Value
6.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 2.0 |
| P/S | 8.1 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.7 |
| PEG | 10.0 |
- ▸Forward P/E: 22.5x
- ▸PEG: 0.13
DIOD · Why this verdict
Why Diodes (DIOD) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Diodes Incorporated has delivered strong earnings execution and exceptional cash conversion, but the current price sits near technical resistance with a risk/reward ratio of roughly 0.8-to-1, elevated leverage at a debt-to-equity of 5.4, and heavy geographic concentration in Asia — a combination that supports holding but not adding at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has posted approximately 22% year-over-year revenue growth, placing it among the stronger growers in its peer group and supporting a premium on forward earnings estimates. Growth breakdown | Revenue growth remains above 15% year-over-year for 2 consecutive quarters. | →Stable |
| CounterGrowth at this pace in a cyclical semiconductor business is difficult to sustain; any demand softening in the primary Asian market could cause a sharp deceleration given the geographic concentration. | ||
A debt-to-equity ratio of 5.4 has been flagged as a performance penalty — elevated leverage increases financial fragility if the current revenue growth cycle moderates and leaves the company less equipped to weather a demand downturn. Bear case | Debt-to-equity falls below 3.0 within 4 quarters as operating cash flow is deployed toward deleveraging. | →Stable |
| CounterStrong cash conversion provides real capacity to service the debt load; the leverage concern may diminish quickly if the current growth trajectory continues for another year. | ||
The company has delivered three consecutive earnings beats at an average upside surprise of roughly 20%, with only a single miss in the third-most-recent quarter — a pattern of consistently under-promising and over-delivering that reflects strong short-cycle visibility in the business. Earnings | Average EPS surprise remains positive for at least 3 of the next 4 reported quarters. | →Stable |
| CounterOne miss in four quarters and no visible guidance discipline means the beat cadence may reflect conservatively anchored estimates rather than genuine operational momentum, making a multi-quarter miss run more likely than it appears. | ||
Free cash flow converts at roughly 170% of net income and the company scores 8 out of 9 on a standard financial-health gauge — indicating above-average earnings quality, disciplined working capital management, and real cash-generative capacity. Quality breakdown | Free cash flow remains above 100% of net income for 4 consecutive quarters. | →Stable |
| CounterDebt-to-equity of 5.4 means a meaningful portion of operating cash flow is consumed by interest service; the conversion premium could compress rapidly if revenue softens and the interest burden remains fixed. | ||
The current price is within roughly 6% of the technical resistance target while the downside buffer is materially wider, producing a risk/reward ratio of approximately 0.8-to-1 — meaning expected gain is outweighed by expected loss from the current entry point. Price targets | Price retreats to a level where upside to the $119.52 resistance target exceeds 12%, restoring a more favorable entry geometry. | →Stable |
| CounterThe risk/reward ratio can improve quickly if the resistance level is cleared on volume; dismissing the name on entry geometry alone risks missing a sustained breakout above the current target. | ||
The company has posted approximately 22% year-over-year revenue growth, placing it among the stronger growers in its peer group and supporting a premium on forward earnings estimates.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 15% year-over-year for 2 consecutive quarters.
CounterGrowth at this pace in a cyclical semiconductor business is difficult to sustain; any demand softening in the primary Asian market could cause a sharp deceleration given the geographic concentration.
A debt-to-equity ratio of 5.4 has been flagged as a performance penalty — elevated leverage increases financial fragility if the current revenue growth cycle moderates and leaves the company less equipped to weather a demand downturn.
→StableBear case
- Expectation
- Debt-to-equity falls below 3.0 within 4 quarters as operating cash flow is deployed toward deleveraging.
CounterStrong cash conversion provides real capacity to service the debt load; the leverage concern may diminish quickly if the current growth trajectory continues for another year.
The company has delivered three consecutive earnings beats at an average upside surprise of roughly 20%, with only a single miss in the third-most-recent quarter — a pattern of consistently under-promising and over-delivering that reflects strong short-cycle visibility in the business.
→StableEarnings
- Expectation
- Average EPS surprise remains positive for at least 3 of the next 4 reported quarters.
