Value
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 0.4 |
| P/S | 5.7 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 2.8 |
| PEG | 3.1 |
| Analyst target | 3.0 |
- ▸Forward P/E: 40.0x
- ▸PEG: 3.96
- ▸Expensive valuation
AAON · Why this verdict
Why AAON (AAON) 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 score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
AAON is a strong-growth building-products business delivering 54% revenue growth with upward earnings estimate revisions, but the stock trades at a forward P/E of 39.9x — a demanding valuation premium — while free cash flow is deeply negative relative to net income, price momentum is weakening via volume distribution, and the options market is pricing elevated downside hedging activity.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward P/E of 39.9x and a PEG of 3.94, the stock screens as expensive relative to its growth outlook, pricing in a persistently high growth rate that leaves limited margin of safety if execution falters. Valuation breakdown | Forward P/E compresses below 25x as earnings growth accelerates faster than the share price, improving the reward-to-risk geometry. | →Stable |
| CounterA company posting 54% revenue growth with rising earnings estimates can plausibly sustain a premium valuation for several quarters if the growth rate holds — expensive on current earnings does not imply expensive on earnings two years forward if the trajectory continues. | ||
Revenue grew 54% year-over-year and earnings estimates are trending upward, suggesting the company is in a genuine acceleration phase where analysts are still revising their expectations higher. Bull case | Consensus earnings estimates revise upward by at least 10% over the next 2 quarters, and revenue growth sustains above 25% YoY. | →Stable |
| CounterAt a forward P/E of 39.9x and a PEG of 3.94, the growth premium is already fully embedded in the price; any growth disappointment may trigger a sharp de-rating rather than a gentle correction, particularly given the alternating beat-miss earnings pattern over the last four quarters. | ||
Free cash flow is deeply negative relative to net income — at -182% — meaning the company is not converting reported earnings into real cash, a red flag on earnings quality that undermines confidence in the stated profitability level. Quality breakdown | FCF relative to net income improves above -80% for 2 consecutive quarters, indicating earnings are beginning to translate into cash generation. | →Stable |
| CounterThe Piotroski F-Score of 7 out of 9 reflects a broadly healthy financial structure on other dimensions; if the negative FCF is transient rather than structural, the quality concern may prove to be a temporary dislocation that resolves as revenue scale builds. | ||
While the stock trades above its 200-day moving average, on-balance volume is falling — a divergence suggesting that sellers are quietly distributing shares even as price holds its broader trend support, and momentum reads below the level that would confirm a healthy technical setup. Momentum breakdown | On-balance volume reverses to rising for 4 consecutive weeks and RSI crosses above 55, confirming renewed buying interest and validating a recovery in technical momentum. | →Stable |
| CounterTrading above the 200-day moving average is a constructive signal in its own right; if fundamentals continue to improve and earnings estimates keep rising, the volume divergence may quickly resolve in the bulls' favor and the distribution signal proves short-lived. | ||
At a forward P/E of 39.9x and a PEG of 3.94, the stock screens as expensive relative to its growth outlook, pricing in a persistently high growth rate that leaves limited margin of safety if execution falters.
→StableValuation breakdown
- Expectation
- Forward P/E compresses below 25x as earnings growth accelerates faster than the share price, improving the reward-to-risk geometry.
CounterA company posting 54% revenue growth with rising earnings estimates can plausibly sustain a premium valuation for several quarters if the growth rate holds — expensive on current earnings does not imply expensive on earnings two years forward if the trajectory continues.
Revenue grew 54% year-over-year and earnings estimates are trending upward, suggesting the company is in a genuine acceleration phase where analysts are still revising their expectations higher.
→StableBull case
- Expectation
- Consensus earnings estimates revise upward by at least 10% over the next 2 quarters, and revenue growth sustains above 25% YoY.
CounterAt a forward P/E of 39.9x and a PEG of 3.94, the growth premium is already fully embedded in the price; any growth disappointment may trigger a sharp de-rating rather than a gentle correction, particularly given the alternating beat-miss earnings pattern over the last four quarters.
