UNITED GUARDIAN INC

Where It Passes

Where It Falls Short

• Debt & Leverage8% pass✓ 3✗ 12▾

  11 of 12 flag UG'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 Liabilities6.50

  ✓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
• Valuation15% pass✓ 4✗ 24▾

  11 of 13 flag UG's valuation — Graham, Lynch, Greenblatt +8 more

  Net income / market capitalization+8.05%; #974/6340 (top 15.4%)

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

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio3.5x

  ✗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 Value6.0%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.0%, ROC=22.0%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

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

  Price / (CFO / Shares)19.8x

  ✗Dreman< 8x

  Price / Book Value per Share3.5x

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

  Valuation ReasonablenessOE Yield=5.5%

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

  P/E or FCF YieldFCF Yield=4.9%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=3.5x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share20.4x

  ✓Ackman<= 25

  Price vs. Trailing Low146% of trailing low ($5.79)

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

  Positive book equity / market capitalization+0.2877; #3744/6449 (top 58.1%)

  ✗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 Share3.46x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+8.5%

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

  Revenue / market capitalization+0.3200; #3241/5247 (top 61.8%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+7.57%; #1074/4519 (top 23.8%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+18.65%; #1411/6202 (top 22.8%)

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

  6 of 8 flag UG's growth — Graham, Lynch, Dreman +3 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 CAGR12.5%

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

  Inventory Growth vs Revenue GrowthInv: -20.2% vs Rev: 23.6%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction$0.80 (2010) -> $1.01 (2021)

  ✓DremanPositive over recent years

  EPS CAGR2.1% CAGR over 11 years

  ✗Dreman> 5% annualized

  Positive Net Income Frequency19/19 years positive

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

  3yr Median Revenue Growth-13.4%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency1/1 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 49.7% -> 48.8%, operating margin 26.3% -> 21.3%

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

  5-year Revenue CAGR-0.8%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR12.5% over 5 years

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

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

  Current Ratio6.50

  ✓Graham>= 2.0

  ROIC (3-5 yr avg)

  ✗Buffett> 10%

  ROIC - WACC

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)22.0%

  ✗Greenblatt> 25%

  Current Ratio Change YoY6.62 -> 7.31

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.88x -> 0.80x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities6.50

  ✓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
• Valuation models29% pass✓ 2✗ 5▾

  Models split on UG at $8.46 — fair values range $3.15–$26.33

  Buffett fair value$5.40

  ✗Buffett-56.7% margin vs $8.46

  Greenblatt fair value$5.02

  ✗Greenblatt-68.5% margin vs $8.46

  Munger fair value$4.88

  ✗Munger-73.4% margin vs $8.46

  Pabrai fair value$3.15

  ✗Pabrai-168.6% margin vs $8.46

  Akre fair value$26.33

  ✓Akre+67.9% margin vs $8.46

  Marks fair value$12.80

  ✓Marks+33.9% margin vs $8.46

  Ackman fair value$3.43

  ✗Ackman-146.6% margin vs $8.46
• Profitability31% pass✓ 17✗ 18▾

  11 of 16 flag UG's profitability — Graham, Buffett, Lynch +8 more

  Net income / market capitalization+8.05%; #974/6340 (top 15.4%)

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

  Positive EPS (10 years)12/20 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)19/20 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)28.8%

  ✓Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)21.3% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$2.2M

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)0.19

  ✓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 CAGR12.5%

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

  ROE28.0%

  ✓Lynch> 15%

  EBIT / Enterprise Value6.0%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.0%, ROC=22.0%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets16.06%

  ✓PiotroskiROA > 0

  ROA Change YoY23.56% -> 16.06% (delta: -7.50%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=15.00%, ROA=16.06%

  ✗PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY53.0% -> 48.8%

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue31.7%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity28.0%

  ✓Dreman> 12%

  Margin of SafetyP/B=3.5x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity22.9% (3-yr avg)

  ✓AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency19/19 years positive

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

  Operating Income / Revenue25.9%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity28.0%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend26.3% (2023) -> 21.3% (2025)

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 49.7% -> 48.8%, operating margin 26.3% -> 21.3%

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

  Gross profit / total assets+39.22%; #978/3702 (top 26.4%)

  ✓AsnessTop 30% of eligible cross-section

  Net income / positive book equity+27.97%; #501/5226 (top 9.6%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0743; #3098/5884 (top 52.7%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR12.5% over 5 years

  ✓Neff7%-20% annualized

  Positive Diluted-EPS Years6/6 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts36% pass✓ 5✗ 9▾

  Split decision: 8 FAIL · 5 PASS · 3 NEUTRAL

  Overall verdict

  ✗GrahamFAIL (2/9)✗BuffettFAIL (3/9)✗LynchFAIL (4/7)✗GreenblattRank #1029✓PiotroskiPASS (F-Score 5)✓DremanPASS (5/11)✓MungerPASS (2/4)✗PabraiFAIL (0/3)✗AkreFAIL (2/6)✗MarksFAIL (2/5)✓AckmanPASS (5/9)✗TempletonFAIL (2/8)✓SleepPASS (3/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (3/6)•SchlossNEUTRAL (4/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow50% pass✓ 7✗ 5▾

  5 of 10 pass — Buffett, Piotroski, Dreman +2 more object

  Free Cash Flow Proxy$2.2M

  ✗BuffettPositive and growing

  FCF Positive and Growing$2.9M

  ✓LynchPositive and growing

  Operating Cash Flow$2.0M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=15.00%, ROA=16.06%

  ✗PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)19.8x

  ✗Dreman< 8x

  P/E or FCF YieldFCF Yield=4.9%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive16/16 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap7.6%

  ✓Ackman>= 4%

  Price / FCF per Share20.4x

  ✓Ackman<= 25

  Positive Operating Cash Flow frequency19/19 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$2.9M

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

  (Operating cash flow - capex) / market capitalization+7.57%; #1074/4519 (top 23.8%)

  ✗OshaughnessyTop 10% of eligible cross-section