Value
9.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.4 |
| P/S | 10.0 |
| EV/EBITDA | 7.1 |
| Fwd P/E | 9.6 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 7.9x
- ▸PEG: 0.12
- ▸Attractively valued
LKQ · Why this verdict
Why LKQ (LKQ) 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 score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A deep valuation discount — forward price-to-earnings of 7.9x, PEG ratio of 0.12, and 35.8% upside to the analyst consensus target — combined with free cash flow running at 153% of net income frame a recovery case, but two misses in the last four quarters and a confirmed price downtrend signal that fundamental pressure has not yet peaked.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward P/E of 7.9x and a PEG ratio of 0.12, the stock screens as deeply discounted relative to its earnings growth rate, with the analyst consensus implying 35.8% upside from current prices. Valuation breakdown | The forward P/E multiple re-rates above 10x within 12 months, consistent with narrowing the discount implied by analyst targets. | →Stable |
| CounterTwo misses in the last four quarters and a downward-trending share price suggest the market's skepticism about earnings delivery is not irrational; cheap stocks can remain cheap if earnings revisions continue to track negative. | ||
Free cash flow running at 153% of net income — paired with a Piotroski F-Score of 8 out of 9 — indicates a business generating real cash well ahead of reported profits, providing a meaningful buffer against near-term earnings volatility. Quality breakdown | Free cash flow remains above 100% of net income for at least 3 of the next 4 reported quarters. | →Stable |
| CounterA rich cash-conversion ratio can mask deteriorating operating trends if driven by working-capital timing; a reversal in receivables or inventory dynamics would compress free cash flow toward net income quickly and undermine this pillar. | ||
Two misses in the last four quarters — with an average EPS surprise of -1.81% — signal that management has not been setting achievable guidance consistently, raising the risk that consensus estimates remain too high heading into the next report. Earnings | EPS surprise turns positive (above 0%) for each of the next 2 consecutive reported quarters, signaling a return to delivery discipline. | →Stable |
| CounterThe single strong beat (+7.69%) in the trailing period shows the business can outperform meaningfully when conditions align; a cyclical inflection in auto parts demand could re-accelerate earnings delivery and make the miss pattern a trough rather than a trend. | ||
The share price trades below its 200-day moving average with the moving average itself sloping downward at -2.1% over 30 days — a confirmed downtrend — which historically resolves by further weakness before a sustained recovery can begin. Momentum breakdown | The 200-day moving average slope turns flat or positive (above 0% over a 30-day window) within 6 months as the price base stabilizes. | →Stable |
| CounterThe momentum score has cleared the recovery threshold and the death-cross warning is noted as 'recovering,' suggesting the worst of the technical damage may already be behind the stock even though the moving average has not yet turned positive. | ||
At a forward P/E of 7.9x and a PEG ratio of 0.12, the stock screens as deeply discounted relative to its earnings growth rate, with the analyst consensus implying 35.8% upside from current prices.
→StableValuation breakdown
- Expectation
- The forward P/E multiple re-rates above 10x within 12 months, consistent with narrowing the discount implied by analyst targets.
CounterTwo misses in the last four quarters and a downward-trending share price suggest the market's skepticism about earnings delivery is not irrational; cheap stocks can remain cheap if earnings revisions continue to track negative.
Free cash flow running at 153% of net income — paired with a Piotroski F-Score of 8 out of 9 — indicates a business generating real cash well ahead of reported profits, providing a meaningful buffer against near-term earnings volatility.
→StableQuality breakdown
- Expectation
- Free cash flow remains above 100% of net income for at least 3 of the next 4 reported quarters.
CounterA rich cash-conversion ratio can mask deteriorating operating trends if driven by working-capital timing; a reversal in receivables or inventory dynamics would compress free cash flow toward net income quickly and undermine this pillar.
Two misses in the last four quarters — with an average EPS surprise of -1.81% — signal that management has not been setting achievable guidance consistently, raising the risk that consensus estimates remain too high heading into the next report.
