Value
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.4 |
| P/S | 7.6 |
| EV/EBITDA | 4.0 |
| Fwd P/E | 6.8 |
| PEG | 6.3 |
| Analyst target | 3.0 |
- ▸Forward P/E: 18.9x
- ▸PEG: 1.19
MGEE · Why this verdict
Why MGE Energy (MGEE) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Best-in-class operating margins and strong underlying franchise quality coexist with a confirmed price downtrend, negative free cash flow, and a leadership transition — the risk/reward geometry remains unfavorable and patience is warranted.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock is trading below its 200-day moving average with the average declining at 1.4% over the past 30 days and on-balance volume falling, confirming a downtrend that technical conditions have not yet reversed. Momentum breakdown | On-balance volume turns from distribution to accumulation and price reclaims the 200-day moving average over the next 8 weeks. | →Stable |
| CounterMACD is improving and RSI at 55 is neither oversold nor extreme, suggesting the price pressure may be moderating before a full technical reversal is required. | ||
Free cash flow is negative — running at -127% relative to net income — meaning the company is not converting its reported earnings into cash, which pressures the sustainability of its dividend and long-term financial flexibility. Quality breakdown | Free cash flow turns positive relative to net income for 2 consecutive quarters. | →Stable |
| CounterA Piotroski F-score of 8 out of 9 and operating margins of 19% indicate the core business quality is intact; a negative FCF-to-earnings ratio may normalize as balance sheet conditions improve. | ||
Operating margins of 19% are recognized as best-in-class within the peer group, reflecting a structurally efficient operation that earns a premium on the same regulated revenue base as its competitors. Peer rank | Operating margins remain at or above 17% for 4 consecutive quarters, sustaining peer leadership. | →Stable |
| CounterPeer-relative margin advantages can compress with external decisions outside management's control, and the current data does not address the regulatory outlook or whether the 19% level is structurally defensible. | ||
A recent officer departure or appointment — formally disclosed in a current report — introduces organizational uncertainty at a moment when the stock is already in a confirmed downtrend. Gates warning | No additional executive changes are disclosed in the subsequent 2 quarters and EPS beats estimates by more than 5% in both periods. | →Stable |
| CounterInsider transaction signal is neutral with no net share sales in the preceding 90 days, suggesting the transition may be orderly and unlikely to disrupt near-term earnings delivery. | ||
The stock is trading below its 200-day moving average with the average declining at 1.4% over the past 30 days and on-balance volume falling, confirming a downtrend that technical conditions have not yet reversed.
→StableMomentum breakdown
- Expectation
- On-balance volume turns from distribution to accumulation and price reclaims the 200-day moving average over the next 8 weeks.
CounterMACD is improving and RSI at 55 is neither oversold nor extreme, suggesting the price pressure may be moderating before a full technical reversal is required.
Free cash flow is negative — running at -127% relative to net income — meaning the company is not converting its reported earnings into cash, which pressures the sustainability of its dividend and long-term financial flexibility.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive relative to net income for 2 consecutive quarters.
CounterA Piotroski F-score of 8 out of 9 and operating margins of 19% indicate the core business quality is intact; a negative FCF-to-earnings ratio may normalize as balance sheet conditions improve.
Operating margins of 19% are recognized as best-in-class within the peer group, reflecting a structurally efficient operation that earns a premium on the same regulated revenue base as its competitors.
→StablePeer rank
- Expectation
- Operating margins remain at or above 17% for 4 consecutive quarters, sustaining peer leadership.
CounterPeer-relative margin advantages can compress with external decisions outside management's control, and the current data does not address the regulatory outlook or whether the 19% level is structurally defensible.
A recent officer departure or appointment — formally disclosed in a current report — introduces organizational uncertainty at a moment when the stock is already in a confirmed downtrend.
→StableGates warning
- Expectation
- No additional executive changes are disclosed in the subsequent 2 quarters and EPS beats estimates by more than 5% in both periods.
CounterInsider transaction signal is neutral with no net share sales in the preceding 90 days, suggesting the transition may be orderly and unlikely to disrupt near-term earnings delivery.
Per-dimension breakdown
Quality
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.6 |
| ROA | 2.5 |
| Gross margin | 4.3 |
| Op margin | 9.4 |
| Net margin | 9.5 |
| Current ratio | 4.5 |
| FCF quality | 0.0 |
| Moat | 6.4 |
| Piotroski F | 8.9 |
- ▸Strong margins: 19%
- ▸Earnings quality RED FLAG: -127% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
5.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.2 |
| EPS growth | 5.2 |
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.3 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Overbought (RSI 73)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 4.5 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.3 |
| quality rank | 8.0 |
| growth rank | 6.7 |
- ▸Best-in-class margins
Technical
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.5 |
| support resistance | 0.4 |
| 52w position | 7.7 |
Risk (lower is worse)
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.2 |
| days to cover | 6.7 |
| volatility | 6.6 |
| implied vol | 6.6 |
| beta | 8.7 |
| debt equity | 6.8 |
- ▸Concentration risks: 3 MED (10-K Item 1A)
Catalyst
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 5.5 |
| dividend safety | 6.5 |
- ▸Dividend: 241.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:41d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-2.1=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=6.5>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-2.06
Upside
-18.1%
Downside
8.8%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 73
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $3.0B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-2.1=NEGATIVE) reinforce the read. Current asymmetry R:R is -2.06 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.1, Momentum at 6.5, and Peer rank at 5.7; the weakest are Technical at 2.9, Sentiment at 4.8, and Insider at 5.0. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -2.06 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The stock is trading below its 200-day moving average with the average declining at 1.4% over the past 30 days and on-balance volume falling, confirming a downtrend that technical conditions have not yet reversed.
Trip ifPrice advances more than 8% above current levels and holds for 2 consecutive weeks.
- P2Free cash flow is negative — running at -127% relative to net income — meaning the company is not converting its reported earnings into cash, which pressures the sustainability of its dividend and long-term financial flexibility.
Trip ifFree cash flow rises above $0 relative to net income for 2 consecutive quarters, indicating the -127% conversion deficit has resolved and dividend sustainability pressure has eased.
- P3Operating margins of 19% are recognized as best-in-class within the peer group, reflecting a structurally efficient operation that earns a premium on the same regulated revenue base as its competitors.
Trip ifOperating margin falls below 15% for 2 consecutive quarters.
- P4A recent officer departure or appointment — formally disclosed in a current report — introduces organizational uncertainty at a moment when the stock is already in a confirmed downtrend.
Trip ifEPS surprise exceeds 5% for 2 consecutive quarters.