Value
8.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.1 |
| P/S | 10.0 |
| EV/EBITDA | 8.9 |
| Fwd P/E | 9.8 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 6.2x
- ▸PEG: 0.14
- ▸Attractively valued
ADNT · Why this verdict
Why Adient (ADNT) 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 score4.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Adient trades at a forward price-to-earnings ratio of 6.9x and PEG of 0.14 with exceptional free cash flow generation relative to reported earnings, but the business quality sits below the minimum investable threshold — with no competitive moat and near-zero operating margins — and earnings execution has been inconsistent across the last four quarters, making the valuation discount insufficient to overcome the quality deficit.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward price-to-earnings ratio of 6.9x and a PEG of 0.14, the market is pricing the company's earnings at a trough-level discount relative to growth, with analyst consensus implying approximately 38% upside from current levels. Valuation breakdown | The forward price-to-earnings ratio expands toward 10x over 12 months as the market begins to narrow the valuation gap, driven by improving earnings visibility and sustained beats. | →Stable |
| CounterA trough-level multiple in an auto-parts business with no identified competitive moat and near-zero operating margins may reflect a fair structural discount rather than a temporary mispricing; the valuation may be cheap for durable reasons. | ||
Business quality sits below the minimum threshold for a long position, with no identified competitive moat and near-zero operating margins that leave the franchise highly exposed to volume and pricing cycles in the automotive supply chain without a structural earnings buffer. Warnings | Operating margin recovers above 5% for 2 consecutive quarters, demonstrating meaningful improvement from near-minimal current levels and a path toward competitive industry positioning. | →Stable |
| CounterA Piotroski financial-health score that reflects reasonable balance-sheet discipline suggests that, while margins are thin, the company is not in acute financial distress; a margin recovery plan could rehabilitate the quality profile faster than the current snapshot implies. | ||
Free cash flow represents 548% of net income, indicating the company generates substantially more cash than reported earnings suggest — a function of significant non-cash charges flowing through the income statement — which provides a real liquidity cushion even as headline profitability remains thin. Quality breakdown | Free cash flow conversion remains above 200% of net income for 2 consecutive quarters, confirming that the cash generation advantage is durable and not a one-period accounting artifact. | →Stable |
| CounterFree cash flow conversion of 548% relative to near-zero net income is almost entirely a consequence of the denominator being very small; if net income normalizes upward, the ratio will decline sharply, and the apparent cash advantage may overstate the underlying health of the business. | ||
The last four quarters show two beats followed by two prior misses — with the two most recent quarters beating by 18% and 81% above consensus respectively — but the overall four-quarter record has been flagged as a concern rather than a strength, reflecting the volatility of results in a low-margin business. Catalyst breakdown | The company beats consensus EPS by more than 5% for 3 consecutive quarters, establishing a consistent outperformance pattern that demonstrates the recent acceleration in execution is durable. | →Stable |
| CounterThe two most recent beats of 18% and 81% above consensus are material and may signal that estimates have been set conservatively; if this pattern of consistently under-promising and over-delivering continues, the earnings concern could resolve quickly. | ||
At a forward price-to-earnings ratio of 6.9x and a PEG of 0.14, the market is pricing the company's earnings at a trough-level discount relative to growth, with analyst consensus implying approximately 38% upside from current levels.
→StableValuation breakdown
- Expectation
- The forward price-to-earnings ratio expands toward 10x over 12 months as the market begins to narrow the valuation gap, driven by improving earnings visibility and sustained beats.
CounterA trough-level multiple in an auto-parts business with no identified competitive moat and near-zero operating margins may reflect a fair structural discount rather than a temporary mispricing; the valuation may be cheap for durable reasons.
Business quality sits below the minimum threshold for a long position, with no identified competitive moat and near-zero operating margins that leave the franchise highly exposed to volume and pricing cycles in the automotive supply chain without a structural earnings buffer.
→StableWarnings
- Expectation
- Operating margin recovers above 5% for 2 consecutive quarters, demonstrating meaningful improvement from near-minimal current levels and a path toward competitive industry positioning.
CounterA Piotroski financial-health score that reflects reasonable balance-sheet discipline suggests that, while margins are thin, the company is not in acute financial distress; a margin recovery plan could rehabilitate the quality profile faster than the current snapshot implies.
