Value
4.3/10data confidence 50%| Component | Sub-score |
|---|---|
| P/S | 2.7 |
| Fwd P/E | 2.9 |
| PEG | 7.8 |
- ▸Forward P/E: 37.3x
- ▸PEG: 0.87
FEIM · Why this verdict
Why Frequency Electronics (FEIM) 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
Frequency Electronics is growing revenue 70% YoY with a Piotroski F-Score of 9/9 and 134% cash conversion, but 91% of revenue comes from U.S. Government programs, insiders sold $37.5M (5.2% of market cap), and 3 of the last 4 earnings reports missed.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing 70% YoY, with the July 2026 quarter at $23.5M versus $13.8M a year earlier, and cash conversion is 134% FCF/NI with a Piotroski F-Score of 9/9. Growth breakdown | Quarterly revenue should stay above $18.4M, in line with next-quarter estimates, and growth remain above 30% YoY. | →Stable |
| CounterRevenue is lumpy ($15.4M in April 2026 against $23.5M in July 2026) and net margin scores only 1.8, so quarterly jumps may reflect contract timing rather than a durable trend. | ||
U.S. Government programs account for 91.0% of revenue, tying results to defense budget and contract timing. Bear case | Government share of revenue should fall below 85% as commercial customers are added. | ↑Improving |
| CounterGovernment programs provide multi-year funded demand with low credit risk, so concentration also underpins the 70% growth. | ||
Earnings missed in 3 of the last 4 reports, and insiders sold $37.5M in 90 days, equal to 5.183% of market cap, with no buys. Bear case | The next report on 2026-12-10 should beat estimates and insider selling fall below 1% of market cap. | ↑Improving |
| CounterThe latest report on 2026-09-10 was a beat ($0.41), and the large sales were two transactions that may reflect a single holder rebalancing rather than a view on the business. | ||
The $81.17 analyst target is 26.5% above the $64.18 price against 14.1% downside, a reward-to-risk of 1.88, while RSI is oversold at 22 and the stock stays above its 200-day average. Upside pct | Price should rise toward the analyst target and momentum score recover above 4.5 from 2.9. | ↓Deteriorating |
| CounterFalling OBV, 11% short interest and a forward P/E of 33.4x leave the valuation demanding for a stock with a poor earnings record. | ||
Revenue is growing 70% YoY, with the July 2026 quarter at $23.5M versus $13.8M a year earlier, and cash conversion is 134% FCF/NI with a Piotroski F-Score of 9/9.
→StableGrowth breakdown
- Expectation
- Quarterly revenue should stay above $18.4M, in line with next-quarter estimates, and growth remain above 30% YoY.
CounterRevenue is lumpy ($15.4M in April 2026 against $23.5M in July 2026) and net margin scores only 1.8, so quarterly jumps may reflect contract timing rather than a durable trend.
U.S. Government programs account for 91.0% of revenue, tying results to defense budget and contract timing.
↑ImprovingBear case
- Expectation
- Government share of revenue should fall below 85% as commercial customers are added.
CounterGovernment programs provide multi-year funded demand with low credit risk, so concentration also underpins the 70% growth.
Earnings missed in 3 of the last 4 reports, and insiders sold $37.5M in 90 days, equal to 5.183% of market cap, with no buys.
↑ImprovingBear case
- Expectation
- The next report on 2026-12-10 should beat estimates and insider selling fall below 1% of market cap.
CounterThe latest report on 2026-09-10 was a beat ($0.41), and the large sales were two transactions that may reflect a single holder rebalancing rather than a view on the business.
The $81.17 analyst target is 26.5% above the $64.18 price against 14.1% downside, a reward-to-risk of 1.88, while RSI is oversold at 22 and the stock stays above its 200-day average.
↓DeterioratingUpside pct
- Expectation
- Price should rise toward the analyst target and momentum score recover above 4.5 from 2.9.
CounterFalling OBV, 11% short interest and a forward P/E of 33.4x leave the valuation demanding for a stock with a poor earnings record.
Per-dimension breakdown
Quality
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.0 |
| ROA | 2.0 |
| Gross margin | 3.6 |
| Op margin | 8.9 |
| Net margin | 1.8 |
| Current ratio | 7.7 |
| FCF quality | 9.5 |
| Moat | 7.1 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 134% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 70% YoY
Momentum
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.0 |
| Analyst rating | 5.0 |
| Price target | 8.8 |
- ▸LLM news sentiment: +0.60 (n=2)
- ▸Analyst upside: 33%
Insider
7.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 8.9 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.9 |
| quality rank | 3.6 |
| growth rank | 8.7 |
- ▸Industry growth leader
Technical
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.4 |
| support resistance | 5.5 |
| 52w position | 6.0 |
| gap | 5.0 |
Risk (lower is worse)
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.5 |
| days to cover | 7.9 |
| volatility | 0.0 |
| put call | 5.2 |
| implied vol | 0.5 |
| max pain risk | 3.0 |
| beta | 9.5 |
| debt equity | 9.8 |
| news risk | 6.0 |
- ▸High IV: 77%
- ▸Above max pain $40
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 6.0 |
- ▸Earnings concerns: 1B/3M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.9<4.5
- ASYMMETRY:0.9<1.5@spot
Warning (0)
none
Reward-to-Risk
0.89
Upside
+13.4%
Downside
15.0%
Sizing output
AVOID
SetupRange Bound — RSI 45 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $0.8B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 10.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.9<4.5, ASYMMETRY:0.9<1.5@spot) reinforce the read. Current asymmetry R:R is 0.89 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 10.0, Sentiment at 7.1, and Insider at 7.0; the weakest are Catalyst at 2.9, Momentum at 3.9, and Value at 4.3. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.89 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Rapid Growth Strong Cash Conversion
Trip ifQuarterly revenue falls below $15M.
- P2Government Customer Concentration
Trip ifU.S. Government programs exceed 95% of revenue.
- P3Earnings Miss And Insider Selling
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P4Analyst Upside Versus Oversold Trend
Trip ifShare price drops to $59.69 or lower, the stop-loss level, from the current $64.18.