash Flow10% pass✓ 2✗ 10▾

  9 of 10 flag PRPL's cash flow — Buffett, Lynch, Piotroski +6 more

  Free Cash Flow Proxy$-35.4M

  ✗BuffettPositive and growing

  FCF Positive and Growing$-2.4M

  ✗LynchPositive and growing

  Operating Cash Flow$-33.8M

  ✗PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=-11.42%, ROA=-17.35%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  P/E or FCF YieldP/E=2.8x, FCF Yield=-705.1%

  ✓PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive2/9 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap-1.6%

  ✗Ackman>= 4%

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency3/10 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$-2.4M

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

  (Operating cash flow - capex) / market capitalization-40.08%; #3777/4519 (top 83.6%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Verdicts14% pass✓ 2✗ 12▾

  Split decision: 11 FAIL · 3 NEUTRAL · 2 PASS

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (0/9)✗LynchFAIL (3/7)✗GreenblattRank #2565✓PiotroskiPASS (F-Score 4)✗DremanFAIL (3/11)✗MungerFAIL (1/4)•PabraiNEUTRAL (2/3)✗AkreFAIL (1/6)✗MarksFAIL (1/5)✗AckmanFAIL (1/9)✓TempletonPASS (4/8)✗SleepFAIL (1/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (1/6)✗SchlossFAIL (0/7)•OshaughnessyNEUTRAL (Not ranked)
• Valuation23% pass✓ 9✗ 19▾

  10 of 13 flag PRPL's valuation — Graham, Greenblatt, Dreman +7 more

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio

  ✗Graham<= 1.5x

  P/E x P/B

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)0.07

  ✓Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value-39.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-39.7%, ROC=-48.4%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS2.8x

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

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  Price / Book Value per ShareN/A (negative BVPS)

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

  Valuation ReasonablenessP/E=2.8x, OE Yield=-24.1%

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

  P/E or FCF YieldP/E=2.8x, FCF Yield=-705.1%

  ✓PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=2.8x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Price vs. Trailing Low100% of trailing low ($1.36)

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

  Net income / market capitalization-645.73%; #5973/6340 (top 94.2%)

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

  Positive book equity / market capitalization-10.9607; #6289/6449 (top 97.5%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS2.8x

  ✓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 ShareN/A (non-positive TBVPS)

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-118.2%

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

  Revenue / market capitalization+72.5453; #98/5247 (top 1.9%)

  ✓OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization-40.08%; #3777/4519 (top 83.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-89.01%; #5975/6202 (top 96.3%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth25% pass✓ 5✗ 8▾

  6 of 8 flag PRPL's growth — Graham, Marks, Ackman +3 more

  EPS Growth (3-yr avg, 10-yr window)N/A (negative base EPS)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)0.07

  ✓Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR43.1%

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

  Inventory Growth vs Revenue GrowthInv: -18.7% vs Rev: -5.6%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction$-0.49 (2016) -> $0.48 (2025)

  ✓DremanPositive over recent years

  EPS CAGR32.7% CAGR over 8 years

  ✓Dreman> 5% annualized

  Positive Net Income Frequency1/10 years positive

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

  3yr Median Revenue Growth-4.4%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency2/5 years with positive EPS growth

  ✗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 33.7% -> 40.2%, operating margin -22.3% -> -9.2%

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

  5-year Revenue CAGR-6.3%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR43.1% over 5 years

  ✗Neff7%-20% annualized
• Valuation models50% pass✓ 1✗ 1▾

  Models split on PRPL at $1.36 — fair values range $0.37–$12.80

  Dreman fair value$12.80

  ✓Dreman+89.4% margin vs $1.36

  Templeton fair value$0.37

  ✗Templeton-267.6% margin vs $1.36