→StableEarnings
- Expectation
- EPS surprise turns positive (above 0%) for each of the next 2 consecutive reported quarters, signaling a return to delivery discipline.
CounterThe single strong beat (+7.69%) in the trailing period shows the business can outperform meaningfully when conditions align; a cyclical inflection in auto parts demand could re-accelerate earnings delivery and make the miss pattern a trough rather than a trend.
The share price trades below its 200-day moving average with the moving average itself sloping downward at -2.1% over 30 days — a confirmed downtrend — which historically resolves by further weakness before a sustained recovery can begin.
→StableMomentum breakdown
- Expectation
- The 200-day moving average slope turns flat or positive (above 0% over a 30-day window) within 6 months as the price base stabilizes.
CounterThe momentum score has cleared the recovery threshold and the death-cross warning is noted as 'recovering,' suggesting the worst of the technical damage may already be behind the stock even though the moving average has not yet turned positive.
Per-dimension breakdown
Quality
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.7 |
| ROA | 2.9 |
| Gross margin | 3.7 |
| Op margin | 2.9 |
| Net margin | 1.9 |
| Current ratio | 5.6 |
| FCF quality | 10.0 |
| Moat | 4.5 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 153% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
6.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.6 |
| EPS growth | 10.0 |
Momentum
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -2.0%/30d — confirmed downtrend
Sentiment
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.8 |
| Price target | 9.6 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (8.0) — signal dampened
- ▸Analyst upside: 52%
Insider
5.1/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.2 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.9 |
| quality rank | 4.6 |
| growth rank | 2.4 |
- ▸Attractive P/E vs peers
Technical
2.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.2 |
| support resistance | 2.2 |
| 52w position | 3.7 |
Risk (lower is worse)
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.9 |
| days to cover | 7.5 |
| volatility | 4.9 |
| put call | 10.0 |
| implied vol | 4.3 |
| max pain risk | 3.0 |
| beta | 8.1 |
| debt equity | 6.2 |
- ▸Above max pain $18
Catalyst
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 1.1 |
| earnings timing | 5.0 |
| surprise avg | 2.0 |
| dividend safety | 5.0 |
- ▸Earnings concerns: 1B/2M
- ▸Dividend: 458.0%
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULT|L3:NEWS_MOD=-1Passed (8)
- MOMENTUM:5.5>=5.5
- ASYMMETRY:4.0>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:35d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- DEATH_CROSS:momentum=5.5>=5.0 recovering
Reward-to-Risk
3.99
Upside
+32.1%
Downside
8.0%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 65
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: MOMENTUM:5.5>=5.5. Top dim: Value at 9.1; weakest: Technical at 2.4. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Value at 9.1, Sentiment at 7.2, and Growth at 6.8; the weakest are Technical at 2.4, Catalyst at 3.6, and Peer rank at 3.7. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 3.99 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1At a forward P/E of 7.9x and a PEG ratio of 0.12, the stock screens as deeply discounted relative to its earnings growth rate, with the analyst consensus implying 35.8% upside from current prices.
Trip ifForward P/E expands above 12x for 2 consecutive quarters without a corresponding upward revision to EPS estimates.
- P2Free cash flow running at 153% of net income — paired with a Piotroski F-Score of 8 out of 9 — indicates a business generating real cash well ahead of reported profits, providing a meaningful buffer against near-term earnings volatility.
Trip ifFree cash flow falls below 80% of net income for 2 consecutive quarters.
- P3Two misses in the last four quarters — with an average EPS surprise of -1.81% — signal that management has not been setting achievable guidance consistently, raising the risk that consensus estimates remain too high heading into the next report.
Trip ifEPS surprise stays below 0% for 3 consecutive quarters.
- P4The share price trades below its 200-day moving average with the moving average itself sloping downward at -2.1% over 30 days — a confirmed downtrend — which historically resolves by further weakness before a sustained recovery can begin.
Trip ifThe 200-day moving average slope rises above 0% over a 30-day window and price closes above the 200-day moving average for 4 consecutive weeks.