Value
7.9/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.4 |
| EV/EBITDA | 2.1 |
| Fwd P/E | 9.1 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 11.4x
- ▸PEG: 0.24
- ▸Attractively valued
CRC · Why this verdict
Why California Resources Corporatio (CRC) 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 score4.9/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Operations are concentrated entirely within California and California energy markets, creating two elevated geographic risk exposures that amplify the impact of any state-level regulatory, pricing, or demand disruption. Bear case | Geographic revenue concentration in California declines below 80% of total revenue for two consecutive reporting periods, indicating the company has begun diversifying its operational footprint. | →Stable |
| CounterThe insider signal is neutral with no recent selling, and analyst ratings are broadly positive with an average analyst upside of 46%, suggesting institutional researchers view the California concentration as a known and manageable risk rather than a near-term trigger. | ||
At 12.7 times forward earnings and a price-to-growth ratio of 0.27, the stock offers a compelling valuation discount, with roughly 27% upside to analyst consensus targets and a favorable risk/reward of approximately 6-to-1. Valuation breakdown | Price advances at least 15% from current $56.59 over 12 months, capturing a meaningful portion of the gap to the analyst target of $71.74. | →Stable |
| CounterCheap valuation alongside weak quality metrics and recent earnings misses may indicate the discount reflects deteriorating fundamentals rather than a mispriced opportunity; the quality floor failure suggests the business does not yet merit a full re-rating. | ||
The two most recent quarters produced earnings misses of 2% and 6% below consensus, reversing two prior beats of 15% and 19% and raising questions about whether earlier earnings momentum has stalled. Earnings | Earnings beat consensus for three consecutive quarters with average surprise above 5%, confirming a durable re-acceleration rather than a temporary interruption. | →Stable |
| CounterMomentum notes describe the current RSI at 39 as a pullback within an uptrend, and the stock remains above its 200-day moving average — the recent misses may reflect a temporary soft patch rather than a structural deceleration. | ||
Business quality falls below the minimum acceptable floor, with return metrics at or near zero and margins described as moderate — a profile that leaves limited cushion against operational setbacks. Bear case | Business quality rises above the minimum 4.0 floor for two consecutive assessment periods, reflecting improvement across profitability and operating efficiency. | →Stable |
| CounterFree cash flow is positive with a 13% FCF margin and an 8.7% FCF yield, suggesting that despite weak reported profitability metrics, the business is generating real cash that could support a quality improvement over time. | ||
A positive free cash flow margin of 13% and an FCF yield of 8.7% provide a cash generation cushion that supports the business through its quality improvement process and limits immediate distress risk. Quality breakdown | FCF margin remains above 10% of revenue for two consecutive quarters, confirming cash generation is stable even as earnings quality is being rebuilt. | →Stable |
| CounterThe dividend yield has been flagged at 286%, suggesting the cash flow may not be sufficient to sustain the distribution at current levels; if the dividend requires reduction, it would signal that the FCF cushion is thinner than the headline margin implies. | ||
Operations are concentrated entirely within California and California energy markets, creating two elevated geographic risk exposures that amplify the impact of any state-level regulatory, pricing, or demand disruption.
→StableBear case
- Expectation
- Geographic revenue concentration in California declines below 80% of total revenue for two consecutive reporting periods, indicating the company has begun diversifying its operational footprint.
CounterThe insider signal is neutral with no recent selling, and analyst ratings are broadly positive with an average analyst upside of 46%, suggesting institutional researchers view the California concentration as a known and manageable risk rather than a near-term trigger.
At 12.7 times forward earnings and a price-to-growth ratio of 0.27, the stock offers a compelling valuation discount, with roughly 27% upside to analyst consensus targets and a favorable risk/reward of approximately 6-to-1.
→StableValuation breakdown
- Expectation
- Price advances at least 15% from current $56.59 over 12 months, capturing a meaningful portion of the gap to the analyst target of $71.74.
CounterCheap valuation alongside weak quality metrics and recent earnings misses may indicate the discount reflects deteriorating fundamentals rather than a mispriced opportunity; the quality floor failure suggests the business does not yet merit a full re-rating.