Free cash flow represents 548% of net income, indicating the company generates substantially more cash than reported earnings suggest — a function of significant non-cash charges flowing through the income statement — which provides a real liquidity cushion even as headline profitability remains thin.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 200% of net income for 2 consecutive quarters, confirming that the cash generation advantage is durable and not a one-period accounting artifact.
CounterFree cash flow conversion of 548% relative to near-zero net income is almost entirely a consequence of the denominator being very small; if net income normalizes upward, the ratio will decline sharply, and the apparent cash advantage may overstate the underlying health of the business.
The last four quarters show two beats followed by two prior misses — with the two most recent quarters beating by 18% and 81% above consensus respectively — but the overall four-quarter record has been flagged as a concern rather than a strength, reflecting the volatility of results in a low-margin business.
→StableCatalyst breakdown
- Expectation
- The company beats consensus EPS by more than 5% for 3 consecutive quarters, establishing a consistent outperformance pattern that demonstrates the recent acceleration in execution is durable.
CounterThe two most recent beats of 18% and 81% above consensus are material and may signal that estimates have been set conservatively; if this pattern of consistently under-promising and over-delivering continues, the earnings concern could resolve quickly.
Per-dimension breakdown
Quality
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.3 |
| ROA | 2.1 |
| Gross margin | 0.0 |
| Op margin | 1.3 |
| Net margin | 0.2 |
| Current ratio | 4.3 |
| FCF quality | 10.0 |
| Moat | 4.2 |
| Piotroski F | 5.6 |
- ▸Excellent cash conversion: 548% FCF/NI
- ▸No competitive moat
Growth
4.2/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 4.2 |
Momentum
1.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 1.3 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -1.0%/30d — confirmed downtrend
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 9.6 |
| erm sentiment | 4.3 |
- ▸Analyst upside: 55%
Insider
3.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.0 |
- ▸Modest insider selling — $515,403 (0.032% of mkt cap)
Peer rank
3.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.0 |
| quality rank | 2.7 |
| growth rank | 4.8 |
Technical
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.1 |
| support resistance | 9.3 |
| 52w position | 4.8 |
Risk (lower is worse)
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.5 |
| days to cover | 4.6 |
| volatility | 0.5 |
| put call | 0.0 |
| implied vol | 3.3 |
| max pain risk | 7.0 |
| beta | 5.0 |
| debt equity | 4.5 |
- ▸Elevated put/call: 2.83
- ▸High IV: 60%
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- ASYMMETRY:3.6>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.4<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
3.64
Upside
+34.8%
Downside
9.6%
Sizing output
AVOID
SetupFALLING_KNIFE — Death cross, below all MAs, RSI 33, MACD bearish
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.51>1.3, MCap $1.6B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 8.8 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:1.4<4.5.
The strongest dimensions are Value at 8.8, Technical at 7.7, and Sentiment at 6.3; the weakest are Momentum at 1.4, Quality at 3.3, and Peer rank at 3.4. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 3.64 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1At a forward price-to-earnings ratio of 6.9x and a PEG of 0.14, the market is pricing the company's earnings at a trough-level discount relative to growth, with analyst consensus implying approximately 38% upside from current levels.
Trip ifForward P/E rises above 12x for 2 consecutive quarters, indicating the trough-level discount has been substantially re-rated.
- P2Business quality sits below the minimum threshold for a long position, with no identified competitive moat and near-zero operating margins that leave the franchise highly exposed to volume and pricing cycles in the automotive supply chain without a structural earnings buffer.
Trip ifOperating margin recovers above 5% for 2 consecutive quarters, demonstrating a meaningful structural improvement above near-minimal current levels.
- P3Free cash flow represents 548% of net income, indicating the company generates substantially more cash than reported earnings suggest — a function of significant non-cash charges flowing through the income statement — which provides a real liquidity cushion even as headline profitability remains thin.
Trip ifFree cash flow conversion falls below 150% of net income for 2 consecutive quarters, signaling the cash generation advantage has narrowed materially from the current 548%.
- P4The last four quarters show two beats followed by two prior misses — with the two most recent quarters beating by 18% and 81% above consensus respectively — but the overall four-quarter record has been flagged as a concern rather than a strength, reflecting the volatility of results in a low-margin business.
Trip ifEPS surprise exceeds 5% for 3 consecutive quarters, establishing a consistent outperformance pattern that resolves the earnings execution concern.