Sol-Gel Technologies Ltd.

Where It Passes

Where It Falls Short

• Valuation0% pass✗ 28▾

  All 13 investors flag SLGL's valuation

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio6.7x

  ✗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 Value-4.4%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-4.4%, ROC=-76.1%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

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

  Price / (CFO / Shares)476.9x

  ✗Dreman< 8x

  Price / Book Value per Share6.7x

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

  Valuation ReasonablenessOE Yield=-3.9%

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

  P/E or FCF YieldFCF Yield=0.2%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=6.7x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share558.4x

  ✗Ackman<= 25

  Price vs. Trailing Low1060% of trailing low ($5.20)

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

  Net income / market capitalization-3.40%; #3712/6340 (top 58.5%)

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

  Positive book equity / market capitalization+0.1264; #4597/6449 (top 71.3%)

  ✗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 Share6.73x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

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

  Revenue / market capitalization+0.1074; #4299/5247 (top 81.9%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+0.15%; #2512/4519 (top 55.6%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-26.37%; #4261/6202 (top 68.7%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Valuation models0% pass✗ 2▾

  SLGL overvalued: all 2 models price fair value below $55.12 (median $2.67)

  Munger fair value$1.80

  ✗Munger-2962.2% margin vs $55.12

  Ackman fair value$3.54

  ✗Ackman-1457.1% margin vs $55.12
• Profitability6% pass✓ 5✗ 30▾

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

  Positive EPS (10 years)5/12 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)1/12 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-32.7%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)-38.9% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-6.1M

  ✗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

  ROE-26.9%

  ✗Lynch> 15%

  EBIT / Enterprise Value-4.4%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-4.4%, ROC=-76.1%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-20.48%

  ✗PiotroskiROA > 0

  ROA Change YoY-29.52% -> -20.48% (delta: +9.04%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=1.08%, ROA=-20.48%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity-26.9%

  ✗Dreman> 12%

  Margin of SafetyP/B=6.7x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-44.7% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency1/11 years positive

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

  Operating Income / Revenue-38.9%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity-26.9%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-1885.8% (2023) -> -38.9% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin -1885.8% -> -38.9%

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

  Net income / market capitalization-3.40%; #3712/6340 (top 58.5%)

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

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity-26.86%; #3840/5226 (top 73.5%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.2085; #4271/5884 (top 72.6%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR-46.8% over 5 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years4/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts7% pass✓ 1✗ 13▾

  Split decision: 12 FAIL · 3 NEUTRAL · 1 PASS

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (1/9)✗LynchFAIL (2/7)✗GreenblattRank #2328✓PiotroskiPASS (F-Score 5)✗DremanFAIL (1/11)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (0/5)✗AckmanFAIL (2/9)✗TempletonFAIL (2/8)•SleepNEUTRAL (4/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (1/7)•OshaughnessyNEUTRAL (Not ranked)
• Debt & Leverage8% pass✓ 3✗ 12▾

  11 of 12 flag SLGL's debt & leverage — Graham, Buffett, Lynch +8 more

  LT Debt vs Net Current Assets

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest Coverage

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

  Total Debt / Equity

  ✗Lynch< 0.33

  Cash - Long-term Debt

  ✗LynchPositive preferred

  LT Debt / Total Assets Change0.00% -> 0.00%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities4.37

  ✓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 Levels

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

  Interest Coverage & Debt/EBITDA

  ✗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
• Growth13% pass✓ 4✗ 9▾

  7 of 8 flag SLGL'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-32.9% CAGR over 6 years

  ✗Dreman> 5% annualized

  Positive Net Income Frequency1/11 years positive

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

  3yr Median Revenue Growth68.0%

  ✓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 -1885.8% -> -38.9%

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

  5-year Revenue CAGR17.2%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR-46.8% over 5 years

  ✗Neff7%-20% annualized
• Efficiency25% pass✓ 3✗ 8▾

  6 of 8 flag SLGL's efficiency — Buffett, Greenblatt, Piotroski +3 more

  Current Ratio4.37

  ✓Graham>= 2.0

  ROIC (3-5 yr avg)-328.2%

  ✗Buffett> 10%

  ROIC - WACC-338.2%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)-76.1%

  ✗Greenblatt> 25%

  Current Ratio Change YoY5.92 -> 4.37

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.32x -> 0.65x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities4.37

  ✓Dreman> 1.5

  Return on Invested Capital

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=unavailable; FY2024: ROIC=unavailable; FY2025: ROIC=unavailable

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

  Reinvestment Rate x ROIC

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)

  ✗SleepROIC > 12% in a majority of years
• Cash Flow30% pass✓ 4✗ 8▾

  7 of 10 flag SLGL's cash flow — Buffett, Dreman, Pabrai +4 more

  Free Cash Flow Proxy$-6.1M

  ✗BuffettPositive and growing

  FCF Positive and Growing$0.3M

  ✓LynchPositive and growing

  Operating Cash Flow$0.3M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=1.08%, ROA=-20.48%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)476.9x

  ✗Dreman< 8x

  P/E or FCF YieldFCF Yield=0.2%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive1/11 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap0.2%

  ✗Ackman>= 4%

  Price / FCF per Share558.4x

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency1/11 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$0.3M

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

  (Operating cash flow - capex) / market capitalization+0.15%; #2512/4519 (top 55.6%)

  ✗OshaughnessyTop 10% of eligible cross-section