Value
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.5 |
| P/S | 10.0 |
| EV/EBITDA | 3.5 |
| Fwd P/E | 8.8 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 12.6x
- ▸PEG: 0.04
- ▸Attractively valued
ALHC · Why this verdict
Why Alignment Healthcare (ALHC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Alignment Healthcare is growing revenue about 37% YoY with consistent earnings beats and strong cash conversion, but sub-par business quality, heavy insider selling and a confirmed downtrend keep it speculative.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow equals about 266% of net income, showing earnings are backed by cash despite thin margins. Quality breakdown | Free cash flow stays above net income over the next 12 months. | ↓Deteriorating |
| CounterCash conversion in managed-care plans can reflect timing of medical-cost payments and reverse quickly. | ||
Revenue is growing about 37% YoY, with quarterly revenue rising from roughly $1.01B to $1.36B over the last four reported quarters. Growth breakdown | Quarterly revenue keeps compounding above $1.4B within 12 months. | →Stable |
| CounterGrowth is concentrated in CMS-contracted plans and margins are thin, so rate changes could erase the benefit of scale. | ||
The company beat EPS estimates in three of the last four quarters, with average surprise of roughly 42%. Earnings | EPS keeps meeting or beating consensus through the next four reports. | ↓Deteriorating |
| CounterThe latest beat was only 5.9% on a $0.04 estimate and one quarter has no reported actual, so the surprise trend is fading. | ||
Business quality scores 3.9 versus a 4.0 floor and revenue depends on CMS contracts, making the franchise fragile to policy shifts. Bear case | Quality score recovers above 4.0 as margins improve. | ↓Deteriorating |
| CounterOperating and gross margin scores are near zero and no competitive moat is identified, so quality may not improve. | ||
Insiders sold about $13.7M (0.90% of market cap) in 90 days while the stock trades below its 200-day average in a downtrend, 71% off its high. Insider breakdown | Insider selling fades and price stabilizes above the 200-day average. | →Stable |
| CounterInstitutions are accumulating and analyst upside is 53%, so selling may be routine rather than informational. | ||
Free cash flow equals about 266% of net income, showing earnings are backed by cash despite thin margins.
↓DeterioratingQuality breakdown
- Expectation
- Free cash flow stays above net income over the next 12 months.
CounterCash conversion in managed-care plans can reflect timing of medical-cost payments and reverse quickly.
Revenue is growing about 37% YoY, with quarterly revenue rising from roughly $1.01B to $1.36B over the last four reported quarters.
→StableGrowth breakdown
- Expectation
- Quarterly revenue keeps compounding above $1.4B within 12 months.
CounterGrowth is concentrated in CMS-contracted plans and margins are thin, so rate changes could erase the benefit of scale.
The company beat EPS estimates in three of the last four quarters, with average surprise of roughly 42%.
↓DeterioratingEarnings
- Expectation
- EPS keeps meeting or beating consensus through the next four reports.
CounterThe latest beat was only 5.9% on a $0.04 estimate and one quarter has no reported actual, so the surprise trend is fading.
Business quality scores 3.9 versus a 4.0 floor and revenue depends on CMS contracts, making the franchise fragile to policy shifts.
↓DeterioratingBear case
- Expectation
- Quality score recovers above 4.0 as margins improve.
CounterOperating and gross margin scores are near zero and no competitive moat is identified, so quality may not improve.
Insiders sold about $13.7M (0.90% of market cap) in 90 days while the stock trades below its 200-day average in a downtrend, 71% off its high.
→StableInsider breakdown
- Expectation
- Insider selling fades and price stabilizes above the 200-day average.
CounterInstitutions are accumulating and analyst upside is 53%, so selling may be routine rather than informational.
Per-dimension breakdown
Quality
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.4 |
| ROA | 1.5 |
| Gross margin | 0.0 |
| Op margin | 0.0 |
| Net margin | 0.3 |
| Current ratio | 6.1 |
| FCF quality | 10.0 |
| Moat | 5.4 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 266% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 37% YoY
Momentum
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 6.5 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 1.5 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -9.9%/30d — confirmed downtrend
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.5 |
| Analyst rating | 7.1 |
| Price target | 9.4 |
- ▸Analyst upside: 46%
Insider
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 2.0 |
| insider conviction | 2.0 |
| holder change | 7.7 |
| notable moves | 7.0 |
- ▸Heavy insider selling — $13,712,577 (0.936% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.7 |
| quality rank | 3.6 |
| growth rank | 7.3 |
Technical
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.8 |
| support resistance | 5.0 |
| 52w position | 0.0 |
Risk (lower is worse)
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.7 |
| days to cover | 9.1 |
| volatility | 0.0 |
| put call | 3.3 |
| implied vol | 0.0 |
| beta | 6.8 |
| debt equity | 4.6 |
| news risk | 6.0 |
- ▸High IV: 82%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 1.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 8.0 |
- ▸Estimates down -7.0% (30d)
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- ASYMMETRY:1.8>=1.5
- 8K:CLEAN
- EARNINGS_PROXIMITY:114d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.7<4.5
- INSIDER:0.94%=EXTREME
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
1.80
Upside
+27.0%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($1.5B) below institutional reach
SuitabilitySpeculative — Drawdown -71% (>40% off 52w high)
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 2.7<4.5 outcome against Growth at 10.0 and asymmetric R:R of 1.80.
The strongest dimensions are Growth at 10.0, Value at 7.7, and Catalyst at 6.9; the weakest are Momentum at 2.7, Peer rank at 3.4, and Quality at 3.9. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 1.80 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Rapid Revenue Growth
Trip ifRevenue growth falls below 15% YoY for 2 consecutive quarters.
- P2Earnings Beat Streak
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P3Cash Conversion Strength
Trip ifFree cash flow to net income falls below 100% for 2 consecutive quarters.
- P4Cms Concentration And Quality Risk
Trip ifQuality score falls below 3.0 from current 3.9.
- P5Insider Selling And Downtrend
Trip ifNet insider selling exceeds 2% of market cap over 90 days.