Value
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 6.5 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.6 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 26.9x
- ▸PEG: 0.09
CVLT · Why this verdict
Why Commvault Systems (CVLT) 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 score5.9/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Commvault combines a wide economic moat with free cash flow running at roughly four times reported net income and strong price momentum that has cleared its upper threshold. The critical concern is that the stock has reached its near-term resistance target with less than 1% headroom — creating a reward-to-risk ratio of approximately 0.03 to 1 — while two of the two most recent earnings results missed consensus and financial leverage stands above 120%.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Both revenue and earnings growth scores are high and return on equity stands at roughly 42%, indicating the business is compounding capital efficiently; however, a debt-to-equity ratio above 120% amplifies downside risk if earnings soften unexpectedly. Bear case | Revenue grows above 10% year-over-year for 2 consecutive quarters, confirming the high-tier growth characterization, while debt-to-equity stays below 150%. | →Stable |
| CounterThe return on equity of 42% and strong cash generation are partly a function of the leveraged capital structure; de-levering — whether by choice or necessity — would reduce reported return on equity even if operating profits grow. | ||
The business carries a wide economic moat and converts reported net income to free cash flow at roughly four times — an exceptionally strong ratio indicating that accounting earnings are substantially backed by real cash, supporting resilient shareholder returns across market cycles. Quality breakdown | Free cash flow conversion remains above 200% of net income for the next four quarters, confirming the structural quality advantage is maintained. | →Stable |
| CounterAn elevated free cash flow-to-net-income ratio can compress if the business needs to accelerate investment spending for product development or go-to-market expansion; if growth investment intensifies, conversion may normalize toward net income. | ||
Price momentum has cleared the upper threshold with the MACD improving and on-balance volume in accumulation, suggesting institutional buying has resumed; however, the relative strength index is at 81 — a historically overbought level — and the 200-day moving average slope is flat or negative, flagging late-cycle distribution risk. Momentum breakdown | The relative strength index normalizes below 65 without breaking the underlying uptrend, and on-balance volume continues rising over the next two quarters. | ↓Deteriorating |
| CounterA relative strength index above 80 in a momentum-led recovery can persist for multiple quarters before reverting; if the underlying business continues to deliver, the technically overbought condition may resolve through time rather than price correction. | ||
The two most recent earnings results both missed consensus — the newest by 38% and the prior quarter by roughly 3% — and the four-quarter average surprise has turned modestly negative, raising questions about whether guidance discipline has deteriorated or the business is entering a softer demand phase. Earnings | The next two quarterly results both beat consensus, restoring a positive average quarterly surprise, to demonstrate the miss pattern is transient rather than a trend. | ↑Improving |
| CounterTwo of the four quarters also produced meaningful beats, including a 19% positive surprise; lumpy timing of enterprise software contract recognitions can cause single-quarter misses that do not reflect underlying demand health. | ||
With only about 0.2% of headroom to the near-term resistance target and a reward-to-risk ratio of roughly 0.03 to 1, the current price offers essentially no compensation for the downside risk; holding near this level without a fresh catalyst requires accepting an extreme asymmetry against the investor. Price targets | Upside to the near-term price target exceeds 8% on any new entry evaluation, restoring a risk/reward profile that justifies position exposure. | →Stable |
| CounterNear-term resistance levels can reset rapidly after a positive earnings catalyst; if the company raises guidance at the next print, analyst price targets could move materially higher, making the current near-target reading a temporary condition. | ||
Both revenue and earnings growth scores are high and return on equity stands at roughly 42%, indicating the business is compounding capital efficiently; however, a debt-to-equity ratio above 120% amplifies downside risk if earnings soften unexpectedly.
→StableBear case
- Expectation
- Revenue grows above 10% year-over-year for 2 consecutive quarters, confirming the high-tier growth characterization, while debt-to-equity stays below 150%.
CounterThe return on equity of 42% and strong cash generation are partly a function of the leveraged capital structure; de-levering — whether by choice or necessity — would reduce reported return on equity even if operating profits grow.
The business carries a wide economic moat and converts reported net income to free cash flow at roughly four times — an exceptionally strong ratio indicating that accounting earnings are substantially backed by real cash, supporting resilient shareholder returns across market cycles.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 200% of net income for the next four quarters, confirming the structural quality advantage is maintained.
