Value
8.2/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 9.3 |
| Fwd P/E | 9.6 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 8.1x
- ▸PEG: 0.08
- ▸Attractively valued
SPT · Why this verdict
Why Sprout Social (SPT) 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 score5.5/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Sprout Social is cheap (forward P/E 8.4x, PEG 0.08), free-cash-flow positive and has beaten estimates four quarters running, but the $12.86 price is already 27.8% above the $9.28 analyst target and RSI is 81.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company is free-cash-flow positive despite a GAAP loss, with an FCF margin of 22% and an FCF yield of 13.3%. Quality breakdown | FCF margin stays above 15% over the next 12 months. | →Stable |
| CounterFree cash flow is helped by stock-based compensation and upfront annual billing, while ROE, operating margin and net margin all score zero. | ||
Sprout Social beat EPS estimates in all 4 recent quarters, averaging a +45.2% surprise. Earnings | EPS keeps beating consensus in the report due 2026-11-03 and the following quarters. | ↓Deteriorating |
| CounterEstimates are low and flat at $0.16, so the beats may reflect conservative guidance that analysts will reset higher, shrinking future surprises. | ||
The $12.86 price is 27.8% above the $9.28 analyst target and 3.7% from its 52-week high, so analyst-implied upside is exhausted. Analyst target | Analysts raise their targets above the current price as results come in. | →Stable |
| CounterAnalyst targets lag a rapid rally, so the gap may close through upward revisions instead of a price decline. | ||
Momentum is strong at 7.5/10, with price above its 200-day average and rising on-balance volume, but RSI of 81 marks the shares as overbought. Momentum breakdown | Price holds above its 200-day average as RSI cools over the next few months. | ↓Deteriorating |
| CounterAn RSI of 81 with 83% implied volatility and moderate insider selling of $1.4M suggests the rally could reverse sharply around the earnings report in 10 days. | ||
The stock is attractively valued at a forward P/E of 8.4x and a PEG of 0.08. Valuation breakdown | The forward P/E stays below 14x as earnings grow over the next 12 months. | →Stable |
| CounterThe PEG depends on earnings forecasts that rely on turning GAAP profitable, and revenue growth scores only 5.2/10. | ||
The company is free-cash-flow positive despite a GAAP loss, with an FCF margin of 22% and an FCF yield of 13.3%.
→StableQuality breakdown
- Expectation
- FCF margin stays above 15% over the next 12 months.
CounterFree cash flow is helped by stock-based compensation and upfront annual billing, while ROE, operating margin and net margin all score zero.
Sprout Social beat EPS estimates in all 4 recent quarters, averaging a +45.2% surprise.
↓DeterioratingEarnings
- Expectation
- EPS keeps beating consensus in the report due 2026-11-03 and the following quarters.
CounterEstimates are low and flat at $0.16, so the beats may reflect conservative guidance that analysts will reset higher, shrinking future surprises.
The $12.86 price is 27.8% above the $9.28 analyst target and 3.7% from its 52-week high, so analyst-implied upside is exhausted.
→StableAnalyst target
- Expectation
- Analysts raise their targets above the current price as results come in.
CounterAnalyst targets lag a rapid rally, so the gap may close through upward revisions instead of a price decline.
Momentum is strong at 7.5/10, with price above its 200-day average and rising on-balance volume, but RSI of 81 marks the shares as overbought.
↓DeterioratingMomentum breakdown
- Expectation
- Price holds above its 200-day average as RSI cools over the next few months.
CounterAn RSI of 81 with 83% implied volatility and moderate insider selling of $1.4M suggests the rally could reverse sharply around the earnings report in 10 days.
The stock is attractively valued at a forward P/E of 8.4x and a PEG of 0.08.
→StableValuation breakdown
- Expectation
- The forward P/E stays below 14x as earnings grow over the next 12 months.
CounterThe PEG depends on earnings forecasts that rely on turning GAAP profitable, and revenue growth scores only 5.2/10.
Per-dimension breakdown
Quality
4.2/10data 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 | 4.1 |
| FCF quality | 8.3 |
| Moat | 7.2 |
| Rule of 40 | 5.5 |
| Piotroski F | 6.7 |
- ▸FCF-positive despite GAAP loss (FCF margin 22%, FCF yield 13.7%)
Growth
5.2/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 5.2 |
Momentum
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 8.6 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 2.6 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.0 |
| Price target | 2.9 |
- ▸LLM news sentiment: +0.40 (n=1)
- ▸Below analyst target
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 — $1,408,929 (0.186% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.9 |
| quality rank | 1.6 |
| growth rank | 3.9 |
Technical
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.5 |
| support resistance | 2.4 |
| 52w position | 7.5 |
| gap | 6.0 |
Risk (lower is worse)
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.7 |
| days to cover | 6.3 |
| volatility | 1.0 |
| put call | 5.0 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 7.0 |
| debt equity | 9.2 |
- ▸High IV: 108%
- ▸Above max pain $8
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 5 days
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:5.2>=4.5
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.7=NEGATIVE
- EARNINGS_PROXIMITY:5d<=7d
Warning (2)
- MOMENTUM:5.2<5.5 (soft — BUY_NOW allowed but watch)
- INSIDER:0.19%=MODERATE
Reward-to-Risk
-1.73
Upside
-25.9%
Downside
15.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 68, MACD bullish
EdgeInst Constrain — Small cap ($0.8B) below institutional reach
SuitabilityAggressive — MCap $0.8B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.7=NEGATIVE, EARNINGS_PROXIMITY:5d<=7d) reinforce the read. Current asymmetry R:R is -1.73 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.2, Catalyst at 7.0, and Insider at 5.5; the weakest are Quality at 4.2, Technical at 4.6, and Risk (lower is worse) at 4.7. The V9 engine flagged 2 failed gates with 2 warnings, producing an asymmetric reward-to-risk of -1.73 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.
- P2Fcf Positive Despite Gaap Loss
Trip ifFree cash flow margin falls below 10% from the current 22%.
- P3Price Above Analyst Target
Trip ifThe analyst target rises above $15 from the current $9.28.
- P4Overbought Momentum
Trip ifThe momentum score falls below 5.0 from the current 7.5.
- P5Low Multiple Valuation
Trip ifForward P/E rises above 14x from the current 8.4x.