Value
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.3 |
| P/S | 5.5 |
| EV/EBITDA | 1.1 |
| Fwd P/E | 7.5 |
| PEG | 2.4 |
| Analyst target | 3.0 |
- ▸Forward P/E: 16.6x
- ▸PEG: 5.25
QLYS · Why this verdict
Why Qualys (QLYS) is rated BUY WAIT
Updated
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VerdictBUY WAIT
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Qualys is a high-quality infrastructure software business with an excellent ROE of 38%, perfect 4-for-4 earnings beat streak averaging 10.9% positive surprises, and a Rule of 40 score of 44, but the stock has already surpassed its analyst price target and faces 16% short interest alongside a confirmed downtrend, leaving no room for new entry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With an ROE of 38%, gross margins of 29%, and a Rule of 40 score of 44, Qualys demonstrates best-in-class profitability for an infrastructure software company, earning the highest quality score relative to peers in the data. Quality breakdown | ROE remains above 30% and Rule of 40 stays above 40 for the next two annual reporting periods. | →Stable |
| CounterGeographic concentration in the United States at 56% limits addressable market expansion, and the PEG ratio of 4.50 indicates the quality premium is already richly priced relative to growth. | ||
Qualys has beaten earnings estimates in all four of the last four quarters with surprises of 6.2%, 4.9%, 19.2%, and 13.3%, averaging 10.9%, indicating management consistently under-promises and over-delivers. Earnings | The earnings beat streak extends to at least 6 consecutive quarters. | →Stable |
| CounterThe most recent quarter produced the smallest beat at 6.2%, and with estimates already factoring in a track record of beats, the surprise cushion may compress further. | ||
At a current price of $114.65, the stock is already trading above its analyst consensus target after applying a 10% haircut, producing negative upside of -0.4% and a negative reward-to-risk ratio, which eliminates any risk-adjusted case for new entry. Warnings | Analyst price targets are revised upward above $130 following continued earnings beats, restoring positive upside. | →Stable |
| CounterAnalysts may not upgrade targets until they see multiple quarters of accelerating growth, and the current below-200MA downtrend could persist even as earnings remain strong. | ||
With 16% of the float sold short and a quality score of 8.5, there is a notable short squeeze setup where positive earnings catalysts could force short sellers to cover, amplifying any upward price move. Risk breakdown | Short interest declines below 10% as the quality of the business becomes more broadly recognized. | →Stable |
| CounterThe stock is below its 200-day moving average despite strong fundamentals, suggesting short sellers may be correctly positioned for a continued price decline before the quality re-rating occurs. | ||
With an ROE of 38%, gross margins of 29%, and a Rule of 40 score of 44, Qualys demonstrates best-in-class profitability for an infrastructure software company, earning the highest quality score relative to peers in the data.
→StableQuality breakdown
- Expectation
- ROE remains above 30% and Rule of 40 stays above 40 for the next two annual reporting periods.
CounterGeographic concentration in the United States at 56% limits addressable market expansion, and the PEG ratio of 4.50 indicates the quality premium is already richly priced relative to growth.
Qualys has beaten earnings estimates in all four of the last four quarters with surprises of 6.2%, 4.9%, 19.2%, and 13.3%, averaging 10.9%, indicating management consistently under-promises and over-delivers.
→StableEarnings
- Expectation
- The earnings beat streak extends to at least 6 consecutive quarters.
CounterThe most recent quarter produced the smallest beat at 6.2%, and with estimates already factoring in a track record of beats, the surprise cushion may compress further.
At a current price of $114.65, the stock is already trading above its analyst consensus target after applying a 10% haircut, producing negative upside of -0.4% and a negative reward-to-risk ratio, which eliminates any risk-adjusted case for new entry.
→StableWarnings
- Expectation
- Analyst price targets are revised upward above $130 following continued earnings beats, restoring positive upside.
CounterAnalysts may not upgrade targets until they see multiple quarters of accelerating growth, and the current below-200MA downtrend could persist even as earnings remain strong.
With 16% of the float sold short and a quality score of 8.5, there is a notable short squeeze setup where positive earnings catalysts could force short sellers to cover, amplifying any upward price move.
→StableRisk breakdown
- Expectation
- Short interest declines below 10% as the quality of the business becomes more broadly recognized.
CounterThe stock is below its 200-day moving average despite strong fundamentals, suggesting short sellers may be correctly positioned for a continued price decline before the quality re-rating occurs.
Per-dimension breakdown
Quality
8.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 9.2 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 5.3 |
| FCF quality | 7.9 |
| Moat | 8.4 |
| Rule of 40 | 7.6 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 38%
- ▸Strong margins: 29%
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
4.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.0 |
| EPS growth | 4.0 |
Momentum
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 0.8 |
- ▸Uptrend pullback (RSI 35) - buy opportunity
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.0 |
| Price target | 4.2 |
- ▸LLM news sentiment: +0.40 (n=1)
Insider
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Notable insider selling — $7,968,993 (0.165% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.1 |
| quality rank | 9.1 |
| growth rank | 3.1 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.3 |
| support resistance | 5.9 |
| 52w position | 6.4 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.5 |
| days to cover | 6.2 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 2.0 |
| beta | 9.4 |
| debt equity | 9.6 |
| news risk | 6.0 |
- ▸High IV: 68%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 8.2 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 10 days
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier +2 (HOLD_IF_HOLDING → STRONG_BUY_WAIT).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=+2|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.40
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.2<4.5
- ASYMMETRY:-1.0=NEGATIVE
Warning (1)
- EARNINGS_PROXIMITY:10d<=14d (soft)
Reward-to-Risk
-0.97
Upside
-14.6%
Downside
15.0%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeTemporary headwind — High quality (8.7) with weak momentum (3.2)
SuitabilityAggressive — MCap $4.8B<$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: INSIDER:OK. Top dim: Quality at 8.7; weakest: Momentum at 3.2. No conviction either direction.
The strongest dimensions are Quality at 8.7, Catalyst at 6.6, and Technical at 6.5; the weakest are Momentum at 3.2, Value at 4.2, and Growth at 4.5. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.97 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Elite Profitability Metrics
Trip ifROE falls below 25% or Rule of 40 score drops below 35 in any reported annual period.
- P2Perfect Earnings Beat Streak
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters.
- P3Analyst Target Already Exceeded
Trip ifAnalyst consensus price target declines to below $100, increasing the gap beyond 15% below current price.
- P4High Short Interest Squeeze Potential
Trip ifShort interest rises above 20% of the float.