CounterOne miss in four quarters and no visible guidance discipline means the beat cadence may reflect conservatively anchored estimates rather than genuine operational momentum, making a multi-quarter miss run more likely than it appears.
Free cash flow converts at roughly 170% of net income and the company scores 8 out of 9 on a standard financial-health gauge — indicating above-average earnings quality, disciplined working capital management, and real cash-generative capacity.
→StableQuality breakdown
- Expectation
- Free cash flow remains above 100% of net income for 4 consecutive quarters.
CounterDebt-to-equity of 5.4 means a meaningful portion of operating cash flow is consumed by interest service; the conversion premium could compress rapidly if revenue softens and the interest burden remains fixed.
The current price is within roughly 6% of the technical resistance target while the downside buffer is materially wider, producing a risk/reward ratio of approximately 0.8-to-1 — meaning expected gain is outweighed by expected loss from the current entry point.
→StablePrice targets
- Expectation
- Price retreats to a level where upside to the $119.52 resistance target exceeds 12%, restoring a more favorable entry geometry.
CounterThe risk/reward ratio can improve quickly if the resistance level is cleared on volume; dismissing the name on entry geometry alone risks missing a sustained breakout above the current target.
Per-dimension breakdown
Quality
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.5 |
| ROA | 0.9 |
| Gross margin | 2.3 |
| Op margin | 2.0 |
| Net margin | 2.7 |
| Current ratio | 9.8 |
| FCF quality | 10.0 |
| Moat | 4.9 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 170% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
9.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 22% YoY
Momentum
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 3.4 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 5.0 |
| Price target | 7.1 |
Insider
3.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.0 |
- ▸Notable insider selling — $7,616,955 (0.148% of mkt cap)
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.0 |
| quality rank | 3.9 |
| growth rank | 4.8 |
Technical
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.6 |
| support resistance | 4.5 |
| 52w position | 7.9 |
Risk (lower is worse)
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.7 |
| days to cover | 8.6 |
| volatility | 0.0 |
| put call | 6.8 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 3.7 |
| debt equity | 0.0 |
- ▸High IV: 81%
- ▸Above max pain $35
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+2Passed (6)
- MOMENTUM:7.6>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:43d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.2=NEGATIVE
- 8K_CRITICAL:4.01
Warning (0)
none
Reward-to-Risk
-0.17
Upside
-2.6%
Downside
15.0%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 48, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.90>1.3
Investment implication
The F-path SELL output reflects an overall score of 4.5 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 9.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.2=NEGATIVE, 8K_CRITICAL:4.01) reinforce the read. Current asymmetry R:R is -0.17 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 9.0, Momentum at 7.6, and Catalyst at 6.9; the weakest are Insider at 3.3, Risk (lower is worse) at 3.6, and Quality at 4.8. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -0.17 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 three consecutive earnings beats at an average upside surprise of roughly 20%, with only a single miss in the third-most-recent quarter — a pattern of consistently under-promising and over-delivering that reflects strong short-cycle visibility in the business.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Free cash flow converts at roughly 170% of net income and the company scores 8 out of 9 on a standard financial-health gauge — indicating above-average earnings quality, disciplined working capital management, and real cash-generative capacity.
Trip ifFree cash flow turns negative (FCF/NI ratio falls below 0%) for 2 consecutive quarters.
- P3The company has posted approximately 22% year-over-year revenue growth, placing it among the stronger growers in its peer group and supporting a premium on forward earnings estimates.
Trip ifRevenue growth falls below 10% year-over-year for 2 consecutive quarters.
- P4A debt-to-equity ratio of 5.4 has been flagged as a performance penalty — elevated leverage increases financial fragility if the current revenue growth cycle moderates and leaves the company less equipped to weather a demand downturn.
Trip ifDebt-to-equity ratio falls below 2.5, eliminating the leverage concern.
- P5The current price is within roughly 6% of the technical resistance target while the downside buffer is materially wider, producing a risk/reward ratio of approximately 0.8-to-1 — meaning expected gain is outweighed by expected loss from the current entry point.
Trip ifPrice retraces below $102 (more than 15% below the $119.52 resistance target), restoring double-digit upside headroom.