Value
7.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.4 |
| EV/EBITDA | 4.8 |
| Fwd P/E | 7.2 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 17.5x
- ▸PEG: 0.32
- ▸Attractively valued
KWR · Why this verdict
Why Quaker Houghton (KWR) 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
Strong cash conversion — free cash flow at roughly 10 times net income and a perfect Piotroski F-Score of 9/9 — and healthy price momentum mask extreme risk conditions: a put-to-call ratio of 8.00, 16% short interest, and a stock price $42 above the options market's max pain level of $105; with only 0.3% upside to the analyst consensus target and a recent pattern of earnings underdelivery, the risk profile has breached the minimum acceptable threshold and warrants an exit.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A put-to-call ratio of 8.00 — extraordinarily elevated — combined with 16% short interest and a stock price $42 above the options market max pain level of $105 create a risk configuration that has breached the minimum acceptable floor, signaling that a large segment of the market is positioned for a material decline. Risk | Short interest falls below 8% and the put-to-call ratio normalizes below 2.0 over 12 months, resolving the extreme risk posture. | →Stable |
| CounterPrice and volume momentum remain constructive — above the 200-day moving average with rising volume accumulation — indicating the bearish options positioning has not yet translated into actual price deterioration. | ||
With only 0.3% separating the current price from the analyst consensus target and a reward-to-risk ratio of 0.04-to-1, the stock offers essentially a flat return for continued exposure while carrying considerable near-term downside risk from the elevated short and options positioning. Price targets | Either a price pullback or upward analyst target revision restores upside headroom greater than 10%, warranting a reassessment of the setup. | →Stable |
| CounterMomentum remains constructive above the 200-day moving average; if earnings delivery improves from the recent pattern, analysts may revise the target higher — retroactively validating the current price. | ||
The most recent quarter came in at the consensus estimate, the quarter before that missed by nearly 6%, and of the last four quarters only one was a beat — with an average earnings surprise of -2.0% — pointing to a pattern of underdelivery that has weakened the fundamental support for the current price. Earnings | EPS surprise exceeds 3% for 2 consecutive quarters, demonstrating a genuine reversal of the underdelivery trend. | →Stable |
| CounterThe most recent in-line result may signal operational stabilization after a miss, and the MACD is in bullish territory — if underlying momentum continues, earnings delivery may re-enter positive surprise territory. | ||
Despite thin reported net margins, the business converts earnings into free cash flow at roughly 10 times net income and carries a perfect Piotroski F-Score of 9/9 — indicating strong working capital management and balance sheet health that partially offset the elevated risk and earnings delivery concerns. Quality | Free cash flow conversion stays above 200% relative to net income and the Piotroski F-Score remains at 8/9 or above over the next 12 months. | →Stable |
| CounterFree cash flow at 10 times net income reflects net income that is currently very thin; returns on equity and assets are near the bottom of the peer range, and if net income normalizes from its low base or cash generation weakens, the apparent cash conversion advantage shrinks materially. | ||
A put-to-call ratio of 8.00 — extraordinarily elevated — combined with 16% short interest and a stock price $42 above the options market max pain level of $105 create a risk configuration that has breached the minimum acceptable floor, signaling that a large segment of the market is positioned for a material decline.
→StableRisk
- Expectation
- Short interest falls below 8% and the put-to-call ratio normalizes below 2.0 over 12 months, resolving the extreme risk posture.
CounterPrice and volume momentum remain constructive — above the 200-day moving average with rising volume accumulation — indicating the bearish options positioning has not yet translated into actual price deterioration.
With only 0.3% separating the current price from the analyst consensus target and a reward-to-risk ratio of 0.04-to-1, the stock offers essentially a flat return for continued exposure while carrying considerable near-term downside risk from the elevated short and options positioning.
→StablePrice targets
- Expectation
- Either a price pullback or upward analyst target revision restores upside headroom greater than 10%, warranting a reassessment of the setup.
CounterMomentum remains constructive above the 200-day moving average; if earnings delivery improves from the recent pattern, analysts may revise the target higher — retroactively validating the current price.
