Value
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.5 |
| P/S | 7.6 |
| EV/EBITDA | 3.5 |
| Fwd P/E | 7.5 |
| PEG | 8.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 16.6x
- ▸PEG: 0.84
CRUS · Why this verdict
Why Cirrus Logic (CRUS) 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 score5.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
The company has beaten consensus earnings estimates in all four reported quarters with an average upside surprise near 22%, backed by free cash flow conversion of 122% of net income, but shares sit just 6.6% below near-term resistance with a reward-to-risk ratio below 1.0 — meaning the potential downside outweighs the potential upside at today's price.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has delivered consensus beats in each of the four most recent quarters, with an average upside surprise of roughly 22%, indicating a sustained discipline of consistently under-promising and over-delivering that compounds investor confidence quarter by quarter. Earnings | Average quarterly EPS surprise stays above 10% and the beat streak extends to five or more consecutive quarters over the next 12 months. | →Stable |
| CounterWith estimates already calibrated to elevated beats, the implied bar rises each cycle; a single in-line or missed result could reset sentiment sharply and remove the premium the streak commands. | ||
A single customer accounts for 91% of revenue, and the top ten collectively represent 96%, leaving the business acutely exposed to any design-out, volume reduction, or pricing pressure from that dominant relationship — a risk that high earnings quality does not hedge. Bear case | No public disclosure from the dominant customer of supplier diversification or material design changes over the next 12 months; concentration stays above 80% in the next annual filing, confirming the risk has not crystallised. | →Stable |
| CounterDeep multi-generation integration implies the relationship is entrenched; long-standing concentration may reflect a competitive moat within that partnership rather than fragility, and the risk may never materialise. | ||
The business converts 122% of net income into free cash flow against operating margins of 21%, demonstrating that the GAAP income statement understates real cash generation and that the earnings quality is high by any standard measure. Quality breakdown | Free cash flow conversion remains above 100% of net income and operating margins stay above 18% for each of the next four fiscal quarters. | →Stable |
| CounterRevenue growth scores are soft; if the top line decelerates materially, absolute free cash flow dollars could shrink even if the conversion ratio holds, limiting the compounding benefit investors are paying for. | ||
With the stock 6.6% below near-term resistance and a reward-to-risk ratio of 0.94 — below 1.0 — the potential downside from current levels exceeds the potential upside, making the setup unattractive for new capital even given the high business quality. Price targets | If this assessment is wrong, shares break decisively above $176.81, analysts raise their targets, and a new favorable setup — with more than 10% upside to the next resistance level — emerges within 12 months. | →Stable |
| CounterStrong earnings momentum and high cash generation can sustain a premium multiple longer than expected; a positive catalyst could rapidly shift the risk geometry and restore an attractive entry point. | ||
The company has delivered consensus beats in each of the four most recent quarters, with an average upside surprise of roughly 22%, indicating a sustained discipline of consistently under-promising and over-delivering that compounds investor confidence quarter by quarter.
→StableEarnings
- Expectation
- Average quarterly EPS surprise stays above 10% and the beat streak extends to five or more consecutive quarters over the next 12 months.
CounterWith estimates already calibrated to elevated beats, the implied bar rises each cycle; a single in-line or missed result could reset sentiment sharply and remove the premium the streak commands.
A single customer accounts for 91% of revenue, and the top ten collectively represent 96%, leaving the business acutely exposed to any design-out, volume reduction, or pricing pressure from that dominant relationship — a risk that high earnings quality does not hedge.
→StableBear case
- Expectation
- No public disclosure from the dominant customer of supplier diversification or material design changes over the next 12 months; concentration stays above 80% in the next annual filing, confirming the risk has not crystallised.
CounterDeep multi-generation integration implies the relationship is entrenched; long-standing concentration may reflect a competitive moat within that partnership rather than fragility, and the risk may never materialise.
The business converts 122% of net income into free cash flow against operating margins of 21%, demonstrating that the GAAP income statement understates real cash generation and that the earnings quality is high by any standard measure.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% of net income and operating margins stay above 18% for each of the next four fiscal quarters.
CounterRevenue growth scores are soft; if the top line decelerates materially, absolute free cash flow dollars could shrink even if the conversion ratio holds, limiting the compounding benefit investors are paying for.
With the stock 6.6% below near-term resistance and a reward-to-risk ratio of 0.94 — below 1.0 — the potential downside from current levels exceeds the potential upside, making the setup unattractive for new capital even given the high business quality.
→StablePrice targets
- Expectation
- If this assessment is wrong, shares break decisively above $176.81, analysts raise their targets, and a new favorable setup — with more than 10% upside to the next resistance level — emerges within 12 months.
CounterStrong earnings momentum and high cash generation can sustain a premium multiple longer than expected; a positive catalyst could rapidly shift the risk geometry and restore an attractive entry point.
Per-dimension breakdown
Quality
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.8 |
| ROA | 8.0 |
| Gross margin | 6.6 |
| Op margin | 8.1 |
| Net margin | 10.0 |
| Current ratio | 5.6 |
| FCF quality | 9.1 |
| Moat | 6.9 |
| Piotroski F | 8.9 |
- ▸Strong margins: 21%
- ▸Excellent cash conversion: 122% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
- ▸High-quality business
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.9 |
| EPS growth | 6.0 |
Momentum
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Oversold in uptrend (RSI 30)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.3 |
| Price target | 7.5 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (4.0) — signal dampened
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $6,035,012 (0.076% of mkt cap)
Peer rank
4.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.4 |
| quality rank | 6.9 |
| growth rank | 2.0 |
- ▸Attractive P/E vs peers
Technical
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.6 |
| support resistance | 9.2 |
| 52w position | 7.3 |
| gap | 5.0 |
Risk (lower is worse)
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.7 |
| days to cover | 6.2 |
| volatility | 0.5 |
| put call | 3.7 |
| implied vol | 4.0 |
| max pain risk | 3.0 |
| beta | 6.4 |
| debt equity | 0.0 |
- ▸Above max pain $110
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
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:40d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.6<4.5
- ASYMMETRY:0.0<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.02
Upside
+0.2%
Downside
9.6%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeTEMP_HEADWIND — High quality (7.8) with weak momentum (2.6)
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.6<4.5, ASYMMETRY:0.0<1.5@spot) reinforce the read. Current asymmetry R:R is 0.02 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.8, Technical at 7.5, and Catalyst at 7.5; the weakest are Momentum at 2.6, Risk (lower is worse) at 3.8, and Insider at 3.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.02 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 delivered consensus beats in each of the four most recent quarters, with an average upside surprise of roughly 22%, indicating a sustained discipline of consistently under-promising and over-delivering that compounds investor confidence quarter by quarter.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2The business converts 122% of net income into free cash flow against operating margins of 21%, demonstrating that the GAAP income statement understates real cash generation and that the earnings quality is high by any standard measure.
Trip ifFree cash flow conversion falls below 80% of net income for 2 consecutive fiscal quarters.
- P3A single customer accounts for 91% of revenue, and the top ten collectively represent 96%, leaving the business acutely exposed to any design-out, volume reduction, or pricing pressure from that dominant relationship — a risk that high earnings quality does not hedge.
Trip ifDisclosed revenue concentration at the top customer falls below 70% in a regulatory filing.
- P4With the stock 6.6% below near-term resistance and a reward-to-risk ratio of 0.94 — below 1.0 — the potential downside from current levels exceeds the potential upside, making the setup unattractive for new capital even given the high business quality.
Trip ifShare price falls more than 12% below $165.94, creating more than 15% upside to the $176.81 resistance target and restoring a favorable reward-to-risk profile.