Value
9.2/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.7 |
| P/S | 10.0 |
| Fwd P/E | 9.7 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 7.1x
- ▸PEG: 0.06
- ▸Attractively valued
CHA · Why this verdict
Why Chagee Holdings (CHA) 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 score6.3/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Chagee Holdings trades at a very low forward multiple with strong cash quality and a near-perfect balance-sheet signal, but a confirmed downtrend and two consecutive earnings misses have shifted the near-term risk profile unfavorably, leaving the setup skewed toward waiting for technical stabilization before adding exposure.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The shares trade at a forward price-to-earnings of 6.9x with a PEG ratio of 0.05, pricing in very modest growth expectations and offering a clear margin of safety relative to earnings power. Valuation breakdown | Forward P/E expands toward 10-12x as earnings stabilize and market confidence recovers over 12 months. | →Stable |
| CounterA low forward multiple can persist indefinitely if earnings estimates continue to be cut; the two consecutive misses suggest the discount may reflect genuine uncertainty rather than a mispricing. | ||
Free cash flow ran at 124% of net income last period, and the Piotroski F-Score came in at 9 out of 9, indicating a financially sound business with strong underlying cash generation. Quality breakdown | Free cash flow as a percentage of net income stays above 100% for the next four quarters, confirming durable cash quality. | ↓Deteriorating |
| CounterA high free-cash-flow-to-net-income ratio can reflect timing differences in working capital rather than a structural advantage; if revenue growth slows, cash conversion may normalize downward. | ||
The stock trades below its 200-day moving average, which is declining at 11.1% over the past 30 days — a confirmed downtrend that increases the risk of owning into further weakness. Momentum breakdown | The 200-day moving average flattens and price closes above it for at least 10 consecutive sessions, signaling trend reversal. | ↑Improving |
| CounterVolume accumulation (rising OBV) and improving MACD suggest underlying buying interest; the trend may stabilize faster than the moving average slope implies. | ||
The two most recent quarters both missed estimates, and the four-quarter record shows 2 beats against 2 misses — a pattern of inconsistent delivery that makes forward guidance unreliable. Earnings | EPS surprise turns positive and exceeds 5% for 2 consecutive quarters, reestablishing a consistent beat pattern. | ↓Deteriorating |
| CounterThe oldest quarter in the window delivered a massive positive surprise of over 415%, showing the company is capable of material outperformance; the inconsistency may reflect lumpy seasonality rather than structural deterioration. | ||
The shares trade at a forward price-to-earnings of 6.9x with a PEG ratio of 0.05, pricing in very modest growth expectations and offering a clear margin of safety relative to earnings power.
→StableValuation breakdown
- Expectation
- Forward P/E expands toward 10-12x as earnings stabilize and market confidence recovers over 12 months.
CounterA low forward multiple can persist indefinitely if earnings estimates continue to be cut; the two consecutive misses suggest the discount may reflect genuine uncertainty rather than a mispricing.
Free cash flow ran at 124% of net income last period, and the Piotroski F-Score came in at 9 out of 9, indicating a financially sound business with strong underlying cash generation.
↓DeterioratingQuality breakdown
- Expectation
- Free cash flow as a percentage of net income stays above 100% for the next four quarters, confirming durable cash quality.
CounterA high free-cash-flow-to-net-income ratio can reflect timing differences in working capital rather than a structural advantage; if revenue growth slows, cash conversion may normalize downward.
The stock trades below its 200-day moving average, which is declining at 11.1% over the past 30 days — a confirmed downtrend that increases the risk of owning into further weakness.
↑ImprovingMomentum breakdown
- Expectation
- The 200-day moving average flattens and price closes above it for at least 10 consecutive sessions, signaling trend reversal.
CounterVolume accumulation (rising OBV) and improving MACD suggest underlying buying interest; the trend may stabilize faster than the moving average slope implies.
The two most recent quarters both missed estimates, and the four-quarter record shows 2 beats against 2 misses — a pattern of inconsistent delivery that makes forward guidance unreliable.
↓DeterioratingEarnings
- Expectation
- EPS surprise turns positive and exceeds 5% for 2 consecutive quarters, reestablishing a consistent beat pattern.
CounterThe oldest quarter in the window delivered a massive positive surprise of over 415%, showing the company is capable of material outperformance; the inconsistency may reflect lumpy seasonality rather than structural deterioration.
Per-dimension breakdown
Quality
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.4 |
| ROA | 5.3 |
| Gross margin | 4.2 |
| Op margin | 6.1 |
| Net margin | 5.1 |
| Current ratio | 9.6 |
| FCF quality | 4.1 |
| Moat | 6.5 |
| Piotroski F | 8.9 |
- ▸Earnings quality warning: 52% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
3.1/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 3.1 |
Momentum
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 9.7 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 5.1 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -5.2%/30d — confirmed downtrend
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 7.0 |
| Price target | 8.8 |
- ▸Analyst upside: 32%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.5 |
| quality rank | 6.7 |
| growth rank | 1.8 |
- ▸Attractive P/E vs peers
- ▸Conservative debt levels
Technical
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.9 |
| support resistance | 3.3 |
| 52w position | 0.1 |
Risk (lower is worse)
6.9/10data confidence 80%| Component | Sub-score |
|---|---|
| short interest | 7.6 |
| days to cover | 7.9 |
| volatility | 2.9 |
| debt equity | 9.2 |
Catalyst
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.9>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:83d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:1.1<1.5@spot
Warning (1)
- DEATH_CROSS:momentum=6.9>=5.0 recovering
Reward-to-Risk
1.14
Upside
+15.2%
Downside
13.4%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 65
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -49% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 4.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 9.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:1.1<1.5@spot) reinforce the read. Current asymmetry R:R is 1.14 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 9.2, Sentiment at 7.4, and Insider at 7.3; the weakest are Technical at 1.8, Growth at 3.1, and Catalyst at 4.3. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 1.14 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Compelling Valuation Discount
Trip ifForward P/E rises above 15x for 2 consecutive quarters, eliminating the valuation discount thesis.
- P2Superior Cash Conversion
Trip ifFree cash flow as a percentage of net income falls below 80% for 2 consecutive quarters.
- P3Confirmed Price Downtrend
Trip ifPrice closes above the 200-day moving average and the MA slope turns positive for 20 consecutive trading days.
- P4Inconsistent Earnings Delivery
Trip ifEPS surprise exceeds 5% for 2 consecutive quarters, reestablishing a consistent beat pattern.