Value
3.5/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 5.8 |
| P/S | 1.4 |
| EV/EBITDA | 0.5 |
| Fwd P/E | 4.2 |
- ▸Forward P/E: 29.1x
NVEC · Why this verdict
Why NVE (NVEC) 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 score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
NVE Corporation is a high-quality, high-margin niche semiconductor business, but the stock's rich valuation, elevated leverage, and dividend safety warning temper the otherwise strong fundamental profile.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock trades at a rich forward P/E of 34.7x with a PEG ratio of 1.27, reflecting an expensive valuation for its growth profile. Valuation breakdown | Forward P/E should compress toward 25x or below within 12 months for the valuation to normalize. | ↑Improving |
| CounterHigh-ROE, high-margin niche semiconductor businesses often sustain premium multiples indefinitely if their moat holds, making a simple P/E comparison misleading. | ||
NVE Corporation is a high-quality business with excellent ROE (25%) and strong margins (58%), backed by a strong Piotroski F-Score of 8/9. Quality breakdown | ROE should stay above 20% and margins above 50% over the next 12 months to sustain the quality profile. | ↓Deteriorating |
| CounterThe engine also flagged an earnings-quality red flag at just 48% FCF-to-net-income conversion, meaning reported profitability may not be fully backed by cash generation. | ||
The engine applied a leverage penalty of -1.0 points due to a debt-to-equity ratio of 1.6, an unusually elevated leverage level for this business. Bear case | Debt-to-equity should decline back below 1.0 within 12 months to remove the leverage penalty. | ↓Deteriorating |
| CounterA debt-to-equity ratio of 1.6 is still well within manageable bounds for a profitable, high-margin business generating consistent free cash flow. | ||
The engine flagged a yield-trap warning — the stock's dividend yield appears attractive but is assessed as unsafe given underlying fundamentals. Catalyst breakdown | Dividend safety score should improve above 5.0 within 12 months if the payout is sustained through a full cash-flow cycle. | ↓Deteriorating |
| CounterA single yield-trap flag can be a false positive if it is driven by a temporarily depressed stock price rather than a genuine payout-coverage problem. | ||
Earnings are due in 18 days with a 3-of-4 beat streak acting as a near-term catalyst, though momentum at 5.1 sits just below the engine's 5.5 preferred threshold. Gates warning | The beat streak should extend at the 2026-07-22 report, and momentum should recover above 5.5. | ↓Deteriorating |
| CounterA momentum reading already below the soft threshold ahead of earnings raises the odds of a sell-the-news reaction even if the beat streak continues. | ||
The stock trades at a rich forward P/E of 34.7x with a PEG ratio of 1.27, reflecting an expensive valuation for its growth profile.
↑ImprovingValuation breakdown
- Expectation
- Forward P/E should compress toward 25x or below within 12 months for the valuation to normalize.
CounterHigh-ROE, high-margin niche semiconductor businesses often sustain premium multiples indefinitely if their moat holds, making a simple P/E comparison misleading.
NVE Corporation is a high-quality business with excellent ROE (25%) and strong margins (58%), backed by a strong Piotroski F-Score of 8/9.
↓DeterioratingQuality breakdown
- Expectation
- ROE should stay above 20% and margins above 50% over the next 12 months to sustain the quality profile.
CounterThe engine also flagged an earnings-quality red flag at just 48% FCF-to-net-income conversion, meaning reported profitability may not be fully backed by cash generation.
The engine applied a leverage penalty of -1.0 points due to a debt-to-equity ratio of 1.6, an unusually elevated leverage level for this business.
↓DeterioratingBear case
- Expectation
- Debt-to-equity should decline back below 1.0 within 12 months to remove the leverage penalty.
CounterA debt-to-equity ratio of 1.6 is still well within manageable bounds for a profitable, high-margin business generating consistent free cash flow.
The engine flagged a yield-trap warning — the stock's dividend yield appears attractive but is assessed as unsafe given underlying fundamentals.
↓DeterioratingCatalyst breakdown
- Expectation
- Dividend safety score should improve above 5.0 within 12 months if the payout is sustained through a full cash-flow cycle.
CounterA single yield-trap flag can be a false positive if it is driven by a temporarily depressed stock price rather than a genuine payout-coverage problem.
Earnings are due in 18 days with a 3-of-4 beat streak acting as a near-term catalyst, though momentum at 5.1 sits just below the engine's 5.5 preferred threshold.
↓DeterioratingGates warning
- Expectation
- The beat streak should extend at the 2026-07-22 report, and momentum should recover above 5.5.
CounterA momentum reading already below the soft threshold ahead of earnings raises the odds of a sell-the-news reaction even if the beat streak continues.
Per-dimension breakdown
Quality
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 5.0 |
| FCF quality | 5.0 |
| Moat | 7.2 |
| Rule of 40 | 5.5 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 30%
- ▸Strong margins: 58%
- ▸Earnings quality warning: 65% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
0.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.5 |
| EPS growth | 1.1 |
- ▸Declining revenue: -8%
Momentum
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 2.2 |
| Volume | 4.4 |
- ▸Capitulation risk (RSI 29, below 200MA)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+7.0%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
4.7/10data confidence 67%| Component | Sub-score |
|---|---|
| news sentiment | 4.3 |
| Analyst rating | 5.0 |
Insider
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 2.0 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Heavy insider selling — $2,950,943 (0.740% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.7 |
| quality rank | 8.6 |
| growth rank | 0.2 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.9 |
| support resistance | 7.0 |
| 52w position | 2.3 |
| gap | 5.0 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.6 |
| days to cover | 4.9 |
| volatility | 0.0 |
| beta | 5.8 |
| debt equity | 9.9 |
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.7 |
| dividend safety | 2.2 |
| news activity | 6.0 |
- ▸Strong earnings: 3B/1M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Market cap $399M below $400M minimum. Not in investable universe.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:MARKET_CAPPassed (4)
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:83d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.9<4.5
- INSIDER:0.74%=EXTREME
Warning (2)
- ASYMMETRY:UPSIDE_EXHAUSTED (upside=0.0%)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.00
Upside
+0.0%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeTemporary headwind — High quality (8.1) with weak momentum (3.9)
SuitabilityAggressive — MCap $0.4B<$5B
Investment implication
The HOLD_IF_HOLDING verdict reflects the MOMENTUM gate's 3.9<4.5 outcome against Quality at 8.1 and asymmetric R:R of 0.00.
The strongest dimensions are Quality at 8.1, Peer rank at 5.7, and Technical at 5.5; the weakest are Growth at 0.8, Value at 3.5, and Momentum at 3.9. The V9 engine flagged 2 failed gates with 2 warnings, producing an asymmetric reward-to-risk of 0.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality High Roe Business
Trip ifFCF-to-net-income conversion falls below 30% or ROE drops below 15% for 2 consecutive quarters.
- P2Expensive Valuation
Trip ifForward P/E stays above 30x while earnings growth decelerates below 5% YoY.
- P3Leverage Penalty Flagged
Trip ifDebt-to-equity rises above 2.0 within the next 2 quarters.
- P4Dividend Yield Trap Warning
Trip ifThe company cuts its dividend payout by more than 20% within the next 4 quarters.
- P5Earnings Catalyst Soft Momentum
Trip ifMomentum score stays below 5.5 for 2 consecutive quarters after the earnings report.