Value
7.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 9.9 |
| P/S | 9.2 |
| EV/EBITDA | 9.6 |
| Fwd P/E | 9.4 |
| PEG | 3.3 |
- ▸Forward P/E: 9.5x
- ▸PEG: 3.62
- ▸Attractively valued
ACIC · Why this verdict
Why American Coastal Insurance (ACIC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The quality score of 6.5 is anchored by a return on equity near 36% and margins near 31%, with peer ranking calling the margins best in class. Quality breakdown | Return on equity and margins should hold near their current elite levels over the next 12 months for the quality read to be sustained. | →Stable |
| CounterEarnings quality carries an explicit red flag, with free cash flow running at -17% of net income, meaning reported profitability is not converting fully into cash. | ||
The position has only 3.1% upside to its analyst-based target against 5.2% downside to stop, producing a reward-to-risk ratio of 0.23 that failed the 1.5 asymmetry bar at spot. Engine gate (failed) | A wider upside margin, well above the current 3.1%, would need to open for the reward-to-risk ratio to clear the 1.5 bar over the next 12 months. | →Stable |
| CounterMomentum remains strong at 6.6, with the stock overbought on RSI at 79 and above its 200-day moving average, conditions that have historically preceded further upside extension in a strong uptrend. | ||
Despite the most recent quarter missing by -11.36%, the trailing four-quarter track record is still beat-heavy at three beats to one miss, with the average surprise a strongly positive 27.7%. Earnings | The company should return to beating estimates in the next reported quarter for the streak to be considered intact rather than broken. | →Stable |
| CounterThe most recent miss follows a stretch of unusually large beats, so a reversion toward smaller or negative surprises would not be surprising after such outsized prior quarters. | ||
Revenue growth is explicitly declining at -1%, with the growth score reading just 1.1, even as margins and profitability elsewhere in the business remain strong. Growth breakdown | Revenue growth should turn positive over the next 12 months for the declining-top-line concern to ease. | →Stable |
| CounterThe earnings-growth component and strong margin profile suggest profitability is being maintained through cost discipline even without top-line growth. | ||
Risk notes flag an elevated put/call ratio of 2.00 and implied volatility of 111%, alongside a debt-to-equity component reading a high 8.2, even as the stock trades near its 52-week high. Risk breakdown | The put/call ratio should normalize toward parity and implied volatility should ease over the next 12 months if the hedging pressure is unwinding. | →Stable |
| CounterShort interest reads only a moderate 7.8 on the risk-component scale, suggesting the elevated options hedging is not being reinforced by heavy short selling. | ||
The quality score of 6.5 is anchored by a return on equity near 36% and margins near 31%, with peer ranking calling the margins best in class.
→StableQuality breakdown
- Expectation
- Return on equity and margins should hold near their current elite levels over the next 12 months for the quality read to be sustained.
CounterEarnings quality carries an explicit red flag, with free cash flow running at -17% of net income, meaning reported profitability is not converting fully into cash.
The position has only 3.1% upside to its analyst-based target against 5.2% downside to stop, producing a reward-to-risk ratio of 0.23 that failed the 1.5 asymmetry bar at spot.
→StableEngine gate (failed)
- Expectation
- A wider upside margin, well above the current 3.1%, would need to open for the reward-to-risk ratio to clear the 1.5 bar over the next 12 months.
CounterMomentum remains strong at 6.6, with the stock overbought on RSI at 79 and above its 200-day moving average, conditions that have historically preceded further upside extension in a strong uptrend.
Despite the most recent quarter missing by -11.36%, the trailing four-quarter track record is still beat-heavy at three beats to one miss, with the average surprise a strongly positive 27.7%.
→StableEarnings
- Expectation
- The company should return to beating estimates in the next reported quarter for the streak to be considered intact rather than broken.
CounterThe most recent miss follows a stretch of unusually large beats, so a reversion toward smaller or negative surprises would not be surprising after such outsized prior quarters.
Revenue growth is explicitly declining at -1%, with the growth score reading just 1.1, even as margins and profitability elsewhere in the business remain strong.
→StableGrowth breakdown
- Expectation
- Revenue growth should turn positive over the next 12 months for the declining-top-line concern to ease.
CounterThe earnings-growth component and strong margin profile suggest profitability is being maintained through cost discipline even without top-line growth.
Risk notes flag an elevated put/call ratio of 2.00 and implied volatility of 111%, alongside a debt-to-equity component reading a high 8.2, even as the stock trades near its 52-week high.
→StableRisk breakdown
- Expectation
- The put/call ratio should normalize toward parity and implied volatility should ease over the next 12 months if the hedging pressure is unwinding.
CounterShort interest reads only a moderate 7.8 on the risk-component scale, suggesting the elevated options hedging is not being reinforced by heavy short selling.
TrendMatrix Research · core thesis
Engine thesis — one sentence
American Coastal Insurance shows strong margins and a beat-heavy earnings record, but a thin upside margin that failed the asymmetry gate, declining revenue, and elevated options hedging argue for trimming rather than adding at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 5.7 |
| Gross margin | 7.5 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 4.2 |
| FCF quality | 0.0 |
| Moat | 6.5 |
| Piotroski F | 4.4 |
- ▸Excellent ROE: 36%
- ▸Strong margins: 31%
- ▸Earnings quality RED FLAG: -17% FCF/NI
Growth
1.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.1 |
| EPS growth | 0.0 |
- ▸Declining revenue: -1%
Momentum
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.2 |
| MACD | 8.6 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Overbought (RSI 75)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.8 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 21%
Insider
7.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.4 |
| quality rank | 8.4 |
| growth rank | 1.5 |
- ▸Attractive P/E vs peers
- ▸Best-in-class margins
Technical
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.1 |
| support resistance | 1.1 |
| 52w position | 8.8 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 7.0 |
| volatility | 6.0 |
| put call | 0.0 |
| implied vol | 0.0 |
| debt equity | 8.2 |
- ▸Elevated put/call: 2.00
- ▸High IV: 82%
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.4>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:29d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.2<1.5@spot
Warning (0)
none
Reward-to-Risk
0.24
Upside
+2.9%
Downside
11.7%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 29d with 3/4 beat streak
SuitabilitySpeculative — Binary industry: Insurance - Property & Casualty
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.2<1.5@spot) reinforce the read. Current asymmetry R:R is 0.24 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.6, Insider at 7.5, and Catalyst at 6.7; the weakest are Growth at 1.1, Technical at 3.7, and Peer rank at 4.2. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 0.24 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality Margins Roe
Trip ifQuality score falls below 4.0 from the current 6.5.
- P2Thin Upside Failed Asymmetry Gate
Trip ifReward-to-risk ratio rises above 1.5 from the current 0.23.
- P3Earnings Beat Streak With Recent Miss
Trip ifEarnings surprise falls below 0% in 2 consecutive quarters.
- P4Declining Revenue Despite Margins
Trip ifRevenue growth turns positive, exceeding 0% YoY, from the current -1%.
- P5Elevated Put Call And Iv
Trip ifPut/call ratio falls below 1.0 from the current 2.00.