The most recent quarter came in at the consensus estimate, the quarter before that missed by nearly 6%, and of the last four quarters only one was a beat — with an average earnings surprise of -2.0% — pointing to a pattern of underdelivery that has weakened the fundamental support for the current price.
→StableEarnings
- Expectation
- EPS surprise exceeds 3% for 2 consecutive quarters, demonstrating a genuine reversal of the underdelivery trend.
CounterThe most recent in-line result may signal operational stabilization after a miss, and the MACD is in bullish territory — if underlying momentum continues, earnings delivery may re-enter positive surprise territory.
Despite thin reported net margins, the business converts earnings into free cash flow at roughly 10 times net income and carries a perfect Piotroski F-Score of 9/9 — indicating strong working capital management and balance sheet health that partially offset the elevated risk and earnings delivery concerns.
→StableQuality
- Expectation
- Free cash flow conversion stays above 200% relative to net income and the Piotroski F-Score remains at 8/9 or above over the next 12 months.
CounterFree cash flow at 10 times net income reflects net income that is currently very thin; returns on equity and assets are near the bottom of the peer range, and if net income normalizes from its low base or cash generation weakens, the apparent cash conversion advantage shrinks materially.
Per-dimension breakdown
Quality
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.1 |
| ROA | 2.9 |
| Gross margin | 3.3 |
| Op margin | 3.4 |
| Net margin | 0.1 |
| Current ratio | 8.4 |
| FCF quality | 10.0 |
| Moat | 5.8 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 1000% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
7.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.6 |
| 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
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.4 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $106,556 (0.004% of mkt cap)
Peer rank
3.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.3 |
| quality rank | 2.6 |
| growth rank | 6.1 |
Technical
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.5 |
| 52w position | 7.0 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.2 |
| days to cover | 0.0 |
| volatility | 4.7 |
| put call | 10.0 |
| implied vol | 6.5 |
| beta | 5.3 |
| debt equity | 7.0 |
- ▸High short interest: 16%
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 1.1 |
| earnings timing | 5.0 |
| surprise avg | 1.5 |
| dividend safety | 5.2 |
- ▸Earnings concerns: 1B/2M
- ▸Dividend: 132.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.8>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:35d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.4=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.38
Upside
-4.5%
Downside
11.9%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 69, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.42>1.3, MCap $2.7B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.4=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.38 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.3, Value at 7.1, and Momentum at 6.8; the weakest are Technical at 2.5, Catalyst at 3.6, and Peer rank at 3.8. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.38 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1A put-to-call ratio of 8.00 — extraordinarily elevated — combined with 16% short interest and a stock price $42 above the options market max pain level of $105 create a risk configuration that has breached the minimum acceptable floor, signaling that a large segment of the market is positioned for a material decline.
Trip ifShort interest falls below 8% and put-to-call ratio drops below 2.0 for 4 consecutive weeks, resolving the extreme risk profile.
- P2With only 0.3% separating the current price from the analyst consensus target and a reward-to-risk ratio of 0.04-to-1, the stock offers essentially a flat return for continued exposure while carrying considerable near-term downside risk from the elevated short and options positioning.
Trip ifUpside to analyst consensus target exceeds 10% (currently 0.3%), indicating meaningful headroom has been restored.
- P3The most recent quarter came in at the consensus estimate, the quarter before that missed by nearly 6%, and of the last four quarters only one was a beat — with an average earnings surprise of -2.0% — pointing to a pattern of underdelivery that has weakened the fundamental support for the current price.
Trip ifEPS surprise exceeds 3% for 2 consecutive quarters, demonstrating a reversal of the recent underdelivery trend.
- P4Despite thin reported net margins, the business converts earnings into free cash flow at roughly 10 times net income and carries a perfect Piotroski F-Score of 9/9 — indicating strong working capital management and balance sheet health that partially offset the elevated risk and earnings delivery concerns.
Trip ifFree cash flow relative to net income falls below 200% for 2 consecutive quarters (current: roughly 1,000%), indicating cash generation has materially weakened.