Value
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.9 |
| P/S | 7.4 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 6.1 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 21.2x
- ▸PEG: 0.22
CSW · Why this verdict
Why CSW Industrials (CSW) 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 score6.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
CSW Industrials' 34% revenue growth puts it among the leaders in its peer group, but a mixed earnings delivery record with 2 beats and 2 misses over the last four quarters, free cash flow converting at only 26% of net income, and a reward-to-risk ratio of 0.44 with just 3.6% upside to target leave the setup unattractive for new entry at current prices despite the strong top-line momentum.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The last four quarters show two beats and two misses, indicating that while revenue is growing rapidly, the company has not demonstrated reliable control over its cost structure or the discipline to guide conservatively and over-deliver. Catalyst breakdown | The company beats EPS estimates in each of the next 3 consecutive quarters with an average surprise above 5%, demonstrating restored guidance reliability. | ↑Improving |
| CounterThe most recent quarter was a 34% beat — the strongest in the four-quarter window — suggesting the miss pattern may be correcting; a single strong print does not confirm a trend but directional improvement is visible. | ||
Revenue has grown 34% year over year, placing the company at the top of its peer group on the growth dimension and indicating the business is capturing meaningful market share or expanding into new demand pools. Growth breakdown | Revenue growth remains above 20% year over year for the next two quarters, confirming the trajectory is not a one-period anomaly. | →Stable |
| CounterA 34% growth rate at an industrial machinery company is difficult to sustain; if the expansion was driven by cyclical demand or one-time project wins, deceleration could be sharp and the mixed earnings history suggests execution may not match the top-line story. | ||
Free cash flow represents only 26% of net income, a level the analysis flags as a red flag for earnings quality, meaning that reported profits are not fully translating into cash available for reinvestment or return to shareholders. Quality breakdown | Free cash flow rises above 60% of net income for 2 consecutive quarters, confirming the earnings-to-cash gap is closing. | →Stable |
| CounterFor a rapidly growing industrial business, depressed near-term cash conversion can reflect working capital expansion or capital spending ahead of future revenue; if growth sustains, the conversion gap may close organically without implying any structural quality concern. | ||
With only 3.6% upside to the take-profit level and a reward-to-risk ratio of 0.44 against 8.1% potential downside, the current setup does not compensate adequately for the risk assumed, making a new entry unattractive at this price. Price targets | Analyst consensus targets are raised such that upside to the take-profit level exceeds 10%, improving the reward profile for prospective buyers. | →Stable |
| CounterIf revenue growth sustains above 30%, consensus targets may be revised materially higher, collapsing the thin upside gap quickly; the current 3.6% may reflect temporary price anchoring rather than a structural ceiling on the stock. | ||
The last four quarters show two beats and two misses, indicating that while revenue is growing rapidly, the company has not demonstrated reliable control over its cost structure or the discipline to guide conservatively and over-deliver.
↑ImprovingCatalyst breakdown
- Expectation
- The company beats EPS estimates in each of the next 3 consecutive quarters with an average surprise above 5%, demonstrating restored guidance reliability.
CounterThe most recent quarter was a 34% beat — the strongest in the four-quarter window — suggesting the miss pattern may be correcting; a single strong print does not confirm a trend but directional improvement is visible.
Revenue has grown 34% year over year, placing the company at the top of its peer group on the growth dimension and indicating the business is capturing meaningful market share or expanding into new demand pools.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 20% year over year for the next two quarters, confirming the trajectory is not a one-period anomaly.
CounterA 34% growth rate at an industrial machinery company is difficult to sustain; if the expansion was driven by cyclical demand or one-time project wins, deceleration could be sharp and the mixed earnings history suggests execution may not match the top-line story.
Free cash flow represents only 26% of net income, a level the analysis flags as a red flag for earnings quality, meaning that reported profits are not fully translating into cash available for reinvestment or return to shareholders.
→StableQuality breakdown
- Expectation
- Free cash flow rises above 60% of net income for 2 consecutive quarters, confirming the earnings-to-cash gap is closing.
CounterFor a rapidly growing industrial business, depressed near-term cash conversion can reflect working capital expansion or capital spending ahead of future revenue; if growth sustains, the conversion gap may close organically without implying any structural quality concern.
With only 3.6% upside to the take-profit level and a reward-to-risk ratio of 0.44 against 8.1% potential downside, the current setup does not compensate adequately for the risk assumed, making a new entry unattractive at this price.
→StablePrice targets
- Expectation
- Analyst consensus targets are raised such that upside to the take-profit level exceeds 10%, improving the reward profile for prospective buyers.
CounterIf revenue growth sustains above 30%, consensus targets may be revised materially higher, collapsing the thin upside gap quickly; the current 3.6% may reflect temporary price anchoring rather than a structural ceiling on the stock.
Per-dimension breakdown
Quality
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.5 |
| ROA | 4.2 |
| Gross margin | 4.4 |
| Op margin | 7.6 |
| Net margin | 5.2 |
| Current ratio | 8.8 |
| FCF quality | 2.5 |
| Moat | 5.6 |
| Piotroski F | 8.9 |
- ▸Earnings quality RED FLAG: 31% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 34% YoY
Momentum
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 10.0 |
| vol acceleration | 3.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
- ▸Volume surge (2.0x avg) on selloff
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.7 |
| Price target | 7.3 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (7.0) — signal dampened
Insider
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 5.0 |
- ▸Modest insider selling — $1,136,788 (0.025% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.3 |
| quality rank | 4.7 |
| growth rank | 9.3 |
- ▸Industry growth leader
Technical
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.2 |
| support resistance | 6.7 |
| 52w position | 6.6 |
| gap | 6.0 |
Risk (lower is worse)
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.5 |
| days to cover | 3.0 |
| volatility | 2.4 |
| beta | 8.0 |
| debt equity | 5.7 |
Catalyst
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 3.0 |
| dividend safety | 7.0 |
- ▸Earnings concerns: 2B/2M
- ▸Earnings in 10 days
- ▸Dividend aristocrat: 0.4% yield
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 (6)
- MOMENTUM:7.4>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.2<1.5@spot
Warning (1)
- EARNINGS_PROXIMITY:10d<=14d (soft)
Reward-to-Risk
0.21
Upside
+1.7%
Downside
8.1%
Sizing output
AVOID
SetupRange Bound — RSI 48 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $4.6B<$5B
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: MOMENTUM:7.4>=5.5. Top dim: Growth at 10.0; weakest: Peer rank at 4.6. No conviction either direction.
The strongest dimensions are Growth at 10.0, Momentum at 7.4, and Sentiment at 6.4; the weakest are Peer rank at 4.6, Catalyst at 4.7, and Risk (lower is worse) at 4.9. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.21 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Industry Leading Revenue Growth
Trip ifRevenue growth falls below 15% YoY for 2 consecutive quarters.
- P2Inconsistent Earnings Delivery
Trip ifEPS surprise exceeds 5% for 3 consecutive quarters, falsifying the inconsistent-delivery concern.
- P3Weak Free Cash Conversion
Trip ifFree cash flow rises above 60% of net income for 2 consecutive quarters.
- P4Unfavorable Risk Reward Geometry
Trip ifAnalyst consensus target rises more than 15% above the current take-profit level of $282.38, creating upside beyond 18% from the current price.