Value
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 0.1 |
| P/S | 9.5 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.1 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 29.6x
- ▸PEG: 0.11
BHE · Why this verdict
Why Benchmark Electronics (BHE) 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
Benchmark Electronics has compiled a perfect four-quarter earnings beat streak and converts income into cash at an exceptional rate, but the stock now trades above its resistance-based price target with a negative risk/reward geometry; customer concentration in the top accounts and a dividend flagged as potentially unsustainable leave new buyers in an unattractive setup despite solid operational execution.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The ten largest customers account for 51% of revenues, concentrating the company's top line in a narrow client base where the loss of even one or two large accounts could produce a material revenue shortfall. Bear case | Top-10 customer concentration declines below 45% of total revenue within 12 months as the customer base broadens. | →Stable |
| CounterDeep relationships with a concentrated set of large customers can create durable switching costs and predictable repeat business; the same concentration that creates risk may also underpin the consistent earnings delivery record. | ||
The company has beaten consensus estimates in each of the past four quarters, averaging a positive surprise of roughly 6.4%, demonstrating consistent delivery above expectations quarter after quarter. Earnings | The beat streak extends to 6 or more consecutive quarters and the average earnings surprise stays above 5% over the next year. | →Stable |
| CounterFour consecutive beats can reflect moderated analyst expectations rather than accelerating business momentum; the stock already trades above the consensus target, suggesting prior beats are fully reflected in the price. | ||
The stock now trades above the resistance-based price target of $90.57, leaving the risk/reward geometry negative — a setup where the identified downside materially outweighs any near-term measurable upside. Price targets | If conditions reverse, either the stock pulls back below $87 or analysts revise targets above $98, restoring a positive upside gap greater than 5%. | →Stable |
| CounterTechnical targets are periodically revised upward as earnings estimates improve; if management raises guidance or delivers a strong next print, analyst targets may follow the stock rather than cap it. | ||
Free cash flow runs at 335% of net income, indicating that the business converts accounting earnings into cash at a rate well above what the income statement suggests — a quality signal that typically reflects low capital intensity and favorable working capital management. Quality breakdown | The FCF-to-net-income ratio stays above 200% in each of the next two reported annual periods, confirming the cash-generation quality is structural rather than transient. | →Stable |
| CounterFree cash flow materially above net income can reflect aggressive management of payables or one-time working capital tailwinds; if those dynamics normalize, the apparent conversion quality could compress sharply. | ||
The ten largest customers account for 51% of revenues, concentrating the company's top line in a narrow client base where the loss of even one or two large accounts could produce a material revenue shortfall.
→StableBear case
- Expectation
- Top-10 customer concentration declines below 45% of total revenue within 12 months as the customer base broadens.
CounterDeep relationships with a concentrated set of large customers can create durable switching costs and predictable repeat business; the same concentration that creates risk may also underpin the consistent earnings delivery record.
The company has beaten consensus estimates in each of the past four quarters, averaging a positive surprise of roughly 6.4%, demonstrating consistent delivery above expectations quarter after quarter.
→StableEarnings
- Expectation
- The beat streak extends to 6 or more consecutive quarters and the average earnings surprise stays above 5% over the next year.
CounterFour consecutive beats can reflect moderated analyst expectations rather than accelerating business momentum; the stock already trades above the consensus target, suggesting prior beats are fully reflected in the price.
The stock now trades above the resistance-based price target of $90.57, leaving the risk/reward geometry negative — a setup where the identified downside materially outweighs any near-term measurable upside.
→StablePrice targets
- Expectation
- If conditions reverse, either the stock pulls back below $87 or analysts revise targets above $98, restoring a positive upside gap greater than 5%.
CounterTechnical targets are periodically revised upward as earnings estimates improve; if management raises guidance or delivers a strong next print, analyst targets may follow the stock rather than cap it.
Free cash flow runs at 335% of net income, indicating that the business converts accounting earnings into cash at a rate well above what the income statement suggests — a quality signal that typically reflects low capital intensity and favorable working capital management.
→StableQuality breakdown
- Expectation
- The FCF-to-net-income ratio stays above 200% in each of the next two reported annual periods, confirming the cash-generation quality is structural rather than transient.
CounterFree cash flow materially above net income can reflect aggressive management of payables or one-time working capital tailwinds; if those dynamics normalize, the apparent conversion quality could compress sharply.
Per-dimension breakdown
Quality
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.0 |
| ROA | 1.9 |
| Gross margin | 0.0 |
| Op margin | 1.5 |
| Net margin | 0.6 |
| Current ratio | 7.5 |
| FCF quality | 10.0 |
| Moat | 5.8 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 335% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
7.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.3 |
| EPS growth | 10.0 |
Momentum
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 2.3 |
| erm sentiment | 5.0 |
- ▸Below analyst target
Insider
3.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.0 |
- ▸Notable insider selling — $7,312,806 (0.222% of mkt cap)
Peer rank
2.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.9 |
| quality rank | 1.7 |
| growth rank | 1.7 |
Technical
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.0 |
| 52w position | 10.0 |
| gap | 5.0 |
Risk (lower is worse)
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.6 |
| days to cover | 8.0 |
| volatility | 0.8 |
| put call | 10.0 |
| implied vol | 4.0 |
| max pain risk | 7.0 |
| beta | 5.9 |
| debt equity | 8.8 |
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.7 |
| dividend safety | 4.2 |
- ▸Perfect beat streak: 4Q
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.8>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:34d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-2.1=NEGATIVE
Warning (0)
none
Reward-to-Risk
-2.12
Upside
-31.8%
Downside
15.0%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 62, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $3.3B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-2.1=NEGATIVE) reinforce the read. Current asymmetry R:R is -2.12 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.2, Momentum at 6.8, and Risk (lower is worse) at 6.5; the weakest are Peer rank at 2.1, Insider at 3.3, and Technical at 3.8. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -2.12 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company has beaten consensus estimates in each of the past four quarters, averaging a positive surprise of roughly 6.4%, demonstrating consistent delivery above expectations quarter after quarter.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, ending the beat streak.
- P2The stock now trades above the resistance-based price target of $90.57, leaving the risk/reward geometry negative — a setup where the identified downside materially outweighs any near-term measurable upside.
Trip ifAnalyst consensus price target is revised above $98, restoring upside greater than 5% from the current price level.
- P3The ten largest customers account for 51% of revenues, concentrating the company's top line in a narrow client base where the loss of even one or two large accounts could produce a material revenue shortfall.
Trip ifTop-10 customer revenue concentration falls below 45% of total revenue for 2 consecutive reported periods.
- P4Free cash flow runs at 335% of net income, indicating that the business converts accounting earnings into cash at a rate well above what the income statement suggests — a quality signal that typically reflects low capital intensity and favorable working capital management.
Trip ifFCF-to-net-income ratio falls below 150% for 2 consecutive reported annual periods.