Value
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.7 |
| P/S | 8.8 |
| EV/EBITDA | 3.1 |
| Fwd P/E | 7.8 |
| PEG | 4.8 |
| Analyst target | 7.5 |
- ▸Forward P/E: 15.5x
- ▸PEG: 1.66
ATMU · Why this verdict
Why Atmus Filtration Technologies I (ATMU) 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
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has delivered earnings beats in each of the last four quarters, with the average positive surprise of approximately 12.5% indicating a consistent pattern of under-promising and over-delivering against consensus expectations. Earnings | EPS beats continue in the next two quarterly reports, with average positive surprises remaining above 5% and sustaining the delivery cadence. | →Stable |
| CounterA perfect beat streak can reflect easy guidance rather than fundamental strength; if end demand in the filtration market softens, management may set guidance at a level it can no longer clear. | ||
With approximately 15.5% of headroom to the near-term target and a risk/reward of roughly 2.3-to-1 in the investor's favor, alongside analyst consensus implying approximately 33% further upside, the entry geometry is favorable relative to the near-term downside. Price targets | Price advances toward the $57.77 near-term target over the next 12 months, capturing the identified upside and validating the entry geometry. | →Stable |
| CounterThe asymmetry gate was just below the minimum threshold at the time of analysis, meaning the cushion is thin; if the entry proves poorly timed, the favorable ratio can collapse quickly given the elevated leverage in the capital structure. | ||
At 2.6x debt-to-equity, leverage is elevated, and free cash flow is converting at only 40% of reported net income — a quality red flag that indicates earnings are not fully translating into cash and that financial flexibility is constrained if operating performance softens. Quality | Debt-to-equity falls below 1.8 and free cash flow conversion improves above 70% of net income for 2 consecutive quarters, confirming that the leverage and cash quality risks are resolving. | →Stable |
| CounterReturn on equity is a high 63%, suggesting the business is generating strong returns on the equity base even while leveraged; the free cash flow shortfall may reflect timing differences or growth investment rather than a structural impairment. | ||
The stock is trading below its 200-day moving average, creating a tactical headwind to near-term price appreciation, though the moving average itself remains upward-sloping at approximately 2.8% per month — indicating this appears to be a pullback within an intact trend rather than a confirmed breakdown. Momentum | The pullback persists for at least two more months before the stock reclaims the 200-day moving average, validating the characterization as a timing risk rather than a trend change. | →Stable |
| CounterRising on-balance volume during the pullback suggests accumulation is occurring; if the broader trend reasserts quickly and the stock reclaims the moving average, the pullback will have been brief and the entry opportunity short-lived. | ||
The company has delivered earnings beats in each of the last four quarters, with the average positive surprise of approximately 12.5% indicating a consistent pattern of under-promising and over-delivering against consensus expectations.
→StableEarnings
- Expectation
- EPS beats continue in the next two quarterly reports, with average positive surprises remaining above 5% and sustaining the delivery cadence.
CounterA perfect beat streak can reflect easy guidance rather than fundamental strength; if end demand in the filtration market softens, management may set guidance at a level it can no longer clear.
With approximately 15.5% of headroom to the near-term target and a risk/reward of roughly 2.3-to-1 in the investor's favor, alongside analyst consensus implying approximately 33% further upside, the entry geometry is favorable relative to the near-term downside.
→StablePrice targets
- Expectation
- Price advances toward the $57.77 near-term target over the next 12 months, capturing the identified upside and validating the entry geometry.
CounterThe asymmetry gate was just below the minimum threshold at the time of analysis, meaning the cushion is thin; if the entry proves poorly timed, the favorable ratio can collapse quickly given the elevated leverage in the capital structure.
At 2.6x debt-to-equity, leverage is elevated, and free cash flow is converting at only 40% of reported net income — a quality red flag that indicates earnings are not fully translating into cash and that financial flexibility is constrained if operating performance softens.
→StableQuality
- Expectation
- Debt-to-equity falls below 1.8 and free cash flow conversion improves above 70% of net income for 2 consecutive quarters, confirming that the leverage and cash quality risks are resolving.
CounterReturn on equity is a high 63%, suggesting the business is generating strong returns on the equity base even while leveraged; the free cash flow shortfall may reflect timing differences or growth investment rather than a structural impairment.
The stock is trading below its 200-day moving average, creating a tactical headwind to near-term price appreciation, though the moving average itself remains upward-sloping at approximately 2.8% per month — indicating this appears to be a pullback within an intact trend rather than a confirmed breakdown.
→StableMomentum
- Expectation
- The pullback persists for at least two more months before the stock reclaims the 200-day moving average, validating the characterization as a timing risk rather than a trend change.
CounterRising on-balance volume during the pullback suggests accumulation is occurring; if the broader trend reasserts quickly and the stock reclaims the moving average, the pullback will have been brief and the entry opportunity short-lived.
TrendMatrix Research · core thesis
Engine thesis — one sentence
The company has beaten consensus estimates in each of the last four quarters at an average 12.5% positive surprise, and about 15.5% of headroom remains to the near-term target at a risk/reward of roughly 2.3-to-1; however, elevated leverage at 2.6x debt-to-equity and free cash flow converting at only 40% of net income constrain financial flexibility, and the stock is pulling back below its 200-day moving average while that average remains upward-sloping.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 8.1 |
| Gross margin | 1.9 |
| Op margin | 6.3 |
| Net margin | 5.8 |
| Current ratio | 8.6 |
| FCF quality | 3.2 |
| Moat | 6.0 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 63%
- ▸Earnings quality RED FLAG: 40% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.2 |
| EPS growth | 3.9 |
Momentum
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 8.8 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.3 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+1.7%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.5 |
| Price target | 8.8 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (5.0) — signal dampened
- ▸Analyst upside: 34%
Insider
4.7/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 4.6 |
| holder change | 5.1 |
- ▸Modest insider selling — $1,529,772 (0.038% of mkt cap)
Peer rank
5.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.1 |
| quality rank | 8.7 |
| growth rank | 7.4 |
- ▸Superior ROE vs peers
Technical
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.3 |
| support resistance | 5.3 |
| 52w position | 5.0 |
Risk (lower is worse)
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 7.1 |
| volatility | 2.3 |
| put call | 7.4 |
| implied vol | 4.0 |
| beta | 6.2 |
| debt equity | 2.4 |
Catalyst
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 8.7 |
| dividend safety | 6.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 44.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- ASYMMETRY:2.0>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:35d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:3.4<4.5
Warning (0)
none
Reward-to-Risk
1.98
Upside
+16.2%
Downside
8.2%
Sizing output
AVOID
SetupRange Bound — RSI 55 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $4.1B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 6.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.4<4.5) reinforce the read. Current asymmetry R:R is 1.98 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 6.9, Sentiment at 6.8, and Value at 6.5; the weakest are Momentum at 3.4, Insider at 4.7, and Growth at 5.0. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 1.98 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Beat Streak Strong Surprise
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, ending the consistent over-delivery pattern.
- P2Favorable Risk Reward And Analyst Upside
Trip ifAnalyst consensus price target is reduced below the current price of $50.02 for 2 consecutive months, eliminating the 15.5% upside thesis.
- P3Elevated Leverage Weak Fcf Conversion
Trip ifDebt-to-equity ratio falls below 1.8 and free cash flow conversion improves above 70% of net income for 2 consecutive quarters.
- P4Pullback In Intact Uptrend
Trip ifStock reclaims the 200-day moving average and sustains above it for 4 consecutive weeks, confirming the pullback has resolved.