Value
9.3/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 10.0 |
| P/S | 10.0 |
| EV/EBITDA | 9.3 |
| Fwd P/E | 8.1 |
| PEG | 10.0 |
- ▸Forward P/E: 14.7x
- ▸PEG: 0.46
- ▸Attractively valued
SGU · Why this verdict
Why Star Group (SGU) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.3/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The engine flags SGU as a potential cyclical trap, with forward P/E at 15x versus a trailing P/E of just 5x, even though the value dimension separately calls it attractively valued at a 0.46 PEG. Warnings | The forward-to-trailing P/E gap should narrow toward 1.5x or less as earnings estimates stabilize, confirming the cheap valuation is genuine rather than a cyclical-peak illusion. | →Stable |
| CounterA wide forward/trailing P/E gap is a classic signal that current trailing earnings are near a cyclical peak and about to roll over, meaning the apparent value could evaporate as forward estimates get cut. | ||
The company has posted three consecutive earnings misses, and the bear case flags earnings expected to decline approximately 66% as the business hits a cyclical peak. Bear case | The company should return to a beat pattern and earnings declines should moderate to less than 30% YoY over the next two quarters. | →Stable |
| CounterA single large beat is already present in the trailing four quarters (125% surprise), showing results can swing sharply and the miss streak may not persist. | ||
Free cash flow runs at -19% of net income, an earnings-quality red flag, even as the company holds best-in-class margins versus peers. Quality breakdown | The FCF-to-net-income ratio should turn positive over the next four quarters to resolve the earnings-quality concern. | →Stable |
| CounterBest-in-class peer margins suggest the underlying business remains structurally profitable, and the FCF/NI gap could be a working-capital or seasonal timing issue rather than a durable quality problem. | ||
Technically, the setup is a breakout, with price above the 200-day moving average and rising on-balance volume. Momentum breakdown | Price should hold above the 200-day moving average and OBV should continue rising over the next quarter to confirm the breakout is sustained. | →Stable |
| CounterA breakout built on technicals alone can reverse quickly if the cyclical-peak earnings concerns materialize into an actual guidance cut. | ||
A recent news-based modifier downgraded the recommended stance from a hold-if-holding posture to a more negative sell-if-holding signal. Engine summary | The news modifier should reset to neutral within the next quarter without further negative catalysts for the downgraded stance to lift. | →Stable |
| CounterIf the news-driven downgrade reflects a durable structural issue rather than a transient item, the more negative stance could persist or intensify further. | ||
The engine flags SGU as a potential cyclical trap, with forward P/E at 15x versus a trailing P/E of just 5x, even though the value dimension separately calls it attractively valued at a 0.46 PEG.
→StableWarnings
- Expectation
- The forward-to-trailing P/E gap should narrow toward 1.5x or less as earnings estimates stabilize, confirming the cheap valuation is genuine rather than a cyclical-peak illusion.
CounterA wide forward/trailing P/E gap is a classic signal that current trailing earnings are near a cyclical peak and about to roll over, meaning the apparent value could evaporate as forward estimates get cut.
The company has posted three consecutive earnings misses, and the bear case flags earnings expected to decline approximately 66% as the business hits a cyclical peak.
→StableBear case
- Expectation
- The company should return to a beat pattern and earnings declines should moderate to less than 30% YoY over the next two quarters.
CounterA single large beat is already present in the trailing four quarters (125% surprise), showing results can swing sharply and the miss streak may not persist.
Free cash flow runs at -19% of net income, an earnings-quality red flag, even as the company holds best-in-class margins versus peers.
→StableQuality breakdown
- Expectation
- The FCF-to-net-income ratio should turn positive over the next four quarters to resolve the earnings-quality concern.
CounterBest-in-class peer margins suggest the underlying business remains structurally profitable, and the FCF/NI gap could be a working-capital or seasonal timing issue rather than a durable quality problem.
Technically, the setup is a breakout, with price above the 200-day moving average and rising on-balance volume.
→StableMomentum breakdown
- Expectation
- Price should hold above the 200-day moving average and OBV should continue rising over the next quarter to confirm the breakout is sustained.
CounterA breakout built on technicals alone can reverse quickly if the cyclical-peak earnings concerns materialize into an actual guidance cut.
A recent news-based modifier downgraded the recommended stance from a hold-if-holding posture to a more negative sell-if-holding signal.
→StableEngine summary
- Expectation
- The news modifier should reset to neutral within the next quarter without further negative catalysts for the downgraded stance to lift.
CounterIf the news-driven downgrade reflects a durable structural issue rather than a transient item, the more negative stance could persist or intensify further.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Star Group L.P. shows an attractive headline valuation (0.46 PEG, best-in-class peer margins) and a bullish technical breakout, but the engine flags it as a potential cyclical trap given the wide forward-vs-trailing P/E gap, three consecutive earnings misses, an expected ~66% earnings decline at a cyclical peak, and a recent news-driven downgrade to a more cautious stance.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.3 |
| ROA | 5.5 |
| Gross margin | 2.5 |
| Op margin | 8.1 |
| Net margin | 2.6 |
| Current ratio | 4.0 |
| FCF quality | 0.0 |
| Moat | 4.9 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: -19% FCF/NI
- ▸No competitive moat
Growth
5.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.3 |
| EPS growth | 8.4 |
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.4 |
| MACD | 7.3 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 1.7 |
- ▸Overbought (RSI 73)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| erm sentiment | 5.0 |
Insider
7.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.2 |
| quality rank | 8.2 |
| growth rank | 2.2 |
- ▸Attractive P/E vs peers
- ▸Best-in-class margins
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.4 |
| support resistance | 1.3 |
| 52w position | 9.3 |
| gap | 6.0 |
Risk (lower is worse)
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.9 |
| days to cover | 7.9 |
| volatility | 7.6 |
| put call | 10.0 |
| implied vol | 0.0 |
| beta | 10.0 |
| debt equity | 5.9 |
- ▸High IV: 238%
Catalyst
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 7.5 |
| dividend safety | 8.0 |
- ▸Earnings concerns: 1B/3M
- ▸Dividend: 6.1%
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULT|L3:NEWS_MOD=-1Passed (7)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:29d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- ASYMMETRY:UPSIDE_EXHAUSTED (upside=0.0%)
Reward-to-Risk
0.00
Upside
+0.0%
Downside
5.8%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($0.4B) below institutional reach
SuitabilityAggressive — MCap $0.4B<$5B
Investment implication
The default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: MOMENTUM:6.5>=5.5. Top dim: Value at 9.3; weakest: Technical at 4.5. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Value at 9.3, Insider at 7.5, and Risk (lower is worse) at 7.3; the weakest are Technical at 4.5, Quality at 4.7, and Sentiment at 5.0. The V9 engine cleared all gates with 1 warning, 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.
- P1Cyclical Trap Valuation Warning
Trip ifThe forward P/E stays more than 2x the trailing P/E (unchanged from the current 2.9x gap) for 2 more consecutive quarters.
- P2Consecutive Earnings Misses Cyclical Peak
Trip ifThe company posts a fourth consecutive earnings miss, or earnings decline more than 70% YoY, worse than the currently expected ~66% decline.
- P3Earnings Quality Red Flag
Trip ifThe FCF-to-net-income ratio stays below -10% for 2 more consecutive quarters, worse than or unchanged from the current -19%.
- P4Bullish Breakout Momentum
Trip ifPrice falls below the 200-day moving average, or on-balance volume turns negative for 2 consecutive months.
- P5News Driven Downgrade To Sell If Holding
Trip ifThe news modifier stays negative for more than 60 days without an improvement in the underlying flagged risk.