Value
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.5 |
| P/S | 8.3 |
| EV/EBITDA | 5.0 |
| Fwd P/E | 8.0 |
| PEG | 6.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 14.9x
- ▸PEG: 1.24
EXP · Why this verdict
Why Eagle Materials (EXP) 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 score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With the stock just 1.4% below the analyst resistance target and a reward-to-risk ratio of approximately 0.2-to-1, the risk/reward at the current price is unfavorable — the potential upside to the nearby target is materially outweighed by the downside risk. Engine gate (failed) | Either the stock pulls back more than 12% over the next six months — creating meaningful upside to the target and restoring positive asymmetry — or analyst targets are revised substantially higher to re-establish an attractive reward profile. | →Stable |
| CounterStrong positive momentum — RSI at 61, MACD bullish, and rising on-balance volume — can carry a stock beyond near-term resistance targets; if momentum remains intact and analyst targets are revised upward, the current resistance may prove a temporary ceiling rather than a structural cap. | ||
Free cash flow represents only approximately 24% of net income — a level the data flags as a red flag — meaning the reported profitability significantly overstates the actual cash generated by the business in recent periods. Quality | Free cash flow as a percentage of net income rises above 50% for 2 consecutive fiscal quarters, demonstrating that reported earnings are converting into cash at a more credible rate. | →Stable |
| CounterReturn on equity is approximately 29% and the Piotroski F-Score is 7 out of 9, indicating that accounting-quality signals on other dimensions remain solid; the FCF shortfall may reflect a timing difference in capital expenditure or working capital rather than a structural deficiency. | ||
Approximately 65% of revenue is concentrated in 10 states, creating meaningful exposure to regional construction activity that can swing sharply with housing cycles, local permitting conditions, and infrastructure spending patterns in those specific markets. Bear case | Revenue concentration from the 10 highest-revenue states falls below 50% in 2 consecutive annual filings, demonstrating meaningful progress toward geographic diversification. | →Stable |
| CounterGeographic concentration in high-activity construction markets can be a competitive advantage when those regions are growing; if the concentrated markets sustain above-average construction activity, the concentration amplifies the upside rather than the downside. | ||
The company has alternated between beats and misses over the last four quarters — with two consecutive misses in the middle two periods flanked by beats at the most recent and oldest quarters — a pattern that does not establish the consistent execution discipline that typically supports premium multiples. Catalyst | EPS surprise exceeds 5% for 3 consecutive quarters, demonstrating a return to consistent above-estimate delivery and rebuilding earnings credibility. | →Stable |
| CounterThe most recent quarter delivered a beat of approximately 24% above consensus, which may mark the beginning of a recovery in earnings execution; if the prior two misses reflected a temporary headwind now resolved, the mixed historical track record carries limited forward-looking predictive weight. | ||
With the stock just 1.4% below the analyst resistance target and a reward-to-risk ratio of approximately 0.2-to-1, the risk/reward at the current price is unfavorable — the potential upside to the nearby target is materially outweighed by the downside risk.
→StableEngine gate (failed)
- Expectation
- Either the stock pulls back more than 12% over the next six months — creating meaningful upside to the target and restoring positive asymmetry — or analyst targets are revised substantially higher to re-establish an attractive reward profile.
CounterStrong positive momentum — RSI at 61, MACD bullish, and rising on-balance volume — can carry a stock beyond near-term resistance targets; if momentum remains intact and analyst targets are revised upward, the current resistance may prove a temporary ceiling rather than a structural cap.
Free cash flow represents only approximately 24% of net income — a level the data flags as a red flag — meaning the reported profitability significantly overstates the actual cash generated by the business in recent periods.
→StableQuality
- Expectation
- Free cash flow as a percentage of net income rises above 50% for 2 consecutive fiscal quarters, demonstrating that reported earnings are converting into cash at a more credible rate.
CounterReturn on equity is approximately 29% and the Piotroski F-Score is 7 out of 9, indicating that accounting-quality signals on other dimensions remain solid; the FCF shortfall may reflect a timing difference in capital expenditure or working capital rather than a structural deficiency.
