XOMA Royalty Corp

Where It Passes

Where It Falls Short

• Valuation models0% pass✗ 2▾

  XOMAP overvalued: all 2 models price fair value below $24.97 (median $16.27)

  Graham fair value$15.25

  ✗Graham-63.7% margin vs $24.97

  Pabrai fair value$17.29

  ✗Pabrai-44.4% margin vs $24.97
• Debt & Leverage8% pass✓ 3✗ 12▾

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

  LT Debt vs Net Current AssetsLT Debt $88.8M vs NCA $85.7M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 1.11, IC: 0.4x

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

  Total Debt / Equity1.11

  ✗Lynch< 0.33

  Cash - Long-term Debt$-3.2M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change48.30% -> 35.37%

  ✓PiotroskiDecreased YoY

  Current Assets / Current Liabilities3.59

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

  Total Debt / Shareholders' Equity1.11

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

  Debt Levels1.11

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

  Interest Coverage & Debt/EBITDAIC=0.9x, D/EBITDA=N/A (D&A unavailable)

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

  Total Debt / Shareholders Equity1.11

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-1.1073; #3331/4210 (top 79.1%)

  ✗AsnessTop 30% of eligible cross-section
• Valuation8% pass✓ 3✗ 25▾

  12 of 13 flag XOMAP's valuation — Graham, Lynch, Greenblatt +9 more

  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 Value1.6%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.6%, ROC=35.3%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS17.1x

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

  Price / (CFO / Shares)103.5x

  ✗Dreman< 8x

  Price / Book Value per Share3.5x

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

  Valuation ReasonablenessP/E=17.1x

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

  P/E or FCF YieldP/E=17.1x, FCF Yield=-32.3%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=17.1x, P/B=3.5x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Price vs. Trailing Low

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

  Net income / market capitalization+11.37%; #537/6340 (top 8.5%)

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

  Positive book equity / market capitalization+0.3124; #3645/6449 (top 56.5%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS17.1x

  ✗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 Share7.59x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-8.3%

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

  Revenue / market capitalization+0.1633; #3970/5247 (top 75.7%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization-32.32%; #3691/4519 (top 81.7%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date

  ✗OshaughnessyTop 10% of eligible cross-section
• Cash Flow10% pass✓ 2✗ 10▾

  9 of 10 flag XOMAP's cash flow — Lynch, Piotroski, Dreman +6 more

  Free Cash Flow Proxy$13.3M

  ✓BuffettPositive and growing

  FCF Positive and Growing$-96.1M

  ✗LynchPositive and growing

  Operating Cash Flow$2.9M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=1.05%, ROA=11.63%

  ✗PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)103.5x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=17.1x, FCF Yield=-32.3%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive3/15 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap-32.3%

  ✗Ackman>= 4%

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency5/17 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$-96.1M

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

  (Operating cash flow - capex) / market capitalization-32.32%; #3691/4519 (top 81.7%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth13% pass✓ 4✗ 9▾

  7 of 8 flag XOMAP'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 Frequency6/18 years positive

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

  3yr Median Revenue Growth83.1%

  ✓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 -879.5% -> 21.8%

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

  5-year Revenue CAGR12.2%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

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

  Split decision: 11 FAIL · 3 NEUTRAL · 2 PASS

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (2/9)✗LynchFAIL (2/7)✗GreenblattRank #1362•PiotroskiNEUTRAL (F-Score 6)✗DremanFAIL (3/11)✓MungerPASS (2/4)✗PabraiFAIL (0/3)✗AkreFAIL (0/6)✗MarksFAIL (0/5)✗AckmanFAIL (3/9)✗TempletonFAIL (3/8)✓SleepPASS (3/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (2/7)•OshaughnessyNEUTRAL (Not ranked)
• Profitability19% pass✓ 13✗ 22▾

  13 of 16 flag XOMAP's profitability — Graham, Buffett, Lynch +10 more

  Positive EPS (10 years)5/27 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)6/27 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-6.6%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)21.8% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$13.3M

  ✓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

  ROE36.4%

  ✓Lynch> 15%

  EBIT / Enterprise Value1.6%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.6%, ROC=35.3%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets11.63%

  ✓PiotroskiROA > 0

  ROA Change YoY-6.25% -> 11.63% (delta: +17.87%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=1.05%, ROA=11.63%

  ✗PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue61.0%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity36.4%

  ✓Dreman> 12%

  Margin of SafetyP/E=17.1x, P/B=3.5x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-10.2% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency6/18 years positive

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

  Operating Income / Revenue10.2%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity36.4%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-879.5% (2023) -> 21.8% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin -879.5% -> 21.8%

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

  Net income / market capitalization+11.37%; #537/6340 (top 8.5%)

  ✓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+36.40%; #341/5226 (top 6.5%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.1160; #3664/5884 (top 62.3%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years4/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Efficiency38% pass✓ 4✗ 7▾

  5 of 8 flag XOMAP's efficiency — Buffett, Piotroski, Munger +2 more

  Current Ratio3.59

  ✓Graham>= 2.0

  ROIC (3-5 yr avg)-13.2%

  ✗Buffett> 10%

  ROIC - WACC-23.2%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)35.3%

  ✓Greenblatt> 25%

  Current Ratio Change YoY5.15 -> 3.37

  ✗PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.13x -> 0.19x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities3.59

  ✓Dreman> 1.5

  Return on Invested Capital2.0%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-15.5%; FY2024: ROIC=-17.5%; FY2025: ROIC=4.7%

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

  Reinvestment Rate x ROIC1.7% (RR=84% x ROIC=2.0%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/4 years above 12% (latest 4.7%)

  ✗SleepROIC > 12% in a majority of years