Value
6.8/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.9 |
| EV/EBITDA | 0.1 |
| Fwd P/E | 8.1 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 14.8x
- ▸PEG: 0.09
DNOW · Why this verdict
Why DNOW (DNOW) 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 score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock trades with approximately 1.3% headroom to its near-term resistance target, leaving essentially no upside at current prices and creating an unfavorable risk/reward configuration where downside materially exceeds the available gain. Warnings | If this ceiling resolves, the stock needs to close above $16.00 for 2 consecutive weeks before fresh, meaningful upside becomes available. | →Stable |
| CounterAn attractively priced growth business — PEG of 0.08 and forward P/E of 14.5x — may re-rate above the current technical ceiling if earnings re-accelerate, rendering the current resistance level transitory. | ||
The most recent quarter delivered an EPS miss of approximately 83%, the largest negative surprise in the four-quarter record and a sharp reversal from two prior beats; the earnings trend has moved in the wrong direction from its recent high point. Earnings | If execution recovers, the company should deliver EPS surprise above 0% for 2 consecutive quarters to suggest the recent miss was an outlier. | →Stable |
| CounterTwo prior beats in the context of an industrial distributor suggest the recent miss may be cyclical or project-timing driven; a strong financial health score of 8 out of 9 indicates the underlying balance sheet has not broadly deteriorated. | ||
Revenue has grown approximately 98% year-over-year, placing the company as the industry growth leader among peers, with a PEG ratio of 0.08 suggesting the market is pricing almost none of that growth into the multiple. Growth breakdown | Revenue growth remains above 30% year-over-year for 2 consecutive quarters, sustaining the industry-leading growth position. | →Stable |
| CounterA near-100% revenue growth rate is almost certainly unsustainable at scale; normalization toward sector-average growth would compress the PEG-derived value case substantially and may already be priced into the low multiple. | ||
The stock trades below its 200-day moving average while that average is itself declining at approximately 2% per month — a confirmed downtrend that suggests near-term price action is unlikely to be supportive regardless of fundamental quality. Momentum breakdown | If the downtrend reverses, the 200-day moving average slope should flatten and turn positive within 4 months, with price reclaiming the moving average. | →Stable |
| CounterRising on-balance volume alongside a declining price trend creates a positive divergence that can precede a trend reversal; institutional buyers may be accumulating into weakness, setting up a potential recovery. | ||
The stock trades with approximately 1.3% headroom to its near-term resistance target, leaving essentially no upside at current prices and creating an unfavorable risk/reward configuration where downside materially exceeds the available gain.
→StableWarnings
- Expectation
- If this ceiling resolves, the stock needs to close above $16.00 for 2 consecutive weeks before fresh, meaningful upside becomes available.
CounterAn attractively priced growth business — PEG of 0.08 and forward P/E of 14.5x — may re-rate above the current technical ceiling if earnings re-accelerate, rendering the current resistance level transitory.
The most recent quarter delivered an EPS miss of approximately 83%, the largest negative surprise in the four-quarter record and a sharp reversal from two prior beats; the earnings trend has moved in the wrong direction from its recent high point.
→StableEarnings
- Expectation
- If execution recovers, the company should deliver EPS surprise above 0% for 2 consecutive quarters to suggest the recent miss was an outlier.
CounterTwo prior beats in the context of an industrial distributor suggest the recent miss may be cyclical or project-timing driven; a strong financial health score of 8 out of 9 indicates the underlying balance sheet has not broadly deteriorated.
Revenue has grown approximately 98% year-over-year, placing the company as the industry growth leader among peers, with a PEG ratio of 0.08 suggesting the market is pricing almost none of that growth into the multiple.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 30% year-over-year for 2 consecutive quarters, sustaining the industry-leading growth position.
CounterA near-100% revenue growth rate is almost certainly unsustainable at scale; normalization toward sector-average growth would compress the PEG-derived value case substantially and may already be priced into the low multiple.
The stock trades below its 200-day moving average while that average is itself declining at approximately 2% per month — a confirmed downtrend that suggests near-term price action is unlikely to be supportive regardless of fundamental quality.
→StableMomentum breakdown
- Expectation
- If the downtrend reverses, the 200-day moving average slope should flatten and turn positive within 4 months, with price reclaiming the moving average.
CounterRising on-balance volume alongside a declining price trend creates a positive divergence that can precede a trend reversal; institutional buyers may be accumulating into weakness, setting up a potential recovery.
TrendMatrix Research · core thesis
Engine thesis — one sentence
DNOW has essentially reached its near-term technical resistance target with only approximately 1.3% headroom remaining, and the most recent quarter delivered an 83% EPS miss that reversed two prior beats; while approximately 98% year-over-year revenue growth places the company as an industry growth leader and the forward P/E of 14.5x screens attractively priced, the confirmed price downtrend and below-minimum quality metrics make the current risk/reward unfavorable.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 1.2 |
| Gross margin | 0.2 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 8.3 |
| FCF quality | 0.0 |
| Moat | 5.0 |
| Piotroski F | 8.9 |
- ▸Cash-burning: FCF -21% of revenue
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
- ▸Quality concerns
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 98% YoY
Momentum
1.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 1.6 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 2.5 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -2.1%/30d — confirmed downtrend
Sentiment
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.1 |
| Price target | 8.5 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (4.0) — signal dampened
- ▸Analyst upside: 29%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.0 |
| quality rank | 1.3 |
| growth rank | 9.5 |
- ▸Industry growth leader
Technical
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 9.8 |
| 52w position | 4.6 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.7 |
| days to cover | 5.7 |
| volatility | 3.5 |
| put call | 5.3 |
| implied vol | 3.2 |
| beta | 8.0 |
| debt equity | 8.6 |
- ▸High IV: 61%
Catalyst
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:1.9<4.5
- ASYMMETRY:1.3<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
1.34
Upside
+9.6%
Downside
7.2%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 33, MACD bearish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $2.3B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Growth at 10.0 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:1.9<4.5.
The strongest dimensions are Growth at 10.0, Technical at 8.1, and Sentiment at 7.0; the weakest are Momentum at 1.9, Quality at 2.6, and Catalyst at 3.9. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 1.34 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Price At Technical Resistance Ceiling
Trip ifPrice closes above $16.00 for 2 consecutive weeks, establishing a new technical resistance target.
- P2Earnings Execution Deteriorating
Trip ifEPS surprise exceeds 0% for 2 consecutive quarters following the most recent miss.
- P3Exceptional Revenue Growth Rate
Trip ifRevenue growth falls below 30% year-over-year for 2 consecutive quarters.
- P4Confirmed Price Downtrend
Trip ifThe 200-day moving-average slope rises above 0% for 2 consecutive months, signaling an end to the confirmed downtrend.