Value
6.8/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.1 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 8.7 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 12.9x
- ▸PEG: 0.07
CGNT · Why this verdict
Why Cognyte Software (CGNT) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score6.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Cognyte combines an attractively valued multiple, a wide economic moat, and a three-of-four-quarter earnings beat streak with a business quality score still flagged as below average, a Rule of 40 fail, and a risk/reward ratio that falls just short of the engine's asymmetry bar, making this a hold pending confirmation that the recent miss was a blip rather than a trend.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Cognyte is flagged with a wide economic moat and a strong Piotroski F-Score of 8 out of 9, even though free cash flow margins remain modest at about 9% and the Rule of 40 score of 20 is a fail. Quality breakdown | The Rule of 40 score should climb above 40 over the next 12 months, aligning growth and margin performance with the moat characterization. | →Stable |
| CounterImplied volatility is elevated at about 84%, suggesting the market isn't yet treating the wide-moat characterization as a source of stability. | ||
Cognyte screens as attractively valued, with a forward P/E near 11.7x and an unusually low PEG ratio of 0.01, and the quality assessment separately identifies a wide economic moat. Valuation breakdown | The value score should stay elevated and the discount should narrow via price appreciation over the next 12 months. | →Stable |
| CounterDespite the moat characterization, the overall quality score is still flagged as below average, tempering how much the cheap multiple should be trusted as a clean mispricing. | ||
Cognyte missed earnings estimates in its most recent reported quarter by about 65%, breaking a streak of three consecutive beats that ranged from 167% to 350%. Earnings | The company should return to beating or meeting estimates, with EPS surprise at or above 0% in the next reported quarter. | ↑Improving |
| CounterThree of the last four quarters were still beats, so a single miss may not signal a broader deterioration in execution. | ||
Cognyte's reward-to-risk ratio of 1.2 falls just short of the engine's 1.5 asymmetry bar, even though the stock passes its momentum check and carries roughly 16.6% upside to target against about 13.5% downside. Engine gate (failed) | The reward-to-risk ratio should climb above 1.5 over the next 12 months as either the upside target rises or the downside risk narrows. | →Stable |
| CounterA higher analyst-implied upside of about 37% than what's reflected in the current risk/reward calculation suggests there may be room for the ratio to improve as targets are reconciled. | ||
Cognyte is flagged with a wide economic moat and a strong Piotroski F-Score of 8 out of 9, even though free cash flow margins remain modest at about 9% and the Rule of 40 score of 20 is a fail.
→StableQuality breakdown
- Expectation
- The Rule of 40 score should climb above 40 over the next 12 months, aligning growth and margin performance with the moat characterization.
CounterImplied volatility is elevated at about 84%, suggesting the market isn't yet treating the wide-moat characterization as a source of stability.
Cognyte screens as attractively valued, with a forward P/E near 11.7x and an unusually low PEG ratio of 0.01, and the quality assessment separately identifies a wide economic moat.
→StableValuation breakdown
- Expectation
- The value score should stay elevated and the discount should narrow via price appreciation over the next 12 months.
CounterDespite the moat characterization, the overall quality score is still flagged as below average, tempering how much the cheap multiple should be trusted as a clean mispricing.
Cognyte missed earnings estimates in its most recent reported quarter by about 65%, breaking a streak of three consecutive beats that ranged from 167% to 350%.
↑ImprovingEarnings
- Expectation
- The company should return to beating or meeting estimates, with EPS surprise at or above 0% in the next reported quarter.
CounterThree of the last four quarters were still beats, so a single miss may not signal a broader deterioration in execution.
Cognyte's reward-to-risk ratio of 1.2 falls just short of the engine's 1.5 asymmetry bar, even though the stock passes its momentum check and carries roughly 16.6% upside to target against about 13.5% downside.
→StableEngine gate (failed)
- Expectation
- The reward-to-risk ratio should climb above 1.5 over the next 12 months as either the upside target rises or the downside risk narrows.
CounterA higher analyst-implied upside of about 37% than what's reflected in the current risk/reward calculation suggests there may be room for the ratio to improve as targets are reconciled.
Per-dimension breakdown
Quality
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.7 |
| ROA | 1.5 |
| Gross margin | 10.0 |
| Op margin | 1.7 |
| Net margin | 0.0 |
| Current ratio | 5.0 |
| FCF quality | 6.4 |
| Moat | 7.9 |
| Rule of 40 | 3.0 |
| Piotroski F | 8.9 |
- ▸FCF-positive despite GAAP loss (FCF margin 12%, FCF yield 6.9%)
- ▸Wide economic moat
- ▸Rule of 40: 24 (fail)
- ▸Strong Piotroski F-Score: 8/9
Growth
7.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.5 |
| EPS growth | 10.0 |
Momentum
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 8.8 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.6 |
| Analyst rating | 5.0 |
| Price target | 8.3 |
- ▸LLM news sentiment: +0.32 (n=3)
- ▸Analyst upside: 27%
Insider
5.0/10data confidence 50%Peer rank
5.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.1 |
| quality rank | 2.2 |
| growth rank | 4.0 |
Technical
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 3.5 |
| 52w position | 5.8 |
| gap | 6.0 |
Risk (lower is worse)
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.6 |
| days to cover | 10.0 |
| volatility | 1.2 |
| put call | 8.7 |
| implied vol | 3.2 |
| max pain risk | 7.0 |
| beta | 4.7 |
| debt equity | 9.4 |
| news risk | 6.0 |
- ▸High IV: 61%
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 7.0 |
- ▸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:39d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.5<1.5@spot
Warning (1)
- DEATH_CROSS:momentum=6.4>=5.0 recovering
Reward-to-Risk
0.53
Upside
+7.9%
Downside
14.9%
Sizing output
AVOID
SetupMomentum Cont — Trend continuation, RSI 64, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.59>1.3, MCap $0.7B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.5<1.5@spot) reinforce the read. Current asymmetry R:R is 0.53 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.8, Value at 6.8, and Catalyst at 6.7; the weakest are Technical at 4.3, Quality at 4.5, and Peer rank at 5.0. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.53 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Attractive Valuation Wide Moat
Trip ifShares decline more than 15% without any re-rating in the multiple, confirming continued de-rating instead of value realization.
- P2Wide Moat Strong Balance Sheet
Trip ifRule of 40 score rises above 40, reversing the current failing reading of 20.
- P3Recent Miss After Beat Streak
Trip ifEPS surprise rises above 0% for 2 consecutive quarters, reversing the current miss.
- P4Reward Risk Just Under Bar
Trip ifReward-to-risk ratio rises above 2.0, moving well past the current 1.2 reading and clearing the engine's asymmetry bar with room to spare.