Value
3.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 2.8 |
| P/S | 8.5 |
| EV/EBITDA | 0.6 |
| Fwd P/E | 3.3 |
| PEG | 3.5 |
- ▸Forward P/E: 33.6x
- ▸PEG: 3.31
HSTM · Why this verdict
Why HealthStream (HSTM) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
HSTM has beaten or met earnings estimates in each of the last 4 quarters with a positive average surprise, and earnings estimates are trending up. Earnings | The earnings beat streak should continue, with average surprise staying positive over the next several quarters. | →Stable |
| CounterWith the analyst target already reached and valuation rich, good execution may already be priced in, offering limited further upside from beats alone. | ||
HSTM converts earnings into cash at an excellent rate and carries a strong Piotroski F-Score, indicating high fundamental quality. Quality breakdown | Free-cash-flow-to-net-income conversion should remain well above 100% and the Piotroski score should stay elevated over the next 12 months. | →Stable |
| CounterStrong quality metrics don't offset the rich valuation multiple already reflected in the stock's forward P/E. | ||
The stock trades at a rich forward P/E with an elevated PEG ratio, and the analyst target has effectively already been reached, leaving limited further upside. Valuation breakdown | Forward P/E should compress toward peer norms or earnings growth should catch up to justify the current multiple. | →Stable |
| CounterA strong growth profile and a beat-heavy earnings history could justify a premium multiple if growth continues to outpace peers. | ||
The engine's asymmetry ratio is negative, reflecting more downside risk than upside potential now that the price target has been reached near the 52-week high. Reward-to-risk math | The asymmetry ratio should turn positive again for the risk-reward profile to favor holding or adding. | →Stable |
| CounterBeing near a 52-week high with strong momentum could indicate the stock has room to make new highs rather than reverse. | ||
HSTM carries a leverage penalty from an elevated debt-to-equity ratio and shows a bearish insider signal with net insider selling over the trailing 90 days. Bear case | The insider signal should shift toward neutral or bullish, and the leverage penalty should ease as debt-to-equity improves. | →Stable |
| CounterThe insider selling involved a small number of shares across only 3 transactions and may reflect routine diversification rather than a considered bearish view. | ||
HSTM has beaten or met earnings estimates in each of the last 4 quarters with a positive average surprise, and earnings estimates are trending up.
→StableEarnings
- Expectation
- The earnings beat streak should continue, with average surprise staying positive over the next several quarters.
CounterWith the analyst target already reached and valuation rich, good execution may already be priced in, offering limited further upside from beats alone.
HSTM converts earnings into cash at an excellent rate and carries a strong Piotroski F-Score, indicating high fundamental quality.
→StableQuality breakdown
- Expectation
- Free-cash-flow-to-net-income conversion should remain well above 100% and the Piotroski score should stay elevated over the next 12 months.
CounterStrong quality metrics don't offset the rich valuation multiple already reflected in the stock's forward P/E.
The stock trades at a rich forward P/E with an elevated PEG ratio, and the analyst target has effectively already been reached, leaving limited further upside.
→StableValuation breakdown
- Expectation
- Forward P/E should compress toward peer norms or earnings growth should catch up to justify the current multiple.
CounterA strong growth profile and a beat-heavy earnings history could justify a premium multiple if growth continues to outpace peers.
The engine's asymmetry ratio is negative, reflecting more downside risk than upside potential now that the price target has been reached near the 52-week high.
→StableReward-to-risk math
- Expectation
- The asymmetry ratio should turn positive again for the risk-reward profile to favor holding or adding.
CounterBeing near a 52-week high with strong momentum could indicate the stock has room to make new highs rather than reverse.
HSTM carries a leverage penalty from an elevated debt-to-equity ratio and shows a bearish insider signal with net insider selling over the trailing 90 days.
→StableBear case
- Expectation
- The insider signal should shift toward neutral or bullish, and the leverage penalty should ease as debt-to-equity improves.
CounterThe insider selling involved a small number of shares across only 3 transactions and may reflect routine diversification rather than a considered bearish view.
TrendMatrix Research · core thesis
Engine thesis — one sentence
HSTM combines a consistent earnings-beat track record and excellent cash conversion with a rich valuation, elevated leverage, and a negative risk-reward asymmetry now that its price target has effectively been reached.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.9 |
| ROA | 1.9 |
| Gross margin | 9.0 |
| Op margin | 3.7 |
| Net margin | 3.2 |
| Current ratio | 3.9 |
| FCF quality | 10.0 |
| Moat | 7.9 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 250% FCF/NI
- ▸Wide economic moat
- ▸Strong Piotroski F-Score: 8/9
Growth
7.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.1 |
| EPS growth | 10.0 |
Momentum
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 9.3 |
| OBV | 6.3 |
| MA position | 8.0 |
| Volume | 2.2 |
- ▸Above 200-MA but MA slope flat
Sentiment
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.9 |
| Price target | 6.9 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (2.0) — signal dampened
Insider
5.5/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
- ▸Modest insider selling — $172,230 (0.020% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.4 |
| quality rank | 7.3 |
| growth rank | 4.2 |
Technical
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.8 |
| support resistance | 3.9 |
| 52w position | 8.8 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.6 |
| days to cover | 6.8 |
| volatility | 3.5 |
| implied vol | 0.0 |
| beta | 10.0 |
| debt equity | 9.8 |
- ▸High IV: 80%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.2 |
| dividend safety | 7.0 |
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:6.2>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.34
Upside
-3.5%
Downside
10.3%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 69, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $0.8B<$5B
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:6.2>=5.5. Top dim: Growth at 7.5; weakest: Value at 3.6. No conviction either direction.
The strongest dimensions are Growth at 7.5, Catalyst at 6.8, and Risk (lower is worse) at 6.3; the weakest are Value at 3.6, Technical at 4.8, and Insider at 5.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.34 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Earnings Beat Track Record
Trip ifEarnings miss consensus estimates by more than 5% for 2 consecutive quarters, breaking the current beat streak.
- P2Excellent Cash Conversion Quality
Trip ifFree-cash-flow-to-net-income ratio falls below 100%, eroding the current excellent cash-conversion quality.
- P3Rich Valuation With Limited Upside
Trip ifForward P/E compresses below 20x while EPS growth continues above 10%, resolving the valuation concern without a price decline.
- P4Negative Risk Reward Asymmetry
Trip ifAsymmetry ratio rises above 0.5, reversing the current negative risk-reward reading.
- P5Leverage Penalty And Insider Selling
Trip ifDebt-to-equity ratio falls below 2.0 and insider transactions turn net-positive, reversing both concerns.