Value
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 1.3 |
| P/S | 6.3 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 7.0 |
| PEG | 8.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 17.9x
- ▸PEG: 0.84
DT · Why this verdict
Why Dynatrace (DT) 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 score5.1/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Dynatrace has built a credible earnings track record — four straight beats averaging roughly 8% above consensus — but the stock has reached its near-term technical resistance and the risk/reward is now balanced at best, leaving no margin of safety for new buyers at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten earnings estimates in each of the last four reported quarters, with the average positive surprise running roughly 8% above consensus — a record that signals consistent execution and disciplined cost management. Catalyst breakdown | The beat streak extends to five or more quarters, with average earnings surprise remaining above 5% over the next two reports. | →Stable |
| CounterFour straight beats can reflect a period of conservative guidance discipline rather than durable outperformance; if growth is moderating, management may reset the bar higher and the streak could end abruptly. | ||
Free cash flow runs at roughly three times reported net income, indicating that earnings are meaningfully understated by accounting charges and that the business generates substantial real cash well in excess of what the income statement suggests. Quality breakdown | Free cash flow conversion remains above 200% of net income over the next four quarters, confirming the structural nature of the gap rather than a one-time timing item. | →Stable |
| CounterA 309% FCF-to-net-income ratio of this magnitude often reflects large non-cash charges; if those charges reverse or the working capital dynamic shifts, cash conversion could normalize sharply lower. | ||
The stock has reached its near-term technical resistance level, leaving less than 7% of remaining upside to the take-profit target while the risk/reward ratio sits at roughly 1-to-1 — insufficient to justify initiating or adding to a position. Warnings | A new technical setup emerges that restores at least a 1.5-to-1 reward-to-risk ratio, either through a price pullback to a lower entry or an upward revision of the resistance target. | →Stable |
| CounterIf earnings acceleration resumes and analysts raise their targets, the current resistance level could be broken decisively, making today's balanced risk/reward look conservative in hindsight. | ||
The stock trades below its 200-day moving average, which is itself declining at about 3% over the past 30 days, and volume has been distributing rather than accumulating; additionally, the debt-to-equity ratio of 6.3 carries a leverage penalty that limits financial flexibility in a downturn. Bear case | Price reclaims and holds above the 200-day moving average for at least 30 days while OBV turns positive, and net debt begins to decrease over the next two annual periods. | →Stable |
| CounterHigh leverage in a software business with strong recurring cash flows may be serviceable; if interest coverage remains healthy and churn is low, the leverage penalty may be a mechanical score deduction rather than a genuine credit risk. | ||
The company has beaten earnings estimates in each of the last four reported quarters, with the average positive surprise running roughly 8% above consensus — a record that signals consistent execution and disciplined cost management.
→StableCatalyst breakdown
- Expectation
- The beat streak extends to five or more quarters, with average earnings surprise remaining above 5% over the next two reports.
CounterFour straight beats can reflect a period of conservative guidance discipline rather than durable outperformance; if growth is moderating, management may reset the bar higher and the streak could end abruptly.
Free cash flow runs at roughly three times reported net income, indicating that earnings are meaningfully understated by accounting charges and that the business generates substantial real cash well in excess of what the income statement suggests.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 200% of net income over the next four quarters, confirming the structural nature of the gap rather than a one-time timing item.
CounterA 309% FCF-to-net-income ratio of this magnitude often reflects large non-cash charges; if those charges reverse or the working capital dynamic shifts, cash conversion could normalize sharply lower.
The stock has reached its near-term technical resistance level, leaving less than 7% of remaining upside to the take-profit target while the risk/reward ratio sits at roughly 1-to-1 — insufficient to justify initiating or adding to a position.
→StableWarnings
- Expectation
- A new technical setup emerges that restores at least a 1.5-to-1 reward-to-risk ratio, either through a price pullback to a lower entry or an upward revision of the resistance target.
CounterIf earnings acceleration resumes and analysts raise their targets, the current resistance level could be broken decisively, making today's balanced risk/reward look conservative in hindsight.
The stock trades below its 200-day moving average, which is itself declining at about 3% over the past 30 days, and volume has been distributing rather than accumulating; additionally, the debt-to-equity ratio of 6.3 carries a leverage penalty that limits financial flexibility in a downturn.
→StableBear case
- Expectation
- Price reclaims and holds above the 200-day moving average for at least 30 days while OBV turns positive, and net debt begins to decrease over the next two annual periods.
CounterHigh leverage in a software business with strong recurring cash flows may be serviceable; if interest coverage remains healthy and churn is low, the leverage penalty may be a mechanical score deduction rather than a genuine credit risk.
Per-dimension breakdown
Quality
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.1 |
| ROA | 2.6 |
| Gross margin | 10.0 |
| Op margin | 4.2 |
| Net margin | 4.0 |
| Current ratio | 5.1 |
| FCF quality | 10.0 |
| Moat | 6.4 |
| Rule of 40 | 7.5 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 309% FCF/NI
- ▸Rule of 40: 44 (pass)
Growth
3.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 7.4 |
| EPS growth | 0.0 |
Momentum
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 3.0 |
| Volume | 2.3 |
- ▸Capitulation risk (RSI 25, below 200MA)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -3.2%/30d — confirmed downtrend
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.5 |
| Analyst rating | 7.5 |
| Price target | 6.7 |
- ▸LLM news sentiment: +0.70 (n=1)
Insider
6.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.9 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $10,421 (0.000% of mkt cap)
Peer rank
3.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.9 |
| quality rank | 4.3 |
| growth rank | 6.0 |
Technical
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.6 |
| support resistance | 7.0 |
| 52w position | 4.1 |
Risk (lower is worse)
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.1 |
| days to cover | 9.7 |
| volatility | 3.6 |
| put call | 0.0 |
| implied vol | 4.0 |
| max pain risk | 3.0 |
| beta | 8.6 |
| debt equity | 0.0 |
- ▸Elevated put/call: 4.38
- ▸Above max pain $22
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.4 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
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)
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.70
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.7<4.5
- ASYMMETRY:0.4<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
0.43
Upside
+3.0%
Downside
7.1%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.6 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.7<4.5, ASYMMETRY:0.4<1.5@spot, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 0.43 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.6, Catalyst at 6.3, and Insider at 6.0; the weakest are Peer rank at 3.7, Momentum at 3.7, and Growth at 3.7. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 0.43 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 earnings estimates in each of the last four reported quarters, with the average positive surprise running roughly 8% above consensus — a record that signals consistent execution and disciplined cost management.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Free cash flow runs at roughly three times reported net income, indicating that earnings are meaningfully understated by accounting charges and that the business generates substantial real cash well in excess of what the income statement suggests.
Trip ifFree cash flow conversion falls below 150% of net income for 2 consecutive quarters.
- P3The stock has reached its near-term technical resistance level, leaving less than 7% of remaining upside to the take-profit target while the risk/reward ratio sits at roughly 1-to-1 — insufficient to justify initiating or adding to a position.
Trip ifReward-to-risk ratio remains below 1.5 for 3 consecutive months without a new technical setup forming.
- P4The stock trades below its 200-day moving average, which is itself declining at about 3% over the past 30 days, and volume has been distributing rather than accumulating; additionally, the debt-to-equity ratio of 6.3 carries a leverage penalty that limits financial flexibility in a downturn.
Trip ifDebt-to-equity ratio rises above 8.0 or price drops more than 15% below the 200-day moving average.