Value
5.3/10data confidence 50%| Component | Sub-score |
|---|---|
| P/S | 6.2 |
| EV/EBITDA | 2.1 |
| Analyst target | 6.0 |
SUI · Why this verdict
Why Sun Communities (SUI) 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
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. People who build TrendMatrix, or entities they control, may hold positions, long or short, in securities it covers, and may trade them at any time. Positions are not disclosed individually. Verdicts are generated by an automated model applied by the same rules to every covered stock, and are not adjusted for any position held by the people who build TrendMatrix. We do not accept payment from issuers for coverage.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score4.4/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Sun Communities has beaten earnings estimates in 3 of the last 4 quarters with an average surprise of 54% and sits at the top of its industry for margins and growth, but trades within 3% of analyst targets and has a notable gap between reported earnings and free cash flow generation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Sun Communities beat earnings in 3 of the last 4 quarters with an average surprise of 54%, including a 168% beat in February 2026 and 52% beat in October 2025, suggesting analysts consistently underestimate the company's quarterly earnings power. Earnings | The company beats earnings estimates in at least 3 of the next 4 quarters, sustaining the current beat pattern with average positive surprises above 20%. | ↑Improving |
| CounterThe most recent quarter missed by 26%, and large beats in prior quarters may have been driven by non-recurring items; analysts may already be adjusting estimates upward, making future beats harder. | ||
Sun Communities earns 60% net margins, is classified as an industry growth leader, and ranks in the top tier for margins among residential REITs, indicating a high-quality portfolio of manufactured home and RV communities with strong pricing power. Peer-rank breakdown | Net margins remain above 50% over the next 12 months, confirming the current level is not temporarily elevated. | Tripped→Stable |
| CounterA 60% net margin in a REIT often reflects depreciation and amortization accounting rather than economic earnings; the cash flow picture, where FCF is only 38% of net income, tells a more constrained story. | ||
Free cash flow is only 38% of net income, flagged as a red flag in the quality assessment, meaning the company is generating substantially less cash than its income statement suggests, which constrains actual dividend coverage and capital reinvestment capacity. Quality breakdown | Free cash flow as a percentage of net income improves to above 60% within 12 months, narrowing the gap between reported earnings and cash generation. | ↑Improving |
| CounterREITs by definition have heavy real property asset bases requiring reinvestment; a FCF-to-earnings ratio well below 100% is structurally expected in the sector, and funds from operations is a more relevant metric than GAAP FCF. | ||
The stock is trading at $124.41, only 2.7% below the analyst consensus target of $127.80, meaning the market has already priced in nearly all of the near-term fundamental improvement that analysts expect. Targets | Analyst consensus price target rises above $140, more than 12% above the current price of $124.41, reflecting upward estimate revisions driven by continued earnings beats. | Tripped→Stable |
| CounterResidential REIT stocks can trade above analyst targets for extended periods when interest rate expectations improve; the 3-quarter beat streak may drive analyst upgrades rather than a price pullback. | ||
Sun Communities beat earnings in 3 of the last 4 quarters with an average surprise of 54%, including a 168% beat in February 2026 and 52% beat in October 2025, suggesting analysts consistently underestimate the company's quarterly earnings power.
↑ImprovingEarnings
- Expectation
- The company beats earnings estimates in at least 3 of the next 4 quarters, sustaining the current beat pattern with average positive surprises above 20%.
CounterThe most recent quarter missed by 26%, and large beats in prior quarters may have been driven by non-recurring items; analysts may already be adjusting estimates upward, making future beats harder.
Sun Communities earns 60% net margins, is classified as an industry growth leader, and ranks in the top tier for margins among residential REITs, indicating a high-quality portfolio of manufactured home and RV communities with strong pricing power.
Tripped→StablePeer-rank breakdown
- Expectation
- Net margins remain above 50% over the next 12 months, confirming the current level is not temporarily elevated.
CounterA 60% net margin in a REIT often reflects depreciation and amortization accounting rather than economic earnings; the cash flow picture, where FCF is only 38% of net income, tells a more constrained story.
Free cash flow is only 38% of net income, flagged as a red flag in the quality assessment, meaning the company is generating substantially less cash than its income statement suggests, which constrains actual dividend coverage and capital reinvestment capacity.
↑ImprovingQuality breakdown
- Expectation
- Free cash flow as a percentage of net income improves to above 60% within 12 months, narrowing the gap between reported earnings and cash generation.
CounterREITs by definition have heavy real property asset bases requiring reinvestment; a FCF-to-earnings ratio well below 100% is structurally expected in the sector, and funds from operations is a more relevant metric than GAAP FCF.
The stock is trading at $124.41, only 2.7% below the analyst consensus target of $127.80, meaning the market has already priced in nearly all of the near-term fundamental improvement that analysts expect.
Tripped→StableTargets
- Expectation
- Analyst consensus price target rises above $140, more than 12% above the current price of $124.41, reflecting upward estimate revisions driven by continued earnings beats.
CounterResidential REIT stocks can trade above analyst targets for extended periods when interest rate expectations improve; the 3-quarter beat streak may drive analyst upgrades rather than a price pullback.
Per-dimension breakdown
Quality
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.6 |
| ROA | 1.8 |
| Gross margin | 6.7 |
| Op margin | 10.0 |
| Net margin | 0.0 |
| Current ratio | 8.8 |
| Moat | 5.4 |
| Piotroski F | 8.9 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
0.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
- ▸Declining revenue: -19%
Momentum
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 2.0 |
| OBV | 1.0 |
| MA position | 1.5 |
| Volume | 8.5 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope flat
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.8 |
| Analyst rating | 7.5 |
| Price target | 8.0 |
- ▸Analyst upside: 23%
Insider
4.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 4.4 |
| notable moves | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.8 |
| quality rank | 1.4 |
| growth rank | 0.0 |
Technical
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.3 |
| support resistance | 9.6 |
| 52w position | 6.4 |
| gap | 6.0 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.1 |
| days to cover | 4.8 |
| volatility | 5.6 |
| put call | 0.0 |
| implied vol | 6.7 |
| max pain risk | 7.0 |
| beta | 8.4 |
| debt equity | 6.7 |
- ▸Elevated put/call: 5.24
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.5 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 3.9%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- ASYMMETRY:2.0>=1.5
- INSIDER:OK
- EARNINGS_PROXIMITY:117d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.5<4.5
- DEATH_CROSS:HARD_BLOCK
- 8K_CRITICAL:4.01,4.01
Warning (0)
none
Reward-to-Risk
2.02
Upside
+11.1%
Downside
5.5%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 2.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.5<4.5, DEATH_CROSS:HARD_BLOCK, 8K_CRITICAL:4.01,4.01) reinforce the read. Current asymmetry R:R is 2.02 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 7.6, Sentiment at 7.1, and Catalyst at 6.7; the weakest are Growth at 0.0, Peer rank at 3.1, and Momentum at 3.5. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 2.02 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Earnings Beat Large Surprises
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, reversing the current strong beat pattern.
- P2Best In Class Reit Margins GrowthTripped
Trip ifNet margin falls below 40%, declining more than 20 percentage points from the current 60% level.
- P3Fcf Quality Gap
Trip ifFree cash flow as a percentage of net income falls below 20%, worsening more than 18 percentage points from the current 38%.
- P4Limited Upside At Analyst TargetTripped
Trip ifPrice drops below $112, more than 10% below the current $124.41, suggesting the market is revising the fundamental outlook lower.