Approximately 65% of revenue is concentrated in 10 states, creating meaningful exposure to regional construction activity that can swing sharply with housing cycles, local permitting conditions, and infrastructure spending patterns in those specific markets.
→StableBear case
- Expectation
- Revenue concentration from the 10 highest-revenue states falls below 50% in 2 consecutive annual filings, demonstrating meaningful progress toward geographic diversification.
CounterGeographic concentration in high-activity construction markets can be a competitive advantage when those regions are growing; if the concentrated markets sustain above-average construction activity, the concentration amplifies the upside rather than the downside.
The company has alternated between beats and misses over the last four quarters — with two consecutive misses in the middle two periods flanked by beats at the most recent and oldest quarters — a pattern that does not establish the consistent execution discipline that typically supports premium multiples.
→StableCatalyst
- Expectation
- EPS surprise exceeds 5% for 3 consecutive quarters, demonstrating a return to consistent above-estimate delivery and rebuilding earnings credibility.
CounterThe most recent quarter delivered a beat of approximately 24% above consensus, which may mark the beginning of a recovery in earnings execution; if the prior two misses reflected a temporary headwind now resolved, the mixed historical track record carries limited forward-looking predictive weight.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Eagle Materials carries solid price momentum and a return on equity of approximately 29%, but the stock is trading within 1.4% of the analyst resistance target with an unfavorable reward-to-risk ratio, free cash flow conversion flagged as a red flag at only 24% of net income, and a geographic revenue concentration of 65% in 10 states that amplifies exposure to regional construction cycles.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.6 |
| ROA | 6.6 |
| Gross margin | 1.7 |
| Op margin | 7.0 |
| Net margin | 9.2 |
| Current ratio | 9.3 |
| FCF quality | 1.9 |
| Moat | 4.9 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 29%
- ▸Strong margins: 18%
- ▸Earnings quality RED FLAG: 24% FCF/NI
- ▸No competitive moat
Growth
3.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.0 |
| EPS growth | 4.4 |
Momentum
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 5.0 |
| Volume | 1.1 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.2 |
| erm sentiment | 4.7 |
Insider
5.1/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.2 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.1 |
| quality rank | 8.6 |
| growth rank | 2.1 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.2 |
| support resistance | 6.5 |
| 52w position | 7.9 |
| gap | 5.0 |
Risk (lower is worse)
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.1 |
| days to cover | 5.5 |
| volatility | 2.8 |
| put call | 6.3 |
| implied vol | 3.4 |
| beta | 5.5 |
| debt equity | 4.6 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.9 |
| dividend safety | 5.2 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 45.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:24d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.5<4.5
- ASYMMETRY:-1.5=NEGATIVE
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.50
Upside
-11.7%
Downside
7.8%
Sizing output
AVOID
SetupRange Bound — RSI 53 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.38>1.3
Investment implication
The F-path SELL output reflects an overall score of 4.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 6.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.5<4.5, ASYMMETRY:-1.5=NEGATIVE, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is -1.50 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 6.4, Value at 6.2, and Technical at 6.2; the weakest are Momentum at 2.5, Growth at 3.7, and Catalyst at 4.7. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of -1.50 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Asymmetry Exhausted At Resistance
Trip ifPrice declines more than 12% from current levels to below $192, restoring meaningful upside to the analyst target and re-establishing positive asymmetry.
- P2Fcf Earnings Quality Gap
Trip ifFree cash flow as a percentage of net income rises above 50% for 2 consecutive fiscal quarters, demonstrating improved cash conversion.
- P3Geographic Concentration Cyclical Risk
Trip ifRevenue concentration in the 10-state region falls below 50% in 2 consecutive annual filings, demonstrating meaningful geographic diversification.
- P4Mixed Earnings Execution
Trip ifEPS surprise exceeds 5% for 3 consecutive quarters, establishing a consistent above-estimate delivery pattern.