Value
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.9 |
| P/S | 4.1 |
| EV/EBITDA | 2.2 |
| Fwd P/E | 5.5 |
| PEG | 5.4 |
| Analyst target | 6.0 |
- ▸Forward P/E: 23.4x
- ▸PEG: 1.39
DTM · Why this verdict
Why DT Midstream (DTM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
DT Midstream is a high-margin midstream business with strong Piotroski fundamentals and an encouraging recent earnings beat, but the stock has reached its near-term technical ceiling with an unfavorable risk/reward, and free cash flow covers only a fraction of reported net income — patience for a better entry is warranted.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company carries net margins of 36% and a Piotroski F-Score of 8 out of 9, indicating a fundamentally sound business with efficient operations and a strong balance-sheet profile relative to peers. Quality breakdown | Net margins remain at or above 30% and the Piotroski score stays at 7 or higher over the next four quarters. | ↑Improving |
| CounterHigh reported margins in midstream can mask structural cash-flow weakness; here free cash flow covers only 32% of net income, suggesting the income statement overstates economic earnings and the margin quality may not be fully translating to cash. | ||
The company has beaten earnings estimates in three of the last four quarters, including the most recent report where actual results came in roughly 12% above consensus — a pattern that reflects disciplined execution. Earnings | The company beats consensus in both of the next two quarters, extending the beat record to five out of six. | →Stable |
| CounterThe single miss in the streak — where actual results came in about 6% below estimate — shows that the beat rate is not yet consistent enough to underwrite a forward earnings premium with confidence. | ||
The stock has reached its near-term resistance level with only about 5.8% remaining upside to the take-profit target and a reward-to-risk ratio of roughly 1.3-to-1 — thin by the standards of a favorable setup and not enough cushion to absorb execution risk. Warnings | A pullback creates a new entry with a reward-to-risk ratio at or above 1.5-to-1, or the analyst community raises the target sufficiently to restore meaningful upside. | ↓Deteriorating |
| CounterA forward price-to-earnings multiple of 28x may be sustainable if the midstream infrastructure investments are long-lived and contracted; investors who wait for a lower entry could miss a sustained re-rating. | ||
Free cash flow represents only 32% of reported net income, flagged as an earnings quality concern — a gap this wide raises the question of whether reported earnings are a reliable proxy for the economic cash the business actually generates. Quality breakdown | Free cash flow conversion rises above 70% of net income for 2 consecutive quarters, narrowing the gap between accounting income and cash generation. | ↑Improving |
| CounterMidstream businesses routinely run high maintenance and expansion capital that depresses near-term FCF; if contracted throughput volumes grow and the capital cycle matures, cash conversion can normalize substantially without any change in underlying business quality. | ||
The company carries net margins of 36% and a Piotroski F-Score of 8 out of 9, indicating a fundamentally sound business with efficient operations and a strong balance-sheet profile relative to peers.
↑ImprovingQuality breakdown
- Expectation
- Net margins remain at or above 30% and the Piotroski score stays at 7 or higher over the next four quarters.
CounterHigh reported margins in midstream can mask structural cash-flow weakness; here free cash flow covers only 32% of net income, suggesting the income statement overstates economic earnings and the margin quality may not be fully translating to cash.
The company has beaten earnings estimates in three of the last four quarters, including the most recent report where actual results came in roughly 12% above consensus — a pattern that reflects disciplined execution.
→StableEarnings
- Expectation
- The company beats consensus in both of the next two quarters, extending the beat record to five out of six.
CounterThe single miss in the streak — where actual results came in about 6% below estimate — shows that the beat rate is not yet consistent enough to underwrite a forward earnings premium with confidence.
The stock has reached its near-term resistance level with only about 5.8% remaining upside to the take-profit target and a reward-to-risk ratio of roughly 1.3-to-1 — thin by the standards of a favorable setup and not enough cushion to absorb execution risk.
↓DeterioratingWarnings
- Expectation
- A pullback creates a new entry with a reward-to-risk ratio at or above 1.5-to-1, or the analyst community raises the target sufficiently to restore meaningful upside.
CounterA forward price-to-earnings multiple of 28x may be sustainable if the midstream infrastructure investments are long-lived and contracted; investors who wait for a lower entry could miss a sustained re-rating.
Free cash flow represents only 32% of reported net income, flagged as an earnings quality concern — a gap this wide raises the question of whether reported earnings are a reliable proxy for the economic cash the business actually generates.
↑ImprovingQuality breakdown
- Expectation
- Free cash flow conversion rises above 70% of net income for 2 consecutive quarters, narrowing the gap between accounting income and cash generation.
CounterMidstream businesses routinely run high maintenance and expansion capital that depresses near-term FCF; if contracted throughput volumes grow and the capital cycle matures, cash conversion can normalize substantially without any change in underlying business quality.
Per-dimension breakdown
Quality
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.3 |
| ROA | 2.7 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 4.5 |
| FCF quality | 4.4 |
| Moat | 6.5 |
| Rule of 40 | 5.5 |
| Piotroski F | 8.9 |
- ▸Strong margins: 35%
- ▸Earnings quality warning: 56% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
3.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.2 |
| EPS growth | 2.5 |
Momentum
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 5.9 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+0.7%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.0 |
| Analyst rating | 7.3 |
| Price target | 8.3 |
- ▸Analyst upside: 26%
Insider
6.6/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 7.7 |
| notable moves | 7.0 |
- ▸Negligible insider buying — $198,915 (0.002% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.1 |
| quality rank | 4.3 |
| growth rank | 1.1 |
Technical
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 8.8 |
| 52w position | 5.6 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.6 |
| days to cover | 2.9 |
| volatility | 3.1 |
| put call | 10.0 |
| implied vol | 5.7 |
| max pain risk | 7.0 |
| beta | 8.6 |
| debt equity | 7.0 |
| news risk | 5.5 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 3.0 |
| dividend safety | 3.0 |
| news activity | 5.0 |
- ▸Earnings concerns: 2B/2M
- ▸Yield trap warning: high yield but unsafe
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 (5)
- ASYMMETRY:1.8>=1.5
- INSIDER:OK
- EARNINGS_PROXIMITY:105d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:2.7<4.5
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.81
Upside
+13.6%
Downside
7.5%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
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:1.8>=1.5. Top dim: Technical at 8.1; weakest: Momentum at 2.7. No conviction either direction.
The strongest dimensions are Technical at 8.1, Sentiment at 6.8, and Quality at 6.6; the weakest are Momentum at 2.7, Peer rank at 3.3, and Growth at 3.4. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 1.81 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Margins Piotroski Quality
Trip ifNet margin compresses below 25% for 2 consecutive quarters.
- P2Earnings Beat Track Record
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P3Target Reached Asymmetry Gap
Trip ifReward-to-risk ratio remains below 1.0 for more than 60 consecutive days without a technical reset.
- P4Weak Free Cash Flow Conversion
Trip ifFree cash flow conversion rises above 60% of net income for 2 consecutive quarters — confirming the earnings quality concern has resolved.