Value
5.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.4 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.9 |
| PEG | 4.4 |
| Analyst target | 9.0 |
- ▸Forward P/E: 22.0x
- ▸PEG: 2.13
QXO · Why this verdict
Why QXO (QXO) 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 score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
QXO is an industrial distribution company with analyst consensus implying 89% upside to a target of $27.41 and 3 consecutive earnings beats averaging 85.8% positive surprise, but below-average business quality at 2.5 out of 10, a confirmed price downtrend, and 20% short interest indicate significant risk that the optimistic analyst case has not yet been validated by underlying financials.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With free cash flow at -14% of revenue and a quality score of 2.5 out of 10, the company has limited financial durability; a business that burns cash even at modest negative levels is vulnerable to the same dilutive financing cycles that penalize early-stage companies. Quality breakdown | Free cash flow turns positive within 4 reporting quarters as distribution operations scale. | →Stable |
| CounterIndustrial distribution businesses can operate with thin initial margins during rapid expansion phases, and the -14% FCF/revenue ratio is far less severe than many growth companies in the data set. | ||
Analysts have a consensus price target of $27.41 against a current price of $16.69, implying 89% upside with an average analyst rating of 8.37 out of 10, the highest level of analyst conviction in the data and a significant positive asymmetry ratio of 5.5. Sentiment breakdown | The stock price rises above $22 within 12 months as the business matures and the analyst thesis is validated by improving fundamentals. | →Stable |
| CounterA quality score of 2.5 out of 10, negative free cash flow, and no established competitive moat mean the 89% analyst upside may reflect potential rather than near-term fundamental reality. | ||
The company has beaten or matched earnings estimates in all three of the last three reported quarters, including a 171% positive surprise in August 2025 and a 160.8% beat in May 2025, suggesting management consistently exceeds conservative guidance. Earnings | The earnings beat streak extends to at least 5 consecutive quarters. | →Stable |
| CounterAll three beats occurred against very low absolute estimates (near $0.00 to $0.13 per share), so percentage-based beat metrics can be misleading when the absolute hurdle is minimal. | ||
With 20% of the float sold short, the market is skeptical of the company's ability to close the gap between analyst targets and current operational reality; however, the strong earnings beats and improving MACD create the conditions for a sharp short squeeze if catalysts materialize. Key risks | Short interest falls below 12% as quarterly results validate the operational improvement story. | →Stable |
| CounterHigh short interest at 20% alongside a quality floor breach signals that sophisticated investors see structural problems not yet reflected in analyst targets, and may be correct. | ||
With free cash flow at -14% of revenue and a quality score of 2.5 out of 10, the company has limited financial durability; a business that burns cash even at modest negative levels is vulnerable to the same dilutive financing cycles that penalize early-stage companies.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive within 4 reporting quarters as distribution operations scale.
CounterIndustrial distribution businesses can operate with thin initial margins during rapid expansion phases, and the -14% FCF/revenue ratio is far less severe than many growth companies in the data set.
Analysts have a consensus price target of $27.41 against a current price of $16.69, implying 89% upside with an average analyst rating of 8.37 out of 10, the highest level of analyst conviction in the data and a significant positive asymmetry ratio of 5.5.
→StableSentiment breakdown
- Expectation
- The stock price rises above $22 within 12 months as the business matures and the analyst thesis is validated by improving fundamentals.
CounterA quality score of 2.5 out of 10, negative free cash flow, and no established competitive moat mean the 89% analyst upside may reflect potential rather than near-term fundamental reality.
The company has beaten or matched earnings estimates in all three of the last three reported quarters, including a 171% positive surprise in August 2025 and a 160.8% beat in May 2025, suggesting management consistently exceeds conservative guidance.
→StableEarnings
- Expectation
- The earnings beat streak extends to at least 5 consecutive quarters.
CounterAll three beats occurred against very low absolute estimates (near $0.00 to $0.13 per share), so percentage-based beat metrics can be misleading when the absolute hurdle is minimal.
With 20% of the float sold short, the market is skeptical of the company's ability to close the gap between analyst targets and current operational reality; however, the strong earnings beats and improving MACD create the conditions for a sharp short squeeze if catalysts materialize.
→StableKey risks
- Expectation
- Short interest falls below 12% as quarterly results validate the operational improvement story.
CounterHigh short interest at 20% alongside a quality floor breach signals that sophisticated investors see structural problems not yet reflected in analyst targets, and may be correct.
Per-dimension breakdown
Quality
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 0.9 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 9.7 |
| FCF quality | 0.0 |
| Moat | 5.0 |
| Piotroski F | 6.7 |
- ▸Cash-burning: FCF -14% of revenue
- ▸No competitive moat
- ▸Quality concerns
Growth
5.0/10data confidence 50%Momentum
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 9.7 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 7.5 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -2.6%/30d — confirmed downtrend
Sentiment
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.4 |
| Price target | 9.9 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 86%
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
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.7 |
| quality rank | 1.5 |
| growth rank | 10.0 |
- ▸Industry growth leader
Technical
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.8 |
| support resistance | 3.2 |
| 52w position | 2.3 |
Risk (lower is worse)
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.5 |
| days to cover | 2.5 |
| volatility | 0.0 |
| put call | 4.1 |
| implied vol | 0.8 |
| beta | 2.7 |
| debt equity | 8.5 |
- ▸High short interest justified: 20%
- ▸High IV: 75%
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (7)
- MOMENTUM:7.1>=5.5
- ASYMMETRY:4.8>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:50d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- DEATH_CROSS:momentum=7.1>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
4.81
Upside
+61.9%
Downside
12.9%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 53
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 2.20>1.3
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Sentiment at 8.0 could not lift the engine output above the verdict floor.
The strongest dimensions are Sentiment at 8.0, Catalyst at 7.5, and Momentum at 7.1; the weakest are Quality at 2.5, Risk (lower is worse) at 2.9, and Technical at 3.1. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 4.81 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Analysts have a consensus price target of $27.41 against a current price of $16.69, implying 89% upside with an average analyst rating of 8.37 out of 10, the highest level of analyst conviction in the data and a significant positive asymmetry ratio of 5.5.
Trip ifAnalyst consensus price target declines below $20, reducing implied upside to less than 20%.
- P2The company has beaten or matched earnings estimates in all three of the last three reported quarters, including a 171% positive surprise in August 2025 and a 160.8% beat in May 2025, suggesting management consistently exceeds conservative guidance.
Trip ifEPS surprise falls below -10% in at least 2 of the next 4 quarters.
- P3With free cash flow at -14% of revenue and a quality score of 2.5 out of 10, the company has limited financial durability; a business that burns cash even at modest negative levels is vulnerable to the same dilutive financing cycles that penalize early-stage companies.
Trip ifFree cash flow worsens beyond -30% of revenue in any reported annual period.
- P4With 20% of the float sold short, the market is skeptical of the company's ability to close the gap between analyst targets and current operational reality; however, the strong earnings beats and improving MACD create the conditions for a sharp short squeeze if catalysts materialize.
Trip ifShort interest rises above 28% of the float.