Value
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.9 |
| P/S | 8.5 |
| EV/EBITDA | 2.1 |
| Fwd P/E | 6.7 |
| PEG | 4.6 |
| Analyst target | 4.0 |
- ▸Forward P/E: 19.2x
- ▸PEG: 1.86
CHE · Why this verdict
Why Chemed (CHE) is rated HOLD
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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VerdictHOLD
Overall score6.2/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Chemed carries strong cash conversion and a solid balance sheet, but 95% of revenue depends on government reimbursement and the company has missed earnings estimates in 3 of the last 4 quarters — a combination of structural payer concentration and recent execution shortfalls that justifies a cautious stance while momentum and risk/reward remain unfavorable.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Approximately 95% of revenue derives from Medicare and Medicaid reimbursement — well above the 70% level flagged as a government-payer cliff — meaning any adverse CMS rate change could materially impair revenue with little offset from commercial or private-pay channels. Bear case | Non-government payer revenue grows to more than 10% of total, reducing Medicare and Medicaid dependence below 90%. | →Stable |
| CounterGovernment payer concentration provides a high degree of revenue predictability and creates barriers to entry in regulated care settings; if CMS rates hold steady or improve, the same concentration that creates downside risk also anchors stable, recurring revenue. | ||
Free cash flow ran at 134% of net income last period and the Piotroski F-Score is 7 out of 9, indicating that the underlying business generates real cash meaningfully in excess of reported earnings. Quality breakdown | Free cash flow as a percentage of net income stays above 110% for the next four quarters, sustaining the cash quality signal. | →Stable |
| CounterWith three recent earnings misses, if the shortfall trend reflects genuine operational pressure, cash conversion may deteriorate as margins compress in future reporting periods. | ||
The company has missed consensus earnings estimates in 3 of the last 4 quarters, with an average EPS surprise of negative 4.5% over that window, suggesting estimates have persistently been set above what management can actually deliver. Catalyst breakdown | EPS surprise turns positive and exceeds 3% for 2 consecutive quarters, reestablishing delivery credibility. | ↑Improving |
| CounterThe most recent quarter delivered a beat of 6.6%, which could indicate the miss pattern has bottomed and that estimates have been sufficiently reset to enable more consistent execution going forward. | ||
A death-cross pattern has triggered a hard block on new exposure, price sits below the 200-day moving average with falling volume accumulation confirming net selling pressure, and momentum scores at 3.2 — below the 4.5 minimum needed to clear the gate. Engine gate (failed) | Price reclaims and holds above the 200-day moving average for at least 15 consecutive trading days, resolving the death-cross condition. | →Stable |
| CounterThe analysis notes the move below the 200-day average is recent and shallow, and characterizes the trend as too early to call definitively — the current weakness may not yet represent a confirmed structural breakdown. | ||
Approximately 95% of revenue derives from Medicare and Medicaid reimbursement — well above the 70% level flagged as a government-payer cliff — meaning any adverse CMS rate change could materially impair revenue with little offset from commercial or private-pay channels.
→StableBear case
- Expectation
- Non-government payer revenue grows to more than 10% of total, reducing Medicare and Medicaid dependence below 90%.
CounterGovernment payer concentration provides a high degree of revenue predictability and creates barriers to entry in regulated care settings; if CMS rates hold steady or improve, the same concentration that creates downside risk also anchors stable, recurring revenue.
Free cash flow ran at 134% of net income last period and the Piotroski F-Score is 7 out of 9, indicating that the underlying business generates real cash meaningfully in excess of reported earnings.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income stays above 110% for the next four quarters, sustaining the cash quality signal.
CounterWith three recent earnings misses, if the shortfall trend reflects genuine operational pressure, cash conversion may deteriorate as margins compress in future reporting periods.
The company has missed consensus earnings estimates in 3 of the last 4 quarters, with an average EPS surprise of negative 4.5% over that window, suggesting estimates have persistently been set above what management can actually deliver.
↑ImprovingCatalyst breakdown
- Expectation
- EPS surprise turns positive and exceeds 3% for 2 consecutive quarters, reestablishing delivery credibility.
CounterThe most recent quarter delivered a beat of 6.6%, which could indicate the miss pattern has bottomed and that estimates have been sufficiently reset to enable more consistent execution going forward.
A death-cross pattern has triggered a hard block on new exposure, price sits below the 200-day moving average with falling volume accumulation confirming net selling pressure, and momentum scores at 3.2 — below the 4.5 minimum needed to clear the gate.
→StableEngine gate (failed)
- Expectation
- Price reclaims and holds above the 200-day moving average for at least 15 consecutive trading days, resolving the death-cross condition.
CounterThe analysis notes the move below the 200-day average is recent and shallow, and characterizes the trend as too early to call definitively — the current weakness may not yet represent a confirmed structural breakdown.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.0 |
| ROA | 9.0 |
| Gross margin | 2.6 |
| Op margin | 5.3 |
| Net margin | 5.3 |
| Current ratio | 3.6 |
| FCF quality | 7.6 |
| Moat | 6.1 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 27%
- ▸Strong Piotroski F-Score: 8/9
Growth
7.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.7 |
| EPS growth | 10.0 |
Momentum
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.4 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 10.0 |
| vol acceleration | 8.5 |
- ▸Overbought (RSI 72)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
- ▸Volume surge (2.2x avg) on up move
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.8 |
| Analyst rating | 6.5 |
| Price target | 6.6 |
- ▸Light analyst coverage (5.0) — signal dampened
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $3,806,260 (0.055% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.9 |
| quality rank | 8.2 |
| growth rank | 5.9 |
- ▸Best-in-class margins
Technical
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 4.2 |
| 52w position | 9.0 |
| gap | 3.0 |
- ▸Extreme gap up (7.0%) - may pull back
Risk (lower is worse)
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.3 |
| days to cover | 6.7 |
| volatility | 5.9 |
| put call | 0.0 |
| implied vol | 7.1 |
| beta | 9.9 |
| debt equity | 8.6 |
| news risk | 6.0 |
- ▸Elevated put/call: 3.12
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.9 |
| dividend safety | 8.5 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend aristocrat: 0.6% yield
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD_NO_UPSIDEPassed (6)
- MOMENTUM:7.1>=5.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:118d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.5=NEGATIVE
- HEALTHCARE_GOV_PAYER:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
-0.45
Upside
-3.3%
Downside
7.5%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:7.1>=5.5. Top dim: Growth at 7.3; weakest: Technical at 4.0. No conviction either direction.
The strongest dimensions are Growth at 7.3, Momentum at 7.1, and Quality at 6.4; the weakest are Technical at 4.0, Value at 5.1, and Peer rank at 5.7. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -0.45 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Government Payer Concentration Cliff
Trip ifNon-government payer revenue grows to more than 10% of total revenue, reducing Medicare and Medicaid share below 90%.
- P2Strong Cash Conversion Quality
Trip ifFree cash flow as a percentage of net income falls below 90% for 2 consecutive quarters.
- P3Deteriorating Earnings Track Record
Trip ifEPS surprise exceeds 3% for 2 consecutive quarters, restoring a consistent delivery record.
- P4Negative Momentum Hard Gate Blocks
Trip ifPrice closes above the 200-day moving average for 15 consecutive trading days, resolving the death-cross pattern.