Value
5.4/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 8.8 |
| EV/EBITDA | 4.4 |
| p ocf | 9.1 |
| Analyst target | 4.0 |
- ▸P/OCF: 7.4x (FFO proxy — REITs gated off P/E)
ESRT · Why this verdict
Why Empire State Realty Trust (ESRT) 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 score4.7/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Three of the four most recently reported quarters came in ahead of estimates by wide margins, suggesting management has consistently under-promised and over-delivered, with an average positive surprise that is far above typical for the sector. Catalyst breakdown | Earnings beats continue for at least 2 more consecutive quarters, each exceeding consensus by at least 10%. | →Stable |
| CounterThe extreme magnitude of recent surprises likely reflects abnormally low analyst estimates on a lightly covered name rather than genuine operating outperformance, making the streak difficult to interpret as durable earnings quality. | ||
Price is in a confirmed downtrend: the 200-day moving average slope has declined at roughly 4% per month, on-balance volume is falling, and a death cross has triggered a hard block against new entries. Momentum breakdown | The downtrend is falsified when the momentum score recovers above 4.5 and the 200-day moving average slope turns flat or positive for at least 2 consecutive months. | →Stable |
| CounterIf the earnings beat pattern accelerates, institutional buyers may step in and arrest the technical deterioration before the trend fully resolves to the downside. | ||
Free cash flow runs at 591% of reported net income — an unusually high conversion ratio suggesting the real economic earnings power of the portfolio is substantially above what the income statement reflects. Quality breakdown | Free cash flow as a multiple of net income stays above 300% and the price-to-operating-cash-flow multiple compresses below 5 times as the market prices in true cash generation. | →Stable |
| CounterA high free-cash-flow-to-net-income ratio on a REIT often reflects large non-cash depreciation charges on long-lived assets, not genuine over-earning; the underlying real estate may be deteriorating in value even as reported cash conversion appears elevated. | ||
All material assets are concentrated in a single metropolitan market, providing no geographic buffer against a sustained local economic or real estate downturn in New York City. Bear case | Revenue turns negative for 2 consecutive quarters, which would confirm that New York City demand deterioration is flowing through to reported results and validating the concentration risk. | →Stable |
| CounterGeographic concentration is a structural feature of this business; if New York City real estate fundamentals remain stable or improve, this risk never materializes into a financial impact. | ||
Three of the four most recently reported quarters came in ahead of estimates by wide margins, suggesting management has consistently under-promised and over-delivered, with an average positive surprise that is far above typical for the sector.
→StableCatalyst breakdown
- Expectation
- Earnings beats continue for at least 2 more consecutive quarters, each exceeding consensus by at least 10%.
CounterThe extreme magnitude of recent surprises likely reflects abnormally low analyst estimates on a lightly covered name rather than genuine operating outperformance, making the streak difficult to interpret as durable earnings quality.
Price is in a confirmed downtrend: the 200-day moving average slope has declined at roughly 4% per month, on-balance volume is falling, and a death cross has triggered a hard block against new entries.
→StableMomentum breakdown
- Expectation
- The downtrend is falsified when the momentum score recovers above 4.5 and the 200-day moving average slope turns flat or positive for at least 2 consecutive months.
CounterIf the earnings beat pattern accelerates, institutional buyers may step in and arrest the technical deterioration before the trend fully resolves to the downside.
Free cash flow runs at 591% of reported net income — an unusually high conversion ratio suggesting the real economic earnings power of the portfolio is substantially above what the income statement reflects.
→StableQuality breakdown
- Expectation
- Free cash flow as a multiple of net income stays above 300% and the price-to-operating-cash-flow multiple compresses below 5 times as the market prices in true cash generation.
CounterA high free-cash-flow-to-net-income ratio on a REIT often reflects large non-cash depreciation charges on long-lived assets, not genuine over-earning; the underlying real estate may be deteriorating in value even as reported cash conversion appears elevated.
All material assets are concentrated in a single metropolitan market, providing no geographic buffer against a sustained local economic or real estate downturn in New York City.
→StableBear case
- Expectation
- Revenue turns negative for 2 consecutive quarters, which would confirm that New York City demand deterioration is flowing through to reported results and validating the concentration risk.
CounterGeographic concentration is a structural feature of this business; if New York City real estate fundamentals remain stable or improve, this risk never materializes into a financial impact.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Empire State Realty Trust has demonstrated a consistent recent pattern of outperforming earnings estimates and converts cash at an unusually high rate relative to reported earnings, but a confirmed price downtrend, a hard technical sell signal, and a single-market New York City footprint make this a low-conviction setup where patience is warranted.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.1 |
| ROA | 1.4 |
| Gross margin | 6.5 |
| Op margin | 6.2 |
| Net margin | 2.5 |
| Current ratio | 6.0 |
| FCF quality | 10.0 |
| Moat | 5.2 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 591% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
1.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.7 |
| EPS growth | 0.0 |
Momentum
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.9 |
| MACD | 7.6 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -4.5%/30d — confirmed downtrend
Sentiment
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.7 |
| erm sentiment | 5.0 |
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
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.0 |
| quality rank | 4.2 |
| growth rank | 2.3 |
Technical
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.6 |
| support resistance | 1.6 |
| 52w position | 3.3 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.7 |
| days to cover | 5.3 |
| volatility | 5.3 |
| put call | 6.7 |
| beta | 5.6 |
| debt equity | 4.4 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.0 |
- ▸Strong earnings: 3B/0M
- ▸Dividend: 246.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.5>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:23d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.2=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=5.5>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.25
Upside
-2.7%
Downside
10.7%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 61
EdgeCatalyst-Driven — Earnings in 23d with 3/4 beat streak
SuitabilityAggressive — Beta 1.36>1.3, MCap $1.7B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.25 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 7.2, Sentiment at 5.6, and Momentum at 5.5; the weakest are Technical at 1.8, Growth at 1.9, and Peer rank at 4.6. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.25 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Beat Streak Momentum
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Confirmed Price Downtrend
Trip ifMomentum score rises above 4.5 and the 200-day moving average slope turns positive for 2 consecutive months.
- P3Exceptional Cash Conversion
Trip ifFree cash flow falls below 200% of net income for 2 consecutive quarters.
- P4Nyc Geographic Concentration
Trip ifRevenue growth turns positive and exceeds 5% YoY for 2 consecutive quarters, indicating the NYC market is absorbing supply without demand deterioration.