Wayfair Inc.

Where It Passes

Where It Falls Short

• Debt & Leverage0% pass✗ 15▾

  All 12 investors flag W's debt & leverage

  LT Debt vs Net Current AssetsLT Debt $2.6B vs NCA $-821.0M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: N/A (negative equity), IC: 0.1x

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

  Total Debt / EquityN/A (negative equity)

  ✗Lynch< 0.33

  Cash - Long-term Debt$-1.5B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change83.32% -> 93.98%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.67

  ✗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=0.1x, D/EBITDA=10.2x

  ✗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
• Valuation0% pass✓ 1✗ 27▾

  No clean pass — all 13 investors flag at least one valuation criterion

  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)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value1.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.7%, ROC=N/A (invested capital <= 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)26.8x

  ✗Dreman< 8x

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

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

  Valuation ReasonablenessOE Yield=-0.5%

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

  P/E or FCF YieldFCF Yield=3.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical Average

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share30.9x

  ✗Ackman<= 25

  Price vs. Trailing Low371% of trailing low ($30.16)

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

  Net income / market capitalization-1.04%; #3413/6340 (top 53.8%)

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

  Positive book equity / market capitalization-0.1831; #5803/6449 (top 90.0%)

  ✗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 ShareN/A (non-positive TBVPS)

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

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

  Revenue / market capitalization+0.8624; #1944/5247 (top 37.0%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+3.93%; #1809/4519 (top 40.0%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+75.07%; #460/6202 (top 7.4%)

  ✓OshaughnessyTop 10% of eligible cross-section
• Growth0% pass✓ 2✗ 11▾

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

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

  ✗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 GrowthInv: 27.1% vs Rev: 7.9%

  ✗LynchInventory growth < Revenue growth

  EPS Growth Direction$-0.80 (2012) -> $-2.44 (2025)

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency1/14 years positive

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

  3yr Median Revenue Growth-1.3%

  ✗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

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 30.6% -> 30.2%, operating margin -6.8% -> 0.1%

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

  5-year Revenue CAGR-2.5%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Valuation models0% pass✗ 2▾

  W overvalued: all 2 models price fair value below $111.92 (median $42.09)

  Munger fair value$45.08

  ✗Munger-148.3% margin vs $111.92

  Ackman fair value$39.09

  ✗Ackman-186.3% margin vs $111.92
• Profitability6% pass✓ 7✗ 28▾

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

  Positive EPS (10 years)1/15 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)1/15 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-108.4%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)0.1% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-78.0M

  ✗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)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

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

  ROEN/A (negative equity)

  ✗Lynch> 15%

  EBIT / Enterprise Value1.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.7%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-9.10%

  ✗PiotroskiROA > 0

  ROA Change YoY-14.22% -> -9.10% (delta: +5.12%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=15.52%, ROA=-9.10%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY30.2% -> 30.2%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue-1.1%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity

  ✗Dreman> 12%

  Margin of Safety

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-108.4% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency1/14 years positive

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

  Operating Income / Revenue2.1%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-6.8% (2023) -> 0.1% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 30.6% -> 30.2%, operating margin -6.8% -> 0.1%

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

  Net income / market capitalization-1.04%; #3413/6340 (top 53.8%)

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

  Gross profit / total assets+125.55%; #93/3702 (top 2.5%)

  ✓AsnessTop 30% of eligible cross-section

  Net income / positive book equity

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.1179; #3680/5884 (top 62.5%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years1/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Efficiency13% pass✓ 2✗ 9▾

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

  Current Ratio0.67

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)

  ✗Buffett> 10%

  ROIC - WACC

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)N/A (invested capital <= 0)

  ✗Greenblatt> 25%

  Current Ratio Change YoY0.79 -> 0.94

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY3.43x -> 3.62x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities0.67

  ✗Dreman> 1.5

  Return on Invested CapitalN/A (non-positive invested capital)

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-127.9%; FY2024: ROIC=-100.3%; FY2025: ROIC=2.7%

  ✗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 2.7%)

  ✗SleepROIC > 12% in a majority of years
• Verdicts15% pass✓ 2✗ 11▾

  Split decision: 11 FAIL · 3 NEUTRAL · 2 PASS

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (1/9)✗LynchFAIL (1/7)•GreenblattNot ranked•PiotroskiNEUTRAL (F-Score 6)✗DremanFAIL (1/11)✗MungerFAIL (0/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (0/5)✓AckmanPASS (4/9)✗TempletonFAIL (2/8)✓SleepPASS (3/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (1/6)✗SchlossFAIL (0/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow40% pass✓ 6✗ 6▾

  6 of 10 flag W's cash flow — Buffett, Dreman, Pabrai +3 more

  Free Cash Flow Proxy$-78.0M

  ✗BuffettPositive and growing

  FCF Positive and Growing$602.0M

  ✓LynchPositive and growing

  Operating Cash Flow$534.0M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=15.52%, ROA=-9.10%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)26.8x

  ✗Dreman< 8x

  P/E or FCF YieldFCF Yield=3.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive7/14 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap4.2%

  ✓Ackman>= 4%

  Price / FCF per Share30.9x

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency12/14 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$602.0M

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

  (Operating cash flow - capex) / market capitalization+3.93%; #1809/4519 (top 40.0%)

  ✗OshaughnessyTop 10% of eligible cross-section