Value
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.1 |
| P/S | 6.2 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 6.4 |
| PEG | 4.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 20.0x
- ▸PEG: 2.52
NTAP · Why this verdict
Why NetApp (NTAP) 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 score6.2/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
NetApp is a high-quality compounder with 30% revenue growth, a 115% return on equity and four straight earnings beats, but the stock trades 11.6% above the analyst target and insiders are selling.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue grew about 30% year over year, with $2.025B in the July 2026 quarter against $1.559B a year earlier. Growth breakdown | Revenue should keep growing at 15% or better toward the $2.10B next-quarter estimate. | →Stable |
| CounterA 30% rate is well above the historical 5% to 8% pace seen through 2024 and 2025, so growth could slow back sharply. | ||
Return on equity is excellent at 115%, margins are strong at 19%, the economic moat is wide and the Rule of 40 score is 46. Quality breakdown | Return on equity should stay above 80% and margins near 19% over the next 12 months. | →Stable |
| CounterThe high return on equity partly reflects leverage (debt to equity of 1.7), which also triggered a 1.0 leverage penalty in the score. | ||
The company beat EPS estimates in all 4 of the last quarters with an average surprise of about 10.1%, including a 21.5% beat to $2.58 in the latest report. Earnings track record | EPS should keep meeting or beating estimates at the 1 December 2026 report. | ↑Improving |
| CounterThe latest beat was much larger than the prior three (2.8% to 8.8%), so the next report faces a tougher comparison. | ||
Price of $215.48 is 11.6% above the $190.52 analyst target, with about 7% downside to the $200.40 stop. Upside pct | Analyst targets should rise toward the current price if growth persists. | ↓Deteriorating |
| CounterA negative reward-to-risk of -1.4 and a put/call ratio of 2.20 mean there is no valuation cushion against a slowdown. | ||
Insiders made 24 sales worth $36.2M in 90 days with no buys, which is only 0.086% of market cap and not a signal of trouble. Insider selling | Insider selling should stay below 0.2% of market cap over the next 12 months. | →Stable |
| CounterThe signal is bearish with zero insider buys, and selling at 24 transactions in a quarter suggests insiders see the stock as fully valued. | ||
Revenue grew about 30% year over year, with $2.025B in the July 2026 quarter against $1.559B a year earlier.
→StableGrowth breakdown
- Expectation
- Revenue should keep growing at 15% or better toward the $2.10B next-quarter estimate.
CounterA 30% rate is well above the historical 5% to 8% pace seen through 2024 and 2025, so growth could slow back sharply.
Return on equity is excellent at 115%, margins are strong at 19%, the economic moat is wide and the Rule of 40 score is 46.
→StableQuality breakdown
- Expectation
- Return on equity should stay above 80% and margins near 19% over the next 12 months.
CounterThe high return on equity partly reflects leverage (debt to equity of 1.7), which also triggered a 1.0 leverage penalty in the score.
The company beat EPS estimates in all 4 of the last quarters with an average surprise of about 10.1%, including a 21.5% beat to $2.58 in the latest report.
↑ImprovingEarnings track record
- Expectation
- EPS should keep meeting or beating estimates at the 1 December 2026 report.
CounterThe latest beat was much larger than the prior three (2.8% to 8.8%), so the next report faces a tougher comparison.
Price of $215.48 is 11.6% above the $190.52 analyst target, with about 7% downside to the $200.40 stop.
↓DeterioratingUpside pct
- Expectation
- Analyst targets should rise toward the current price if growth persists.
CounterA negative reward-to-risk of -1.4 and a put/call ratio of 2.20 mean there is no valuation cushion against a slowdown.
Insiders made 24 sales worth $36.2M in 90 days with no buys, which is only 0.086% of market cap and not a signal of trouble.
→StableInsider selling
- Expectation
- Insider selling should stay below 0.2% of market cap over the next 12 months.
CounterThe signal is bearish with zero insider buys, and selling at 24 transactions in a quarter suggests insiders see the stock as fully valued.
Per-dimension breakdown
Quality
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 7.8 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 9.6 |
| Current ratio | 4.7 |
| FCF quality | 6.1 |
| Moat | 7.5 |
| Rule of 40 | 7.7 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 115%
- ▸Strong margins: 19%
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 30% YoY
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.5 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.3 |
| Price target | 4.2 |
| erm sentiment | 5.0 |
Insider
3.7/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 4.7 |
- ▸Modest insider selling — $36,238,617 (0.082% of mkt cap)
Peer rank
5.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.3 |
| quality rank | 8.5 |
| growth rank | 8.0 |
- ▸Superior ROE vs peers
- ▸Industry growth leader
Technical
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.7 |
| support resistance | 4.5 |
| 52w position | 8.6 |
Risk (lower is worse)
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.5 |
| days to cover | 7.1 |
| volatility | 2.2 |
| put call | 0.0 |
| implied vol | 4.1 |
| max pain risk | 3.0 |
| beta | 5.2 |
| debt equity | 3.6 |
- ▸Elevated put/call: 2.33
- ▸Above max pain $110
Catalyst
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.5 |
| dividend safety | 6.8 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.0>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.6=NEGATIVE
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-1.57
Upside
-14.8%
Downside
9.4%
Sizing output
AVOID
SetupRange Bound — RSI 46 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.45>1.3
Investment implication
The F-path SELL output reflects an overall score of 4.9 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 ( ASYMMETRY:-1.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.57 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 10.0, Quality at 8.1, and Catalyst at 6.9; the weakest are Insider at 3.7, Risk (lower is worse) at 4.1, and Value at 4.1. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.57 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Streak
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P2High Quality Compounder
Trip ifOperating and net margins average less than 14% from the current 19%.
- P3Strong Revenue Growth
Trip ifRevenue growth falls below 15% YoY from the current 30%.
- P4Price Above Analyst Target
Trip ifPrice falls below the $200.40 stop, a drop of more than 7% from $215.48.
- P5Insider Selling Small Vs Market Cap
Trip if90-day insider selling exceeds 0.2% of market cap from the current 0.086%.