Value
7.2/10data confidence 33%| Component | Sub-score |
|---|---|
| P/S | 8.9 |
| Analyst target | 6.0 |
- ▸Attractively valued
KIDS · Why this verdict
Why OrthoPediatrics (KIDS) is rated SELL
Updated
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The quality composite score of 3.4 sits below the engine's 4.0 floor, triggering an action note to exit the position. Warnings | Quality score should recover to at least 4.0 over the next 12 months for the position to be re-considered viable. | →Stable |
| CounterThe quality shortfall is driven mainly by cash burn (-2% of revenue) rather than balance sheet risk, given a current ratio of 7.8 and a moat score of 6.5, so it could recover faster than a structurally impaired business. | ||
The company has beaten earnings estimates in all of the last 4 quarters, with an average surprise of 20.4%. Earnings | The beat streak should continue with a positive average surprise over the next four reported quarters if the streak is durable. | →Stable |
| CounterBeats against negative EPS estimates in a still-unprofitable business can reflect modest absolute improvements rather than a genuine acceleration in profitability. | ||
The stock is in a golden-cross breakout, trading above all major moving averages with an RSI of 66 and bullish MACD. Chart pattern detection | The stock should remain above its key moving averages and RSI should stay above 50 over the next 12 months if the breakout setup holds. | →Stable |
| CounterA breakout in a small, thinly-covered stock ($0.5B market cap, described as below institutional reach) can reverse quickly without sustained institutional buying support. | ||
The V9 expert panel flagged a failed asymmetry gate at 0.5 versus the 1.5 threshold, driving an avoid position-sizing recommendation despite the passed momentum gate. Engine gate (failed) | The asymmetry ratio should rise to at least 1.5 over the next 12 months for position sizing to move off avoid. | →Stable |
| CounterThe passed momentum gate near its 4.5 threshold and ongoing breakout setup suggest the risk/reward profile could improve quickly if the rally continues. | ||
The company is cash-burning at -2% of revenue and fails the Rule of 40 test at a combined score of 11. Quality breakdown | Free cash flow should turn positive and the Rule of 40 combined score should rise to at least 40 over the next 12 months if the growth-profitability balance improves. | →Stable |
| CounterA modest -2% cash burn alongside 5.8% revenue growth and a strong Piotroski F-Score of 6.7 suggests the underlying business is closer to break-even than the Rule of 40 fail implies. | ||
The quality composite score of 3.4 sits below the engine's 4.0 floor, triggering an action note to exit the position.
→StableWarnings
- Expectation
- Quality score should recover to at least 4.0 over the next 12 months for the position to be re-considered viable.
CounterThe quality shortfall is driven mainly by cash burn (-2% of revenue) rather than balance sheet risk, given a current ratio of 7.8 and a moat score of 6.5, so it could recover faster than a structurally impaired business.
The company has beaten earnings estimates in all of the last 4 quarters, with an average surprise of 20.4%.
→StableEarnings
- Expectation
- The beat streak should continue with a positive average surprise over the next four reported quarters if the streak is durable.
CounterBeats against negative EPS estimates in a still-unprofitable business can reflect modest absolute improvements rather than a genuine acceleration in profitability.
The stock is in a golden-cross breakout, trading above all major moving averages with an RSI of 66 and bullish MACD.
→StableChart pattern detection
- Expectation
- The stock should remain above its key moving averages and RSI should stay above 50 over the next 12 months if the breakout setup holds.
CounterA breakout in a small, thinly-covered stock ($0.5B market cap, described as below institutional reach) can reverse quickly without sustained institutional buying support.
The V9 expert panel flagged a failed asymmetry gate at 0.5 versus the 1.5 threshold, driving an avoid position-sizing recommendation despite the passed momentum gate.
→StableEngine gate (failed)
- Expectation
- The asymmetry ratio should rise to at least 1.5 over the next 12 months for position sizing to move off avoid.
CounterThe passed momentum gate near its 4.5 threshold and ongoing breakout setup suggest the risk/reward profile could improve quickly if the rally continues.
The company is cash-burning at -2% of revenue and fails the Rule of 40 test at a combined score of 11.
→StableQuality breakdown
- Expectation
- Free cash flow should turn positive and the Rule of 40 combined score should rise to at least 40 over the next 12 months if the growth-profitability balance improves.
CounterA modest -2% cash burn alongside 5.8% revenue growth and a strong Piotroski F-Score of 6.7 suggests the underlying business is closer to break-even than the Rule of 40 fail implies.
TrendMatrix Research · core thesis
Engine thesis — one sentence
OrthoPediatrics has beaten earnings in all of the last 4 quarters and shows a technical breakout on a golden cross, but quality sits below the engine's floor due to cash burn and a failed Rule of 40 test, and the asymmetry gate failed, keeping position sizing at avoid.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 10.0 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 7.8 |
| FCF quality | 0.0 |
| Moat | 6.5 |
| Rule of 40 | 3.0 |
| Piotroski F | 6.7 |
- ▸Cash-burning: FCF -2% of revenue
- ▸Rule of 40: 11 (fail)
Growth
5.8/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 5.8 |
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 7.5 |
| OBV | 1.0 |
| MA position | 8.0 |
| Volume | 3.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 8.2 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 25%
Insider
4.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 3.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.6 |
| quality rank | 3.2 |
| growth rank | 5.6 |
Technical
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.8 |
| support resistance | 4.4 |
| 52w position | 6.7 |
Risk (lower is worse)
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.5 |
| days to cover | 3.5 |
| volatility | 0.0 |
| implied vol | 0.0 |
| beta | 7.1 |
| debt equity | 8.7 |
- ▸High IV: 89%
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (7)
- MOMENTUM:5.0>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:29d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.8<1.5@spot
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
0.80
Upside
+8.6%
Downside
10.7%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 59, MACD bullish
EdgeCatalyst-Driven — Earnings in 29d with 4/4 beat streak
SuitabilityAggressive — MCap $0.5B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Catalyst at 7.5 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:0.8<1.5@spot.
The strongest dimensions are Catalyst at 7.5, Value at 7.2, and Sentiment at 6.0; the weakest are Quality at 3.4, Insider at 4.0, and Risk (lower is worse) at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.80 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Quality Below Floor
Trip ifQuality score falls below 2.5, further below the 4.0 floor.
- P2Perfect Earnings Beat Streak
Trip ifEarnings surprise stays below 0% for 1 quarter, ending the current 4-quarter streak of 100% beats.
- P3Technical Breakout Setup
Trip ifRSI falls below 50 from the current 66, breaking the breakout setup.
- P4Failed Asymmetry Gate
Trip ifAsymmetry ratio falls below 0.3, further from the 1.5 gate threshold.
- P5Cash Burn Rule Of 40 Fail
Trip ifFree cash flow burn exceeds 10% of revenue, worse than the current -2%.