Value
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.5 |
| P/S | 8.3 |
| EV/EBITDA | 2.0 |
| Fwd P/E | 7.1 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 17.7x
- ▸PEG: 0.10
ALH · Why this verdict
Why Alliance Laundry Holdings (ALH) 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 score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
In each of the three available quarterly reporting periods, the company has either beaten or closely matched analyst estimates, with an average positive surprise of roughly 16%, demonstrating management's ability to deliver results at or above investor expectations. Earnings | EPS surprises should remain positive for the next 2 consecutive quarters to build statistical confidence in the beat track record. | →Stable |
| CounterOnly three quarters of history are available, limiting the statistical confidence in the pattern; the one in-line quarter suggests clean execution is not guaranteed, and a sole-source supplier disruption could produce an abrupt miss. | ||
The business converts 166% of net income into free cash flow, indicating that the income statement materially understates the cash the business actually generates; the reported return on equity of 185%, while headline-catching, likely reflects the mechanical effect of buybacks on a reduced equity base rather than pure operational compounding. Quality breakdown | The free-cash-flow-to-net-income ratio should remain above 120% for the next 12 months to validate that the conversion premium is structural rather than a one-quarter artifact. | →Stable |
| CounterVery high cash conversion ratios can be temporary artifacts of working-capital timing; if revenue growth requires heavier inventory or receivables investment, the ratio may compress toward a more typical level. | ||
Revenue is 74% concentrated in North America and the company depends on sole-source component suppliers, creating two simultaneous fragility points — demand-side and supply-side — that could compound each other in an adverse macro or supply-chain disruption scenario. Bear case | If the risk diminishes, international revenue should grow above 30% of total and management should announce dual-source supplier agreements within 12 months. | →Stable |
| CounterNorth American market leadership may create distribution and pricing advantages that are difficult to replicate internationally; existing sole-source supplier relationships may provide cost certainty that offsets the dependency risk. | ||
On-balance volume is currently declining — indicating that selling pressure is building in the shares even as price holds near its 52-week range — which typically precedes price weakness when divergence from price is sustained. Momentum breakdown | If buying interest returns, on-balance volume should turn upward and price should close above $27.30 (the analyst price target) for at least 3 consecutive weeks. | →Stable |
| CounterThe stock remains above the 200-day moving average with a bullish MACD reading; on-balance volume divergence can resolve upward if a near-term catalyst such as an earnings beat attracts fresh institutional buying. | ||
In each of the three available quarterly reporting periods, the company has either beaten or closely matched analyst estimates, with an average positive surprise of roughly 16%, demonstrating management's ability to deliver results at or above investor expectations.
→StableEarnings
- Expectation
- EPS surprises should remain positive for the next 2 consecutive quarters to build statistical confidence in the beat track record.
CounterOnly three quarters of history are available, limiting the statistical confidence in the pattern; the one in-line quarter suggests clean execution is not guaranteed, and a sole-source supplier disruption could produce an abrupt miss.
The business converts 166% of net income into free cash flow, indicating that the income statement materially understates the cash the business actually generates; the reported return on equity of 185%, while headline-catching, likely reflects the mechanical effect of buybacks on a reduced equity base rather than pure operational compounding.
→StableQuality breakdown
- Expectation
- The free-cash-flow-to-net-income ratio should remain above 120% for the next 12 months to validate that the conversion premium is structural rather than a one-quarter artifact.
CounterVery high cash conversion ratios can be temporary artifacts of working-capital timing; if revenue growth requires heavier inventory or receivables investment, the ratio may compress toward a more typical level.
Revenue is 74% concentrated in North America and the company depends on sole-source component suppliers, creating two simultaneous fragility points — demand-side and supply-side — that could compound each other in an adverse macro or supply-chain disruption scenario.
→StableBear case
- Expectation
- If the risk diminishes, international revenue should grow above 30% of total and management should announce dual-source supplier agreements within 12 months.
CounterNorth American market leadership may create distribution and pricing advantages that are difficult to replicate internationally; existing sole-source supplier relationships may provide cost certainty that offsets the dependency risk.
On-balance volume is currently declining — indicating that selling pressure is building in the shares even as price holds near its 52-week range — which typically precedes price weakness when divergence from price is sustained.
→StableMomentum breakdown
- Expectation
- If buying interest returns, on-balance volume should turn upward and price should close above $27.30 (the analyst price target) for at least 3 consecutive weeks.
CounterThe stock remains above the 200-day moving average with a bullish MACD reading; on-balance volume divergence can resolve upward if a near-term catalyst such as an earnings beat attracts fresh institutional buying.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Alliance Laundry Holdings generates exceptional free cash flow at 166% of net income, has beaten or closely matched estimates across all reported quarters with an average positive surprise of roughly 16%, and analysts see about 22% upside to target — but the current reward-to-risk geometry is unfavorable with only 5.8% headroom to the consensus target; dual concentration risks in North American geography (74%) and sole-source suppliers, alongside a declining on-balance-volume signal, make new entry premature.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 4.7 |
| Gross margin | 3.5 |
| Op margin | 7.9 |
| Net margin | 4.0 |
| Current ratio | 5.1 |
| FCF quality | 10.0 |
| Moat | 6.1 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 185%
- ▸Excellent cash conversion: 166% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
7.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.9 |
| EPS growth | 10.0 |
Momentum
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 2.8 |
| OBV | 1.0 |
| MA position | 4.5 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
Sentiment
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.8 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 21%
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $2,901,107 (0.056% of mkt cap)
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.2 |
| quality rank | 8.5 |
| growth rank | 6.2 |
- ▸Superior ROE vs peers
Technical
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.6 |
| support resistance | 4.5 |
| 52w position | 8.8 |
Risk (lower is worse)
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.3 |
| days to cover | 4.9 |
| volatility | 4.4 |
| put call | 2.2 |
| implied vol | 0.0 |
| debt equity | 0.5 |
- ▸Elevated put/call: 1.67
- ▸High IV: 84%
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:39d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.6<4.5
- ASYMMETRY:0.9<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.86
Upside
+5.6%
Downside
6.5%
Sizing output
AVOID
SetupRange Bound — RSI 50 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.6<4.5, ASYMMETRY:0.9<1.5@spot) reinforce the read. Current asymmetry R:R is 0.86 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.5, Catalyst at 7.5, and Quality at 6.6; the weakest are Momentum at 2.6, Risk (lower is worse) at 3.1, and Insider at 3.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.86 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Delivery
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Exceptional Cash Conversion Quality
Trip ifFree-cash-flow-to-net-income ratio falls below 100% for 2 consecutive quarters.
- P3Falling Volume Distribution Signal
Trip ifOn-balance volume turns upward and price closes above $27.30 for 3 consecutive weeks.
- P4Dual Geographic Supplier Concentration
Trip ifInternational revenue grows above 30% of total for 2 consecutive quarters.