Free cash flow is deeply negative relative to net income — at -182% — meaning the company is not converting reported earnings into real cash, a red flag on earnings quality that undermines confidence in the stated profitability level.
→StableQuality breakdown
- Expectation
- FCF relative to net income improves above -80% for 2 consecutive quarters, indicating earnings are beginning to translate into cash generation.
CounterThe Piotroski F-Score of 7 out of 9 reflects a broadly healthy financial structure on other dimensions; if the negative FCF is transient rather than structural, the quality concern may prove to be a temporary dislocation that resolves as revenue scale builds.
While the stock trades above its 200-day moving average, on-balance volume is falling — a divergence suggesting that sellers are quietly distributing shares even as price holds its broader trend support, and momentum reads below the level that would confirm a healthy technical setup.
→StableMomentum breakdown
- Expectation
- On-balance volume reverses to rising for 4 consecutive weeks and RSI crosses above 55, confirming renewed buying interest and validating a recovery in technical momentum.
CounterTrading above the 200-day moving average is a constructive signal in its own right; if fundamentals continue to improve and earnings estimates keep rising, the volume divergence may quickly resolve in the bulls' favor and the distribution signal proves short-lived.
Per-dimension breakdown
Quality
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.5 |
| ROA | 4.6 |
| Gross margin | 1.2 |
| Op margin | 4.6 |
| Net margin | 3.7 |
| Current ratio | 8.9 |
| FCF quality | 0.0 |
| Moat | 6.1 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -182% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
9.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 9.4 |
- ▸Strong growth: 54% YoY
Momentum
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 6.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Above 200-day MA
Sentiment
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.7 |
| erm sentiment | 6.0 |
Insider
3.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Notable insider selling — $22,671,001 (0.210% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.3 |
| quality rank | 4.3 |
| growth rank | 9.5 |
- ▸Industry growth leader
Technical
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.0 |
| support resistance | 4.1 |
| 52w position | 8.3 |
| gap | 5.0 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.6 |
| days to cover | 7.4 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 1.6 |
| beta | 5.4 |
| debt equity | 8.1 |
- ▸High IV: 70%
Catalyst
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 6.3 |
| dividend safety | 5.2 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 30.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:45d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:4.1<4.5
- ASYMMETRY:-0.8=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.82
Upside
-11.3%
Downside
13.7%
Sizing output
AVOID
SetupRANGE_BOUND — RSI 45 mid-range, Bollinger mid-band
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.40>1.3
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 9.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:4.1<4.5, ASYMMETRY:-0.8=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.82 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 9.7, Risk (lower is worse) at 5.6, and Sentiment at 5.5; the weakest are Value at 2.6, Insider at 3.4, and Peer rank at 3.5. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.82 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Revenue grew 54% year-over-year and earnings estimates are trending upward, suggesting the company is in a genuine acceleration phase where analysts are still revising their expectations higher.
Trip ifRevenue growth falls below 25% YoY for 2 consecutive quarters.
- P2At a forward P/E of 39.9x and a PEG of 3.94, the stock screens as expensive relative to its growth outlook, pricing in a persistently high growth rate that leaves limited margin of safety if execution falters.
Trip ifForward P/E compresses below 25x for 2 consecutive quarters, reversing the expensive-valuation concern.
- P3Free cash flow is deeply negative relative to net income — at -182% — meaning the company is not converting reported earnings into real cash, a red flag on earnings quality that undermines confidence in the stated profitability level.
Trip ifFree cash flow improves above -80% of net income for 2 consecutive quarters.
- P4While the stock trades above its 200-day moving average, on-balance volume is falling — a divergence suggesting that sellers are quietly distributing shares even as price holds its broader trend support, and momentum reads below the level that would confirm a healthy technical setup.
Trip ifRSI crosses above 55 for 2 consecutive weeks while on-balance volume reverses to rising.