Value
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.9 |
| P/S | 7.5 |
| EV/EBITDA | 5.2 |
| Fwd P/E | 6.7 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 19.1x
- ▸PEG: 0.43
MCRI · Why this verdict
Why Monarch Casino & Resort (MCRI) 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 score6.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Monarch Casino & Resort is a high-quality consumer operation with 20% operating margins, free cash flow converting at 121% of net income, and four consecutive earnings beats averaging more than 20% above consensus; the stock has nonetheless already traded above its resistance-level take-profit target, producing a negative risk/reward of -0.04-to-1, while an RSI of 82 signals overbought conditions and a debt-to-equity ratio of 2.4 leaves limited cushion if earnings momentum stalls.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
An RSI reading of 82 places the stock in overbought territory, and a debt-to-equity ratio of 2.4 means the company carries more leverage than a conservative capital structure warrants — a combination that increases vulnerability to a sharp pullback if the upcoming earnings report disappoints or guidance is cautious. Momentum breakdown | RSI normalizes below 70 and the stock holds its 200-day moving average on the subsequent pullback for 3 consecutive weeks, indicating healthy consolidation of overbought conditions. | →Stable |
| CounterOn-balance volume is rising alongside the price advance, indicating that buyers remain active even at the extended RSI; overbought conditions can persist for multiple months in a genuine re-rating ahead of a near-term catalyst. | ||
Operating margins of 20%, free cash flow converting at 121% of net income, and a Piotroski F-Score of 7 out of 9 together indicate a fundamentally sound business that generates more cash than reported earnings suggest. Quality breakdown | Free cash flow conversion remains above 100% of net income and operating margins stay above 18% for 4 consecutive quarters. | →Stable |
| CounterA debt-to-equity ratio of 2.4 means leverage amplifies the apparent quality of returns; if interest costs rise or revenue softens, the quality metrics could deteriorate faster than the absolute margin figures suggest. | ||
Four consecutive earnings beats averaging more than 20% above consensus — including beats of 36.5% and 25.2% — signal a sustained pattern of under-promising and over-delivering that typically attracts a premium re-rating when it persists across multiple cycles. Earnings | Beat streak extends to 6 consecutive quarters with average positive surprise above 10% over the next 12 months. | →Stable |
| CounterWide beats of 20%+ average can reflect estimate anchoring to cautious guidance rather than genuine operational outperformance; if consensus estimates catch up to actual results, the beat streak and any re-rating premium both narrow quickly. | ||
The stock has traded above its resistance-based take-profit level, producing a negative risk/reward of -0.04-to-1 with roughly 12% of potential downside and essentially no remaining upside; the current price does not support a new or added position. V9 | Price pulls back more than 10% from current levels to below approximately $115.70, restoring at least 8% upside headroom to a revised take-profit level. | →Stable |
| CounterAn earnings report in roughly 29 days against a backdrop of four consecutive large beats could trigger another upward re-rating that makes the current price look inexpensive in retrospect. | ||
An RSI reading of 82 places the stock in overbought territory, and a debt-to-equity ratio of 2.4 means the company carries more leverage than a conservative capital structure warrants — a combination that increases vulnerability to a sharp pullback if the upcoming earnings report disappoints or guidance is cautious.
→StableMomentum breakdown
- Expectation
- RSI normalizes below 70 and the stock holds its 200-day moving average on the subsequent pullback for 3 consecutive weeks, indicating healthy consolidation of overbought conditions.
CounterOn-balance volume is rising alongside the price advance, indicating that buyers remain active even at the extended RSI; overbought conditions can persist for multiple months in a genuine re-rating ahead of a near-term catalyst.
Operating margins of 20%, free cash flow converting at 121% of net income, and a Piotroski F-Score of 7 out of 9 together indicate a fundamentally sound business that generates more cash than reported earnings suggest.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% of net income and operating margins stay above 18% for 4 consecutive quarters.
CounterA debt-to-equity ratio of 2.4 means leverage amplifies the apparent quality of returns; if interest costs rise or revenue softens, the quality metrics could deteriorate faster than the absolute margin figures suggest.
Four consecutive earnings beats averaging more than 20% above consensus — including beats of 36.5% and 25.2% — signal a sustained pattern of under-promising and over-delivering that typically attracts a premium re-rating when it persists across multiple cycles.
