Warner Bros. Discovery, Inc.

Where It Passes

Where It Falls Short

• Efficiency0% pass✓ 1✗ 10▾

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

  Current Ratio0.78

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)-2.3%

  ✗Buffett> 10%

  ROIC - WACC-12.3%

  ✗BuffettPositive (WACC = 10%)

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

  ✗Greenblatt> 25%

  Current Ratio Change YoY0.89 -> 1.06

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.38x -> 0.37x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities0.78

  ✗Dreman> 1.5

  Return on Invested Capital-1.5%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-1.4%; FY2024: ROIC=-10.8%; FY2025: ROIC=0.9%

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

  Reinvestment Rate x ROIC0.9% (RR=100% x ROIC=0.9%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 0.9%)

  ✗SleepROIC > 12% in a majority of years
• Valuation models0% pass✗ 6▾

  WBD overvalued: all 6 models price fair value below $30.95 (median $18.50)

  Graham fair value$9.72

  ✗Graham-218.4% margin vs $30.95

  Buffett fair value$24.68

  ✗Buffett-25.4% margin vs $30.95

  Munger fair value$15.90

  ✗Munger-94.7% margin vs $30.95

  Pabrai fair value$26.42

  ✗Pabrai-17.1% margin vs $30.95

  Akre fair value$21.09

  ✗Akre-46.8% margin vs $30.95

  Ackman fair value$10.41

  ✗Ackman-197.3% margin vs $30.95
• Profitability6% pass✓ 7✗ 28▾

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

  Positive EPS (10 years)11/22 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)18/22 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-9.0%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)2.0% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$5.2B

  ✓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-9.6%

  ✗Lynch> 15%

  EBIT / Enterprise Value-1.2%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-1.2%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets0.73%

  ✓PiotroskiROA > 0

  ROA Change YoY-10.82% -> 0.73% (delta: +11.54%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=4.32%, ROA=0.73%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY41.6% -> 44.0%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue-10.4%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity-9.6%

  ✗Dreman> 12%

  Margin of SafetyP/E=106.7x, P/B=2.1x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-12.7% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency18/22 years positive

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

  Operating Income / Revenue-3.5%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity-9.6%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-3.7% (2023) -> 2.0% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 40.6% -> 44.0%, operating margin -3.7% -> 2.0%

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

  Net income / market capitalization-4.08%; #3787/6340 (top 59.7%)

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

  Gross profit / total assets+16.40%; #2325/3702 (top 62.8%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity-9.64%; #3396/5226 (top 65.0%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0483; #2540/5884 (top 43.2%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years3/6 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Growth13% pass✓ 3✗ 10▾

  7 of 8 flag WBD'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

  ✗Dreman> 5% annualized

  Positive Net Income Frequency18/22 years positive

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

  3yr Median Revenue Growth-4.8%

  ✗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 trendgross margin 40.6% -> 44.0%, operating margin -3.7% -> 2.0%

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

  5-year Revenue CAGR28.4%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Verdicts14% pass✓ 2✗ 12▾

  Split decision: 12 FAIL · 2 NEUTRAL · 2 PASS

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (1/9)✗LynchFAIL (1/7)•GreenblattNot ranked•PiotroskiNEUTRAL (F-Score 7)✗DremanFAIL (1/11)✗MungerFAIL (1/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (2/5)✓AckmanPASS (4/9)✗TempletonFAIL (3/8)✓SleepPASS (3/6)✗AsnessFAIL (Rank #1551/2370 (Top 65.4%))✗NeffFAIL (2/6)✗SchlossFAIL (1/7)•OshaughnessyNEUTRAL (Not ranked)
• Valuation15% pass✓ 2✗ 26▾

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

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio2.1x

  ✗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-1.2%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=-1.2%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS106.7x

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

  Price / (CFO / Shares)17.8x

  ✗Dreman< 8x

  Price / Book Value per Share2.1x

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

  Valuation ReasonablenessP/E=106.7x, OE Yield=6.7%

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

  P/E or FCF YieldP/E=106.7x, FCF Yield=4.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=106.7x, P/B=2.1x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share24.9x

  ✓Ackman<= 25

  Price vs. Trailing Low357% of trailing low ($8.67)

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

  Net income / market capitalization-4.08%; #3787/6340 (top 59.7%)

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

  Positive book equity / market capitalization+0.4232; #3174/6449 (top 49.2%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS106.7x

  ✗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+0.4654; #2731/5247 (top 52.0%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+2.81%; #2082/4519 (top 46.1%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+14.42%; #1624/6202 (top 26.2%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Debt & Leverage25% pass✓ 4✗ 11▾

  9 of 12 flag WBD's debt & leverage — Graham, Buffett, Lynch +6 more

  Total Debt / Shareholders' Equity0.98

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

  LT Debt vs Net Current AssetsLT Debt $32.0B vs NCA $-3.6B

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.98, IC: -0.6x

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

  Total Debt / Equity0.98

  ✗Lynch< 0.33

  Cash - Long-term Debt$-28.7B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change37.78% -> 32.54%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.78

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

  Debt Levels0.98

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

  Interest Coverage & Debt/EBITDAIC=-0.6x, D/EBITDA=8.4x

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

  Total Debt / Shareholders Equity0.98

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.9752; #3198/4210 (top 76.0%)

  ✗AsnessTop 30% of eligible cross-section
• Cash Flow50% pass✓ 7✗ 5▾

  5 of 10 pass — Lynch, Dreman, Pabrai +2 more object

  Free Cash Flow Proxy$5.2B

  ✓BuffettPositive and growing

  FCF Positive and Growing$2.2B

  ✗LynchPositive and growing

  Operating Cash Flow$4.3B

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=4.32%, ROA=0.73%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)17.8x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=106.7x, FCF Yield=4.0%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive18/18 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap2.8%

  ✗Ackman>= 4%

  Price / FCF per Share24.9x

  ✓Ackman<= 25

  Positive Operating Cash Flow frequency20/20 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$2.2B

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

  (Operating cash flow - capex) / market capitalization+2.81%; #2082/4519 (top 46.1%)

  ✗OshaughnessyTop 10% of eligible cross-section