Value
6.2/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 3.0 |
| P/S | 10.0 |
| EV/EBITDA | 6.8 |
| Fwd P/E | 9.0 |
| PEG | 3.0 |
- ▸Forward P/E: 12.1x
- ▸PEG: 4.10
UVV · Why this verdict
Why Universal (UVV) 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 score4.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Universal Corporation converts free cash flow at 200% of net income and carries a Piotroski financial strength score of 8 out of 9, but 3 consecutive earnings misses with a devastating average surprise of -46%, an extremely elevated put-to-call ratio of 28, and weak overall growth make this a fragile position.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Universal Corporation converts 200% of net income into free cash flow, signaling that the business generates substantially more actual cash than reported earnings suggest, supporting the thesis that the stock's true earnings power is higher than headline numbers indicate. Quality breakdown | Free cash flow conversion should remain above 150% of net income over the next 12 months. | →Stable |
| CounterThe net margin is less than 1% despite the high free cash flow conversion ratio, meaning the absolute dollar amount of free cash flow is very small, limiting the practical financial benefit of the conversion premium. | ||
Analysts place a consensus price target implying 39% upside from the current $53.33, suggesting the market may be undervaluing the leaf tobacco supply chain business on an asset or cash flow basis despite weak reported earnings. Sentiment breakdown | The price should rise above $60 within 12 months, capturing at least 40% of the implied analyst upside. | →Stable |
| CounterRevenue growth is minimal and the PEG ratio of 4.13 indicates the stock is not inexpensive relative to growth, and the dividend is flagged as unsafe relative to its payout level, reducing the yield-as-a-floor argument. | ||
Universal Corporation missed earnings estimates in 3 of the last 4 quarters with an average negative surprise of -46%, including a recent quarter where actual results were -142.6% below expectations, indicating a severe deterioration in near-term earnings predictability. Earnings | EPS surprise should improve to above -10% in at least 2 of the next 4 quarters as the business cycle stabilizes. | →Stable |
| CounterLeaf tobacco processing companies experience significant quarterly earnings volatility due to crop timing and export shipment patterns, and a single-quarter miss can disproportionately distort the average. | ||
A put-to-call ratio of 28.00 is among the highest observed across the screened universe, reflecting extreme bearish or hedging positioning in the options market that signals elevated downside risk uncertainty. Key risks | The put-to-call ratio should decline below 10 within 12 months as fundamental clarity improves and hedging unwinds. | →Stable |
| CounterIn very thinly traded options markets for small-cap tobacco distributors, a ratio this extreme often reflects a single large institutional hedge rather than a broad bearish consensus, and may not carry predictive weight. | ||
Universal Corporation converts 200% of net income into free cash flow, signaling that the business generates substantially more actual cash than reported earnings suggest, supporting the thesis that the stock's true earnings power is higher than headline numbers indicate.
→StableQuality breakdown
- Expectation
- Free cash flow conversion should remain above 150% of net income over the next 12 months.
CounterThe net margin is less than 1% despite the high free cash flow conversion ratio, meaning the absolute dollar amount of free cash flow is very small, limiting the practical financial benefit of the conversion premium.
Analysts place a consensus price target implying 39% upside from the current $53.33, suggesting the market may be undervaluing the leaf tobacco supply chain business on an asset or cash flow basis despite weak reported earnings.
→StableSentiment breakdown
- Expectation
- The price should rise above $60 within 12 months, capturing at least 40% of the implied analyst upside.
CounterRevenue growth is minimal and the PEG ratio of 4.13 indicates the stock is not inexpensive relative to growth, and the dividend is flagged as unsafe relative to its payout level, reducing the yield-as-a-floor argument.
Universal Corporation missed earnings estimates in 3 of the last 4 quarters with an average negative surprise of -46%, including a recent quarter where actual results were -142.6% below expectations, indicating a severe deterioration in near-term earnings predictability.
→StableEarnings
- Expectation
- EPS surprise should improve to above -10% in at least 2 of the next 4 quarters as the business cycle stabilizes.
CounterLeaf tobacco processing companies experience significant quarterly earnings volatility due to crop timing and export shipment patterns, and a single-quarter miss can disproportionately distort the average.
A put-to-call ratio of 28.00 is among the highest observed across the screened universe, reflecting extreme bearish or hedging positioning in the options market that signals elevated downside risk uncertainty.
→StableKey risks
- Expectation
- The put-to-call ratio should decline below 10 within 12 months as fundamental clarity improves and hedging unwinds.
CounterIn very thinly traded options markets for small-cap tobacco distributors, a ratio this extreme often reflects a single large institutional hedge rather than a broad bearish consensus, and may not carry predictive weight.
Per-dimension breakdown
Quality
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.3 |
| ROA | 3.1 |
| Gross margin | 0.0 |
| Op margin | 1.5 |
| Net margin | 0.6 |
| Current ratio | 9.5 |
| FCF quality | 10.0 |
| Moat | 4.5 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 200% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
2.9/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 2.5 |
| OBV | 10.0 |
| MA position | 7.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 9.1 |
- ▸Analyst upside: 40%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $153,986 (0.012% of mkt cap)
Peer rank
2.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 0.0 |
| growth rank | 1.7 |
Technical
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.0 |
| support resistance | 3.6 |
| 52w position | 6.7 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.0 |
| days to cover | 2.3 |
| volatility | 7.0 |
| put call | 10.0 |
| implied vol | 5.3 |
| max pain risk | 3.0 |
| beta | 9.6 |
| debt equity | 7.1 |
- ▸Above max pain $30
Catalyst
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 4.8 |
- ▸Earnings concerns: 1B/3M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (8)
- MOMENTUM:5.0>=4.5
- ASYMMETRY:2.6>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:41d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
2.56
Upside
+18.6%
Downside
7.3%
Sizing output
AVOID
SetupRANGE_BOUND — RSI 51 mid-range, Bollinger mid-band
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $1.3B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 6.8) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 2.56 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 6.8, Value at 6.2, and Risk (lower is worse) at 6.2; the weakest are Catalyst at 2.5, Peer rank at 2.7, and Growth at 2.9. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 2.56 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Universal Corporation converts 200% of net income into free cash flow, signaling that the business generates substantially more actual cash than reported earnings suggest, supporting the thesis that the stock's true earnings power is higher than headline numbers indicate.
Trip ifFree cash flow conversion falls below 100% of net income in any of the next 4 quarters.
- P2Universal Corporation missed earnings estimates in 3 of the last 4 quarters with an average negative surprise of -46%, including a recent quarter where actual results were -142.6% below expectations, indicating a severe deterioration in near-term earnings predictability.
Trip ifEPS surprise falls below -50% in at least 2 of the next 4 quarters.
- P3A put-to-call ratio of 28.00 is among the highest observed across the screened universe, reflecting extreme bearish or hedging positioning in the options market that signals elevated downside risk uncertainty.
Trip ifPut-to-call ratio rises above 35, exceeding the current 28 level.
- P4Analysts place a consensus price target implying 39% upside from the current $53.33, suggesting the market may be undervaluing the leaf tobacco supply chain business on an asset or cash flow basis despite weak reported earnings.
Trip ifPrice drops below $49.69, more than 6.8% below the current $53.33.