→StableEarnings
- Expectation
- Beat streak extends to 6 consecutive quarters with average positive surprise above 10% over the next 12 months.
CounterWide beats of 20%+ average can reflect estimate anchoring to cautious guidance rather than genuine operational outperformance; if consensus estimates catch up to actual results, the beat streak and any re-rating premium both narrow quickly.
The stock has traded above its resistance-based take-profit level, producing a negative risk/reward of -0.04-to-1 with roughly 12% of potential downside and essentially no remaining upside; the current price does not support a new or added position.
→StableV9
- Expectation
- Price pulls back more than 10% from current levels to below approximately $115.70, restoring at least 8% upside headroom to a revised take-profit level.
CounterAn earnings report in roughly 29 days against a backdrop of four consecutive large beats could trigger another upward re-rating that makes the current price look inexpensive in retrospect.
Per-dimension breakdown
Quality
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.7 |
| ROA | 8.5 |
| Gross margin | 9.6 |
| Op margin | 10.0 |
| Net margin | 9.8 |
| Current ratio | 3.9 |
| FCF quality | 9.0 |
| Moat | 6.9 |
| Rule of 40 | 5.5 |
| Piotroski F | 7.8 |
- ▸Strong margins: 20%
- ▸Excellent cash conversion: 121% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
- ▸High-quality business
Growth
7.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.7 |
| EPS growth | 10.0 |
Momentum
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.0 |
| MACD | 8.7 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Overbought (RSI 81)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 3.0 |
| erm sentiment | 5.0 |
- ▸Below analyst target
Insider
4.8/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| holder change | 5.0 |
- ▸Modest insider selling — $604,200 (0.026% of mkt cap)
Peer rank
5.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.2 |
| quality rank | 7.2 |
| growth rank | 5.5 |
- ▸Best-in-class margins
Technical
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.1 |
| support resistance | 1.4 |
| 52w position | 9.7 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.1 |
| days to cover | 9.2 |
| volatility | 5.8 |
| put call | 8.7 |
| implied vol | 6.2 |
| max pain risk | 3.0 |
| beta | 5.6 |
| debt equity | 2.6 |
- ▸Above max pain $75
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 92.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:4.5>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:20d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-2.3=NEGATIVE
Warning (1)
- MOMENTUM:4.5<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-2.32
Upside
-25.2%
Downside
10.9%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeCATALYST — Earnings in 20d with 4/4 beat streak
SuitabilityAGGRESSIVE — Beta 1.35>1.3, MCap $2.3B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.5 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 ( ASYMMETRY:-2.3=NEGATIVE) reinforce the read. Current asymmetry R:R is -2.32 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.8, Growth at 7.3, and Catalyst at 7.2; the weakest are Technical at 4.1, Sentiment at 4.4, and Momentum at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -2.32 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Four consecutive earnings beats averaging more than 20% above consensus — including beats of 36.5% and 25.2% — signal a sustained pattern of under-promising and over-delivering that typically attracts a premium re-rating when it persists across multiple cycles.
Trip ifAverage EPS surprise falls below 5% for 2 consecutive quarters, signaling the exceptional beat pattern has compressed materially.
- P2Operating margins of 20%, free cash flow converting at 121% of net income, and a Piotroski F-Score of 7 out of 9 together indicate a fundamentally sound business that generates more cash than reported earnings suggest.
Trip ifFree cash flow to net income ratio falls below 80% for 2 consecutive quarters.
- P3The stock has traded above its resistance-based take-profit level, producing a negative risk/reward of -0.04-to-1 with roughly 12% of potential downside and essentially no remaining upside; the current price does not support a new or added position.
Trip ifPrice pulls back more than 10% from current levels to below approximately $115.70.
- P4An RSI reading of 82 places the stock in overbought territory, and a debt-to-equity ratio of 2.4 means the company carries more leverage than a conservative capital structure warrants — a combination that increases vulnerability to a sharp pullback if the upcoming earnings report disappoints or guidance is cautious.
Trip ifRSI falls below 50 and price holds the 200-day moving average for 3 consecutive weeks, signaling overbought conditions have been worked off.