Value
5.3/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 8.7 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 2.7 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 40.9x
- ▸PEG: 0.08
TRNS · Why this verdict
Why Transcat (TRNS) 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 score5.7/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Transcat shows strong 22% revenue growth and excellent cash conversion, but thin 8.3% upside to the analyst target, a 37.8x forward P/E and a mixed earnings record leave a reward-to-risk of only about 1.05.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A forward P/E of 37.8x is paired with low profitability: ROE and net margin components score under 1 out of 10. Valuation breakdown | Margins expand so that the quality score rises above 5.0 from 4.6. | →Stable |
| CounterGrowth stocks with rising revenue can grow into the multiple, and the PEG ratio of 0.08 suggests earnings growth is steep. | ||
Revenue is growing 22% year over year, with the growth score at 7.9 out of 10 and a top growth rank among peers. Growth breakdown | Revenue growth holds above 12% YoY over the next 12 months. | →Stable |
| CounterGrowth confidence is low (only one growth input) and may reflect acquisitions rather than organic demand. | ||
Cash generation is strong, with free cash flow at 812% of net income and a Piotroski F-Score of 9/9. Quality breakdown | Free cash flow stays above 100% of net income and the F-Score stays at 7 or higher. | →Stable |
| CounterNet income is tiny (net margin component 0.5), so the 812% ratio is inflated by a small denominator. | ||
Upside to the $88.68 analyst target is only 8.3% from the $81.92 price versus 7.9% downside to the stop, a reward-to-risk of about 1.05. Targets | Price pulls back or the analyst target rises enough that upside exceeds 15%. | →Stable |
| CounterOnly 3 analysts cover the stock, so targets may lag a growth story and be raised after the earnings report. | ||
Recent earnings are mixed (1 beat and 2 misses), with the next report due in 10 days after a 35.1% beat last quarter. Catalyst breakdown | EPS surprise turns positive on average across the next 4 quarters. | ↓Deteriorating |
| CounterThe last quarter's 35.1% beat shows estimates may be too low, and an executive change adds uncertainty. | ||
A forward P/E of 37.8x is paired with low profitability: ROE and net margin components score under 1 out of 10.
→StableValuation breakdown
- Expectation
- Margins expand so that the quality score rises above 5.0 from 4.6.
CounterGrowth stocks with rising revenue can grow into the multiple, and the PEG ratio of 0.08 suggests earnings growth is steep.
Revenue is growing 22% year over year, with the growth score at 7.9 out of 10 and a top growth rank among peers.
→StableGrowth breakdown
- Expectation
- Revenue growth holds above 12% YoY over the next 12 months.
CounterGrowth confidence is low (only one growth input) and may reflect acquisitions rather than organic demand.
Cash generation is strong, with free cash flow at 812% of net income and a Piotroski F-Score of 9/9.
→StableQuality breakdown
- Expectation
- Free cash flow stays above 100% of net income and the F-Score stays at 7 or higher.
CounterNet income is tiny (net margin component 0.5), so the 812% ratio is inflated by a small denominator.
Upside to the $88.68 analyst target is only 8.3% from the $81.92 price versus 7.9% downside to the stop, a reward-to-risk of about 1.05.
→StableTargets
- Expectation
- Price pulls back or the analyst target rises enough that upside exceeds 15%.
CounterOnly 3 analysts cover the stock, so targets may lag a growth story and be raised after the earnings report.
Recent earnings are mixed (1 beat and 2 misses), with the next report due in 10 days after a 35.1% beat last quarter.
↓DeterioratingCatalyst breakdown
- Expectation
- EPS surprise turns positive on average across the next 4 quarters.
CounterThe last quarter's 35.1% beat shows estimates may be too low, and an executive change adds uncertainty.
Per-dimension breakdown
Quality
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.4 |
| ROA | 1.5 |
| Gross margin | 2.5 |
| Op margin | 2.2 |
| Net margin | 0.5 |
| Current ratio | 8.5 |
| FCF quality | 10.0 |
| Moat | 5.6 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 812% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
7.9/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 7.9 |
- ▸Strong growth: 22% YoY
Momentum
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 5.6 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.3 |
| Price target | 7.7 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (4.0) — signal dampened
- ▸Analyst upside: 20%
Insider
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 4.0 |
| holder change | 3.6 |
| notable moves | 3.0 |
- ▸Modest insider selling — $574,707 (0.069% of mkt cap)
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.8 |
| quality rank | 2.3 |
| growth rank | 8.1 |
- ▸Industry growth leader
Technical
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.7 |
| support resistance | 2.8 |
| 52w position | 7.8 |
| gap | 5.0 |
Risk (lower is worse)
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.0 |
| days to cover | 7.2 |
| volatility | 3.5 |
| put call | 10.0 |
| implied vol | 3.1 |
| beta | 9.0 |
| debt equity | 8.1 |
- ▸High IV: 61%
Catalyst
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 1.1 |
| earnings timing | 5.0 |
| surprise avg | 3.5 |
- ▸Earnings concerns: 1B/2M
- ▸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:8.0>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:0.2<1.5@spot
- EARNINGS_PROXIMITY:5d<=7d
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.22
Upside
+2.4%
Downside
10.8%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 55, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $0.8B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 8.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.2<1.5@spot, EARNINGS_PROXIMITY:5d<=7d) reinforce the read. Current asymmetry R:R is 0.22 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 8.0, Growth at 7.9, and Risk (lower is worse) at 6.8; the weakest are Catalyst at 3.6, Insider at 3.8, and Peer rank at 4.4. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.22 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Revenue Growth
Trip ifRevenue growth falls below 12% YoY from the current 22%.
- P2Excellent Cash Conversion
Trip ifFree cash flow falls below 100% of net income or Piotroski F-Score drops below 6 from 9.
- P3Thin Upside To Target
Trip ifPrice falls more than 6% to the $76.92 stop level without a rise in the analyst target.
- P4Rich Valuation Low Margins
Trip ifForward P/E exceeds 45x from the current 37.8x while the quality score stays below 5.0.
- P5Mixed Earnings Record Near Term Report
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.