Value
9.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.0 |
| P/S | 10.0 |
| Fwd P/E | 9.8 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 6.5x
- ▸PEG: 0.05
- ▸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.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score6.5/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | →Stable |
| 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. | →Stable |
| 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. | →Stable |
| 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.
→StableQuality 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.
→StableMomentum 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.
→StableEarnings
- 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.
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.
Per-dimension breakdown
Quality
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.1 |
| ROA | 4.7 |
| Gross margin | 4.8 |
| Op margin | 6.2 |
| Net margin | 3.6 |
| Current ratio | 9.6 |
| FCF quality | 9.1 |
| Moat | 6.5 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 124% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
6.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.6 |
| EPS growth | 10.0 |
Momentum
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 2.8 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 8.9 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -8.7%/30d — confirmed downtrend
Sentiment
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 9.1 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 39%
Insider
5.2/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.3 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
6.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.3 |
| quality rank | 6.1 |
| growth rank | 3.4 |
- ▸Attractive P/E vs peers
Technical
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.4 |
| support resistance | 9.0 |
| 52w position | 0.0 |
Risk (lower is worse)
6.5/10data confidence 80%| Component | Sub-score |
|---|---|
| short interest | 7.2 |
| days to cover | 9.3 |
| volatility | 0.0 |
| debt equity | 9.3 |
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=-1Passed (7)
- ASYMMETRY:2.1>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:56d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.4<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
2.07
Upside
+21.3%
Downside
10.3%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 39, MACD bearish
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -67% (>40% off 52w high)
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: ASYMMETRY:2.1>=1.5. Top dim: Value at 9.1; weakest: Momentum at 3.4. No conviction either direction.
The strongest dimensions are Value at 9.1, Sentiment at 7.2, and Growth at 6.8; the weakest are Momentum at 3.4, Insider at 5.2, and Catalyst at 5.8. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 2.07 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.