Value
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.0 |
| P/S | 10.0 |
| EV/EBITDA | 6.8 |
| Fwd P/E | 9.6 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 8.0x
- ▸PEG: 0.04
- ▸Attractively valued
TX · Why this verdict
Why Ternium S.A. Ternium (TX) 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 score5.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Ternium is a deeply discounted steel producer at a forward P/E of 8.8x with strong volume accumulation above its 200-day moving average, but an earnings quality red flag at negative 98% free cash flow, a commodity cycle peak signal, and a put/call ratio of 5.27 constrain the investment case.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The forward P/E of 8.8x combined with a forward-to-trailing ratio of 0.53x has triggered a commodity cycle peak gate, signaling that current earnings may have been inflated by a steel price spike and that forward estimates could be built on pricing levels that mean-revert downward. Bear case | Forward earnings per share estimates remain above $5.00 over the next 12 months, indicating that analysts are not pricing in a sharp commodity mean-reversion. | →Stable |
| CounterSteel prices in Latin America and Mexico have historically shown less volatility than spot commodity indices due to regional infrastructure demand tied to nearshoring trends. | ||
A put/call ratio of 5.27 indicates heavily lopsided bearish options positioning, with implied volatility at 80% and the stock already trading above the max pain level of $25, creating conditions where options market makers may exert downward pressure to move price toward the pain threshold. Risk breakdown | The put/call ratio falls below 2.5 and the stock sustains above $48 for at least 30 days, indicating the bearish hedging has reduced. | →Stable |
| CounterElevated put/call ratios in cyclical commodity stocks often reflect producer hedging programs rather than directional bearish speculation, and may not predict price direction as reliably as in growth stocks. | ||
Free cash flow is negative 98% of net income, an extreme earnings quality red flag that indicates the company is consuming nearly all of its reported profits in capital expenditures or working capital, and that reported earnings do not translate to balance sheet cash. Quality breakdown | Free cash flow turns positive and represents at least 30% of net income within the next 2 annual periods. | →Stable |
| CounterSteel producers in growth markets typically carry high capex-to-net-income ratios during capacity expansion phases; a negative FCF ratio may reflect deliberate investment rather than operational weakness. | ||
Despite the earnings quality concerns, on-balance volume is rising and the stock is trading above its 200-day moving average, indicating that buyers are constructive on the long-term thesis and are accumulating shares at current levels. Momentum breakdown | Volume accumulation continues and the stock holds above the 200-day moving average for at least 60 days. | →Stable |
| CounterRising on-balance volume in a commodity stock can reflect speculative momentum following a steel price uptick rather than durable institutional conviction based on fundamentals. | ||
The forward P/E of 8.8x combined with a forward-to-trailing ratio of 0.53x has triggered a commodity cycle peak gate, signaling that current earnings may have been inflated by a steel price spike and that forward estimates could be built on pricing levels that mean-revert downward.
→StableBear case
- Expectation
- Forward earnings per share estimates remain above $5.00 over the next 12 months, indicating that analysts are not pricing in a sharp commodity mean-reversion.
CounterSteel prices in Latin America and Mexico have historically shown less volatility than spot commodity indices due to regional infrastructure demand tied to nearshoring trends.
A put/call ratio of 5.27 indicates heavily lopsided bearish options positioning, with implied volatility at 80% and the stock already trading above the max pain level of $25, creating conditions where options market makers may exert downward pressure to move price toward the pain threshold.
→StableRisk breakdown
- Expectation
- The put/call ratio falls below 2.5 and the stock sustains above $48 for at least 30 days, indicating the bearish hedging has reduced.
CounterElevated put/call ratios in cyclical commodity stocks often reflect producer hedging programs rather than directional bearish speculation, and may not predict price direction as reliably as in growth stocks.
Free cash flow is negative 98% of net income, an extreme earnings quality red flag that indicates the company is consuming nearly all of its reported profits in capital expenditures or working capital, and that reported earnings do not translate to balance sheet cash.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive and represents at least 30% of net income within the next 2 annual periods.
CounterSteel producers in growth markets typically carry high capex-to-net-income ratios during capacity expansion phases; a negative FCF ratio may reflect deliberate investment rather than operational weakness.
Despite the earnings quality concerns, on-balance volume is rising and the stock is trading above its 200-day moving average, indicating that buyers are constructive on the long-term thesis and are accumulating shares at current levels.
→StableMomentum breakdown
- Expectation
- Volume accumulation continues and the stock holds above the 200-day moving average for at least 60 days.
CounterRising on-balance volume in a commodity stock can reflect speculative momentum following a steel price uptick rather than durable institutional conviction based on fundamentals.
Per-dimension breakdown
Quality
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.1 |
| ROA | 1.5 |
| Gross margin | 0.0 |
| Op margin | 2.9 |
| Net margin | 1.8 |
| Current ratio | 8.9 |
| FCF quality | 0.0 |
| Moat | 4.6 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -98% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.5 |
| EPS growth | 10.0 |
Momentum
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 2.8 |
- ▸Oversold in uptrend (RSI 30)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.2 |
| Price target | 7.5 |
| erm sentiment | 5.5 |
Insider
5.0/10data confidence 50%Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.9 |
| quality rank | 4.5 |
| growth rank | 5.0 |
- ▸Attractive P/E vs peers
Technical
9.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 9.6 |
| 52w position | 7.4 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.5 |
| days to cover | 9.9 |
| volatility | 3.0 |
| put call | 0.0 |
| implied vol | 6.0 |
| beta | 6.2 |
| debt equity | 9.3 |
- ▸Elevated put/call: 4.00
Catalyst
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 3.5 |
- ▸Earnings concerns: 2B/2M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:41d clear
- SEMI_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.2<4.5
- ASYMMETRY:0.4<1.5@spot
- MATERIALS_CYCLE_PEAK:fwd=8.0x,ratio=0.53x
Warning (0)
none
Reward-to-Risk
0.37
Upside
+2.8%
Downside
7.6%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Technical at 9.0 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:3.2<4.5.
The strongest dimensions are Technical at 9.0, Value at 8.2, and Sentiment at 6.8; the weakest are Momentum at 3.2, Quality at 3.2, and Catalyst at 3.4. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 0.37 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The forward P/E of 8.8x combined with a forward-to-trailing ratio of 0.53x has triggered a commodity cycle peak gate, signaling that current earnings may have been inflated by a steel price spike and that forward estimates could be built on pricing levels that mean-revert downward.
Trip ifForward earnings per share estimates fall below $4.00, more than 30% below the current implied earnings base, on steel price mean-reversion.
- P2Free cash flow is negative 98% of net income, an extreme earnings quality red flag that indicates the company is consuming nearly all of its reported profits in capital expenditures or working capital, and that reported earnings do not translate to balance sheet cash.
Trip ifFree cash flow remains negative for more than 3 consecutive quarters.
- P3Despite the earnings quality concerns, on-balance volume is rising and the stock is trading above its 200-day moving average, indicating that buyers are constructive on the long-term thesis and are accumulating shares at current levels.
Trip ifStock price drops below $43, more than 13% below the current $49.92, breaking below the 200-day moving average.
- P4A put/call ratio of 5.27 indicates heavily lopsided bearish options positioning, with implied volatility at 80% and the stock already trading above the max pain level of $25, creating conditions where options market makers may exert downward pressure to move price toward the pain threshold.
Trip ifPut/call ratio rises above 7.0, indicating even more extreme bearish positioning than the current 5.27.