Solstice Advanced Materials Inc.

Where It Passes

Where It Falls Short

• Valuation0% pass✗ 28▾

  All 13 investors flag SOLS's valuation

  Price / 3-yr avg EPS21.7x

  ✗Graham<= 15x

  Price-to-Book Ratio7.4x

  ✗Graham<= 1.5x

  P/E x P/B161.40

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)P/E 44.4x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value5.5%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=5.5%, ROC=29.0%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS44.4x

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

  Price / (CFO / Shares)23.1x

  ✗Dreman< 8x

  Price / Book Value per Share7.4x

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

  Valuation ReasonablenessP/E=44.4x, OE Yield=-0.7%

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

  P/E or FCF YieldP/E=44.4x, FCF Yield=1.1%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=44.4x, P/B=7.4x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-44.7% (IV=$45.70 vs Price=$66.12)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share88.2x

  ✗Ackman<= 25

  Price vs. Trailing Low147% of trailing low ($45.07)

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

  Net income / market capitalization+3.13%; #2328/6340 (top 36.7%)

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

  Positive book equity / market capitalization+0.1506; #4464/6449 (top 69.2%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS44.4x

  ✗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 Share19.37x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

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

  Revenue / market capitalization+0.4014; #2926/5247 (top 55.8%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+4.29%; #1736/4519 (top 38.4%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date-19.33%; #3935/6202 (top 63.4%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Verdicts0% pass✗ 16▾

  Split decision: 15 FAIL · 1 NEUTRAL

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (1/9)✗LynchFAIL (1/7)✗GreenblattRank #931✗PiotroskiFAIL (F-Score 3)✗DremanFAIL (4/11)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (3/5)✗AckmanFAIL (3/9)✗TempletonFAIL (1/8)✗SleepFAIL (2/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (0/7)✗OshaughnessyFAIL (Rank #418/963 (Top 43.4%))
• Valuation models0% pass✗ 7▾

  SOLS overvalued: all 7 models price fair value below $66.12 (median $45.70)

  Graham fair value$17.26

  ✗Graham-283.1% margin vs $66.12

  Dreman fair value$45.70

  ✗Dreman-44.7% margin vs $66.12

  Munger fair value$8.65

  ✗Munger-664.4% margin vs $66.12

  Akre fair value$45.73

  ✗Akre-44.6% margin vs $66.12

  Marks fair value$45.70

  ✗Marks-44.7% margin vs $66.12

  Ackman fair value$11.19

  ✗Ackman-490.9% margin vs $66.12

  Templeton fair value$45.70

  ✗Templeton-44.7% margin vs $66.12
• Profitability6% pass✓ 9✗ 26▾

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

  Positive EPS (10 years)3/4 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)3/4 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)18.5%

  ✓Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-13.7M

  ✗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)P/E 44.4x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-38.3%

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

  ROE20.8%

  ✓Lynch> 15%

  EBIT / Enterprise Value5.5%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=5.5%, ROC=29.0%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets4.18%

  ✓PiotroskiROA > 0

  ROA Change YoY11.87% -> 4.18% (delta: -7.69%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=8.02%, ROA=4.18%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY34.6% -> 32.2%

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue12.2%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity20.8%

  ✓Dreman> 12%

  Margin of SafetyP/E=44.4x, P/B=7.4x

  ✗PabraiP/B < 1.5 or P/E < 15

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

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-44.7% (IV=$45.70 vs Price=$66.12)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency3/3 years positive

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

  Operating Income / Revenue

  ✗Ackman>= 15%

  Net Income / Shareholders Equity20.8%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trend

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

  Net income / market capitalization+3.13%; #2328/6340 (top 36.7%)

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

  Gross profit / total assets+22.03%; #1924/3702 (top 52.0%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+20.77%; #753/5226 (top 14.4%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA

  ✗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)
• Debt & Leverage8% pass✓ 1✗ 14▾

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

  LT Debt vs Net Current AssetsLT Debt $2.0B vs NCA $741.0M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 1.27, IC: 4.8x

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

  Total Debt / Equity1.27

  ✗Lynch< 0.33

  Cash - Long-term Debt$-1.2B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change0.00% -> 34.69%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.38

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

  Total Debt / Shareholders' Equity1.27

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

  Debt Levels1.27

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

  Interest Coverage & Debt/EBITDAIC=24.1x, D/EBITDA=2.8x

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

  Total Debt / Shareholders Equity1.27

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-1.2665; #3467/4210 (top 82.4%)

  ✗AsnessTop 30% of eligible cross-section
• Growth13% pass✓ 1✗ 12▾

  7 of 8 flag SOLS's growth — Graham, Lynch, Dreman +4 more

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

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)P/E 44.4x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-38.3%

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

  Inventory Growth vs Revenue GrowthInv: 28.1% vs Rev: 3.1%

  ✗LynchInventory growth < Revenue growth

  EPS Growth Direction$3.91 (2023) -> $1.49 (2025)

  ✗DremanPositive over recent years

  EPS CAGR-38.3% CAGR over 2 years

  ✗Dreman> 5% annualized

  Positive Net Income Frequency3/3 years positive

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

  3yr Median Revenue Growth3.2%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency0/2 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 trend

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

  5-year Revenue CAGR

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency13% pass✓ 1✗ 10▾

  7 of 8 flag SOLS's efficiency — Graham, Buffett, Piotroski +4 more

  Current Ratio1.38

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)

  ✗Buffett> 10%

  ROIC - WACC

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)29.0%

  ✓Greenblatt> 25%

  Current Ratio Change YoY1.72 -> 1.39

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.75x -> 0.68x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities1.38

  ✗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 Flow40% pass✓ 6✗ 6▾

  6 of 10 flag SOLS's cash flow — Buffett, Lynch, Dreman +3 more

  Free Cash Flow Proxy$-13.7M

  ✗BuffettPositive and growing

  FCF Positive and Growing$119.0M

  ✗LynchPositive and growing

  Operating Cash Flow$455.0M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=8.02%, ROA=4.18%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)23.1x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=44.4x, FCF Yield=1.1%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive3/3 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap4.2%

  ✓Ackman>= 4%

  Price / FCF per Share88.2x

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency3/3 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$446.0M

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

  (Operating cash flow - capex) / market capitalization+4.29%; #1736/4519 (top 38.4%)

  ✗OshaughnessyTop 10% of eligible cross-section