Value
6.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 6.2 |
| P/S | 8.9 |
| Fwd P/E | 8.3 |
| PEG | 6.2 |
| Analyst target | 4.0 |
- ▸Forward P/E: 14.0x
- ▸PEG: 1.21
SNN · Why this verdict
Why Smith & Nephew SNATS (SNN) 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
Smith & Nephew is a medical devices company with strong growth profile (7.2/10), a perfect Piotroski F-Score of 9/9, and 140% free cash flow conversion, but faces a death cross price pattern, consecutive earnings misses, and a news sentiment modifier that has shifted the outlook toward selling for current holders.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Smith & Nephew scores 7.2 out of 10 on growth and converts 140% of net income to free cash flow, reflecting a business that generates substantially more cash than its accounting earnings suggest — a positive signal for capital return capacity. Quality breakdown | Free cash flow conversion remains above 100% of net income for at least 3 of the next 4 reported periods. | →Stable |
| CounterA Rule-of-40 score of 22 (a combined revenue growth plus profit margin metric) falls below the typical 40 benchmark, suggesting the growth and profitability balance is insufficient relative to the company's size and maturity. | ||
Smith & Nephew has missed earnings estimates in 2 of the last 4 quarters, and the recent news modifier has pushed the recommendation from a hold to a sell-if-holding signal, reflecting deteriorating near-term fundamental momentum. Catalyst breakdown | The company delivers at least 2 consecutive earnings beats over the next 4 quarters, restoring the beat trend. | →Stable |
| CounterThe historical quarterly data in the bundle dates to 2015-2016, suggesting the earnings history may be stale or based on limited available data, which could reduce its predictive reliability. | ||
The stock has formed a death cross pattern with a 200-day moving average declining at -1.4% over 30 days, and on-balance volume is falling — both confirming that price and volume trends are pointing downward. Momentum breakdown | The stock must recover above the 200-day moving average and sustain it for at least 30 days for the momentum thesis to reverse. | →Stable |
| CounterRSI is at 50 (neutral), MACD is improving, and the setup is characterized as a recovery pattern where the death cross is present but momentum is beginning to inflect — which can precede meaningful reversals. | ||
Smith & Nephew has a risk score of 8.4 out of 10 — the highest among its scored dimensions — with a low volatility environment and low beta, suggesting the stock provides relatively stable downside characteristics versus its peer group. Scores | The stock's price volatility (measured by beta) remains below 1.0 over the next 12 months, confirming its defensive characteristics in volatile markets. | →Stable |
| CounterA high risk score in this context reflects favorable risk metrics, but the dividend payout ratio of 257% signals the dividend may be unsustainable — a cut would likely trigger significant price downside. | ||
Smith & Nephew scores 7.2 out of 10 on growth and converts 140% of net income to free cash flow, reflecting a business that generates substantially more cash than its accounting earnings suggest — a positive signal for capital return capacity.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% of net income for at least 3 of the next 4 reported periods.
CounterA Rule-of-40 score of 22 (a combined revenue growth plus profit margin metric) falls below the typical 40 benchmark, suggesting the growth and profitability balance is insufficient relative to the company's size and maturity.
Smith & Nephew has missed earnings estimates in 2 of the last 4 quarters, and the recent news modifier has pushed the recommendation from a hold to a sell-if-holding signal, reflecting deteriorating near-term fundamental momentum.
→StableCatalyst breakdown
- Expectation
- The company delivers at least 2 consecutive earnings beats over the next 4 quarters, restoring the beat trend.
CounterThe historical quarterly data in the bundle dates to 2015-2016, suggesting the earnings history may be stale or based on limited available data, which could reduce its predictive reliability.
The stock has formed a death cross pattern with a 200-day moving average declining at -1.4% over 30 days, and on-balance volume is falling — both confirming that price and volume trends are pointing downward.
→StableMomentum breakdown
- Expectation
- The stock must recover above the 200-day moving average and sustain it for at least 30 days for the momentum thesis to reverse.
CounterRSI is at 50 (neutral), MACD is improving, and the setup is characterized as a recovery pattern where the death cross is present but momentum is beginning to inflect — which can precede meaningful reversals.
Smith & Nephew has a risk score of 8.4 out of 10 — the highest among its scored dimensions — with a low volatility environment and low beta, suggesting the stock provides relatively stable downside characteristics versus its peer group.
→StableScores
- Expectation
- The stock's price volatility (measured by beta) remains below 1.0 over the next 12 months, confirming its defensive characteristics in volatile markets.
CounterA high risk score in this context reflects favorable risk metrics, but the dividend payout ratio of 257% signals the dividend may be unsustainable — a cut would likely trigger significant price downside.
Per-dimension breakdown
Quality
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.9 |
| ROA | 3.5 |
| Gross margin | 9.7 |
| Op margin | 5.6 |
| Net margin | 5.1 |
| Current ratio | 8.7 |
| FCF quality | 9.7 |
| Moat | 6.5 |
| Rule of 40 | 3.0 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 140% FCF/NI
- ▸Rule of 40: 22 (fail)
- ▸Strong Piotroski F-Score: 9/9
Growth
7.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.3 |
| EPS growth | 10.0 |
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 6.4 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 0.3 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -2.1%/30d — confirmed downtrend
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.5 |
| Price target | 7.1 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (5.0) — signal dampened
Insider
5.0/10data confidence 50%Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.2 |
| quality rank | 6.1 |
| growth rank | 4.3 |
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.6 |
| support resistance | 3.8 |
| 52w position | 6.1 |
Risk (lower is worse)
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.6 |
| days to cover | 8.2 |
| volatility | 7.8 |
| put call | 10.0 |
| implied vol | 2.4 |
| beta | 9.0 |
| debt equity | 7.2 |
- ▸High IV: 66%
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.5 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 258.0%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=-1Passed (7)
- MOMENTUM:5.0>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:40d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.1=NEGATIVE
Warning (2)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:momentum=5.0>=5.0 recovering
Reward-to-Risk
-0.06
Upside
-0.3%
Downside
5.0%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 47
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.0>=4.5. Top dim: Risk (lower is worse) at 7.7; weakest: Peer rank at 4.4. No conviction either direction.
The strongest dimensions are Risk (lower is worse) at 7.7, Growth at 7.2, and Value at 6.7; the weakest are Peer rank at 4.4, Technical at 4.5, and Insider at 5.0. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.06 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Smith & Nephew scores 7.2 out of 10 on growth and converts 140% of net income to free cash flow, reflecting a business that generates substantially more cash than its accounting earnings suggest — a positive signal for capital return capacity.
Trip ifFree cash flow conversion falls below 80% of net income for 2 consecutive quarters, indicating the earnings quality advantage is reversing.
- P2Smith & Nephew has missed earnings estimates in 2 of the last 4 quarters, and the recent news modifier has pushed the recommendation from a hold to a sell-if-holding signal, reflecting deteriorating near-term fundamental momentum.
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, indicating the miss pattern is becoming structural.
- P3The stock has formed a death cross pattern with a 200-day moving average declining at -1.4% over 30 days, and on-balance volume is falling — both confirming that price and volume trends are pointing downward.
Trip ifPrice drops below $27.00, more than 11% below the current $30.46, confirming the downtrend is accelerating rather than recovering.
- P4Smith & Nephew has a risk score of 8.4 out of 10 — the highest among its scored dimensions — with a low volatility environment and low beta, suggesting the stock provides relatively stable downside characteristics versus its peer group.
Trip ifDividend payout ratio exceeds 300% for 2 consecutive reported periods, increasing the probability of a dividend cut that could trigger a price decline of more than 10%.