The two most recent quarters produced earnings misses of 2% and 6% below consensus, reversing two prior beats of 15% and 19% and raising questions about whether earlier earnings momentum has stalled.
→StableEarnings
- Expectation
- Earnings beat consensus for three consecutive quarters with average surprise above 5%, confirming a durable re-acceleration rather than a temporary interruption.
CounterMomentum notes describe the current RSI at 39 as a pullback within an uptrend, and the stock remains above its 200-day moving average — the recent misses may reflect a temporary soft patch rather than a structural deceleration.
Business quality falls below the minimum acceptable floor, with return metrics at or near zero and margins described as moderate — a profile that leaves limited cushion against operational setbacks.
→StableBear case
- Expectation
- Business quality rises above the minimum 4.0 floor for two consecutive assessment periods, reflecting improvement across profitability and operating efficiency.
CounterFree cash flow is positive with a 13% FCF margin and an 8.7% FCF yield, suggesting that despite weak reported profitability metrics, the business is generating real cash that could support a quality improvement over time.
A positive free cash flow margin of 13% and an FCF yield of 8.7% provide a cash generation cushion that supports the business through its quality improvement process and limits immediate distress risk.
→StableQuality breakdown
- Expectation
- FCF margin remains above 10% of revenue for two consecutive quarters, confirming cash generation is stable even as earnings quality is being rebuilt.
CounterThe dividend yield has been flagged at 286%, suggesting the cash flow may not be sufficient to sustain the distribution at current levels; if the dividend requires reduction, it would signal that the FCF cushion is thinner than the headline margin implies.
TrendMatrix Research · core thesis
Engine thesis — one sentence
The stock screens attractively valued at 12.7 times forward earnings with a price-to-growth ratio of 0.27 and roughly 27% upside to analyst targets, but two consecutive recent earnings misses, a business quality score below the minimum acceptable floor, and operations concentrated entirely within California carrying two elevated risk flags offset the valuation discount and keep the near-term fundamental picture fragile despite a favorable risk/reward geometry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 6.9 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 2.2 |
| FCF quality | 6.0 |
| Moat | 5.9 |
| Piotroski F | 6.7 |
- ▸FCF-positive but moderate margins (FCF margin 13%, FCF yield 9.6%)
Growth
4.2/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 4.2 |
Momentum
1.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 1.8 |
- ▸Capitulation risk (RSI 25, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+2.6%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.3 |
| Price target | 9.7 |
| erm sentiment | 5.7 |
- ▸Analyst upside: 59%
Insider
3.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.0 |
- ▸Modest insider selling — $2,314,099 (0.051% of mkt cap)
Peer rank
3.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.4 |
| quality rank | 1.5 |
| growth rank | 4.7 |
Technical
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.8 |
| support resistance | 9.6 |
| 52w position | 4.3 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.1 |
| days to cover | 5.5 |
| volatility | 3.4 |
| put call | 10.0 |
| implied vol | 2.7 |
| beta | 7.5 |
| debt equity | 8.1 |
- ▸High IV: 64%
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 5.7 |
| dividend safety | 6.0 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 316.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- ASYMMETRY:5.2>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:31d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:1.6<4.5
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
5.25
Upside
+38.2%
Downside
7.3%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $4.6B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Sentiment at 8.0 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:1.6<4.5.
The strongest dimensions are Sentiment at 8.0, Value at 7.9, and Technical at 7.6; the weakest are Momentum at 1.6, Quality at 3.1, and Peer rank at 3.4. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 5.25 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Geographic Concentration Risk
Trip ifGeographic revenue concentration in California falls below 60% of total revenue for 2 consecutive reporting periods.
- P2Attractive Valuation With Upside
Trip ifForward P/E rises above 20x from the current 12.7x, eliminating the valuation discount.
- P3Recent Earnings Deterioration
Trip ifEPS beats consensus for 3 consecutive quarters with average surprise above 5%.
- P4Quality Below Minimum Floor
Trip ifBusiness quality rises above the minimum 4.0 floor for 2 consecutive assessment periods.
- P5Fcf Generation Provides Cushion
Trip ifFCF margin falls below 5% of revenue for 2 consecutive quarters, indicating the cash generation cushion has materially deteriorated.