CounterAn elevated free cash flow-to-net-income ratio can compress if the business needs to accelerate investment spending for product development or go-to-market expansion; if growth investment intensifies, conversion may normalize toward net income.
Price momentum has cleared the upper threshold with the MACD improving and on-balance volume in accumulation, suggesting institutional buying has resumed; however, the relative strength index is at 81 — a historically overbought level — and the 200-day moving average slope is flat or negative, flagging late-cycle distribution risk.
↓DeterioratingMomentum breakdown
- Expectation
- The relative strength index normalizes below 65 without breaking the underlying uptrend, and on-balance volume continues rising over the next two quarters.
CounterA relative strength index above 80 in a momentum-led recovery can persist for multiple quarters before reverting; if the underlying business continues to deliver, the technically overbought condition may resolve through time rather than price correction.
The two most recent earnings results both missed consensus — the newest by 38% and the prior quarter by roughly 3% — and the four-quarter average surprise has turned modestly negative, raising questions about whether guidance discipline has deteriorated or the business is entering a softer demand phase.
↑ImprovingEarnings
- Expectation
- The next two quarterly results both beat consensus, restoring a positive average quarterly surprise, to demonstrate the miss pattern is transient rather than a trend.
CounterTwo of the four quarters also produced meaningful beats, including a 19% positive surprise; lumpy timing of enterprise software contract recognitions can cause single-quarter misses that do not reflect underlying demand health.
With only about 0.2% of headroom to the near-term resistance target and a reward-to-risk ratio of roughly 0.03 to 1, the current price offers essentially no compensation for the downside risk; holding near this level without a fresh catalyst requires accepting an extreme asymmetry against the investor.
→StablePrice targets
- Expectation
- Upside to the near-term price target exceeds 8% on any new entry evaluation, restoring a risk/reward profile that justifies position exposure.
CounterNear-term resistance levels can reset rapidly after a positive earnings catalyst; if the company raises guidance at the next print, analyst price targets could move materially higher, making the current near-target reading a temporary condition.
Per-dimension breakdown
Quality
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 2.8 |
| Gross margin | 10.0 |
| Op margin | 3.9 |
| Net margin | 3.3 |
| Current ratio | 6.8 |
| FCF quality | 10.0 |
| Moat | 7.5 |
| Rule of 40 | 5.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 74%
- ▸Excellent cash conversion: 379% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
7.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.8 |
| EPS growth | 10.0 |
Momentum
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 3.3 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.2 |
| Analyst rating | 7.4 |
| Price target | 7.0 |
- ▸LLM news sentiment: +0.44 (n=5)
Insider
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 9.7 |
| notable moves | 7.0 |
- ▸Modest insider selling — $4,446,471 (0.064% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.3 |
| quality rank | 6.9 |
| growth rank | 5.0 |
- ▸Superior ROE vs peers
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 2.7 |
| 52w position | 6.9 |
Risk (lower is worse)
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.8 |
| days to cover | 4.4 |
| volatility | 0.4 |
| put call | 7.0 |
| implied vol | 5.5 |
| max pain risk | 3.0 |
| debt equity | 0.0 |
| news risk | 5.0 |
- ▸Above max pain $100
Catalyst
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+2Passed (7)
- MOMENTUM:5.7>=5.5
- INSIDER:OK
- NEWS_BOOST:ANALYST:0.60
- NEWS_BOOST:ANALYST_CLUSTER(4)
- EARNINGS_PROXIMITY:88d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.2<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.19
Upside
+2.4%
Downside
12.5%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 62, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.9) 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 0.19 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.9, Catalyst at 7.6, and Sentiment at 7.2; the weakest are Peer rank at 3.5, Risk (lower is worse) at 3.8, and Technical at 3.9. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.19 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat Cash Generation
Trip ifFree cash flow conversion falls below 200% of net income for 2 consecutive quarters.
- P2Strong Growth Elevated Leverage
Trip ifRevenue growth falls below 10% year-over-year for 2 consecutive quarters.
- P3Momentum Recovery Late Cycle Risk
Trip ifRelative strength index falls below 40 for 2 consecutive months, signaling a momentum breakdown.
- P4Consecutive Recent Earnings Misses
Trip ifAverage earnings surprise exceeds 5% for 2 consecutive quarters, restoring the delivery cadence.
- P5Price At Target No Upside
Trip ifUpside to the near-term price target exceeds 8% on any new entry evaluation.