Value
4.1/10data confidence 50%| Component | Sub-score |
|---|---|
| P/S | 2.6 |
| Fwd P/E | 2.5 |
| PEG | 7.8 |
- ▸Forward P/E: 46.4x
- ▸PEG: 0.87
FEIM · Why this verdict
Why Frequency Electronics (FEIM) 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 score3.9/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
FEIM faces a 3-of-4 earnings miss streak with an earnings-quality red flag and declining revenue against a rich valuation, and has already reached its price target ahead of a 5-day earnings event, though the stock remains technically oversold within an intact 200-day uptrend.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is declining (-11%) while the stock trades at a rich forward P/E of 56.9x, a combination the engine's value and growth notes both flag. Growth breakdown | Revenue growth should turn positive, above 0% YoY, over the next 12 months to justify the current valuation multiple. | ↓Deteriorating |
| CounterA single-quarter revenue decline in a lumpy government/defense-contract business may not reflect a structural growth problem. | ||
FEIM has missed earnings in 3 of the last 4 quarters with a -35.29% average surprise, and reports again in just 5 days, creating immediate event risk. Earnings | The company should return to a positive earnings surprise, above 0%, at the July 9, 2026 report to break the miss pattern. | →Stable |
| CounterThe bull case notes earnings estimates are trending UP heading into the print, which could set up a beat even after a rough recent stretch. | ||
The quality score flags a RED FLAG on earnings quality, with free cash flow at -98% of net income, indicating reported earnings are not converting to cash. Quality breakdown | FCF/NI should rise above 0% over the next 12 months for the earnings-quality concern to clear. | Tripped↓Deteriorating |
| CounterA single period's negative FCF/NI can reflect timing of working-capital or capex swings rather than a persistent earnings-quality problem. | ||
The stock has reached its target with only -1.3% remaining upside, driving both the momentum gate (4.1<4.5) and asymmetry gate (-0.1) to fail. Engine gate (failed) | The asymmetry ratio should turn positive, above 0, over the next 12 months as either price consolidates or the target is raised. | ↓Deteriorating |
| CounterEarnings estimates trending up ahead of the print could justify a higher price target even without a price pullback. | ||
The stock is technically oversold (RSI 27) while still trading above its 200-day moving average, per the momentum notes, suggesting the broader uptrend has not broken down despite the pullback. Momentum breakdown | RSI should recover above 40 and price should hold above the 200-day moving average over the next 12 months. | ↑Improving |
| CounterFalling OBV, volume distribution, alongside the oversold reading suggests the pullback could be the start of a larger breakdown rather than a buyable dip. | ||
Revenue is declining (-11%) while the stock trades at a rich forward P/E of 56.9x, a combination the engine's value and growth notes both flag.
↓DeterioratingGrowth breakdown
- Expectation
- Revenue growth should turn positive, above 0% YoY, over the next 12 months to justify the current valuation multiple.
CounterA single-quarter revenue decline in a lumpy government/defense-contract business may not reflect a structural growth problem.
FEIM has missed earnings in 3 of the last 4 quarters with a -35.29% average surprise, and reports again in just 5 days, creating immediate event risk.
→StableEarnings
- Expectation
- The company should return to a positive earnings surprise, above 0%, at the July 9, 2026 report to break the miss pattern.
CounterThe bull case notes earnings estimates are trending UP heading into the print, which could set up a beat even after a rough recent stretch.
The quality score flags a RED FLAG on earnings quality, with free cash flow at -98% of net income, indicating reported earnings are not converting to cash.
Tripped↓DeterioratingQuality breakdown
- Expectation
- FCF/NI should rise above 0% over the next 12 months for the earnings-quality concern to clear.
CounterA single period's negative FCF/NI can reflect timing of working-capital or capex swings rather than a persistent earnings-quality problem.
The stock has reached its target with only -1.3% remaining upside, driving both the momentum gate (4.1<4.5) and asymmetry gate (-0.1) to fail.
↓DeterioratingEngine gate (failed)
- Expectation
- The asymmetry ratio should turn positive, above 0, over the next 12 months as either price consolidates or the target is raised.
CounterEarnings estimates trending up ahead of the print could justify a higher price target even without a price pullback.
The stock is technically oversold (RSI 27) while still trading above its 200-day moving average, per the momentum notes, suggesting the broader uptrend has not broken down despite the pullback.
↑ImprovingMomentum breakdown
- Expectation
- RSI should recover above 40 and price should hold above the 200-day moving average over the next 12 months.
CounterFalling OBV, volume distribution, alongside the oversold reading suggests the pullback could be the start of a larger breakdown rather than a buyable dip.
Per-dimension breakdown
Quality
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.5 |
| Gross margin | 3.0 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 7.9 |
| Moat | 4.8 |
| Piotroski F | 8.9 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
0.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
- ▸Declining revenue: -23%
Momentum
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.9 |
| Analyst rating | 6.4 |
| Price target | 6.7 |
- ▸LLM news sentiment: +0.38 (n=10)
- ▸Light analyst coverage (2.0) — signal dampened
Insider
5.0/10data confidence 50%Peer rank
2.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.3 |
| quality rank | 2.8 |
| growth rank | 0.4 |
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.4 |
| support resistance | 2.6 |
| 52w position | 8.0 |
| gap | 6.0 |
Risk (lower is worse)
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.8 |
| days to cover | 6.9 |
| volatility | 0.0 |
| put call | 0.0 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 9.2 |
| debt equity | 9.5 |
| news risk | 6.0 |
- ▸Elevated put/call: 2.53
- ▸High IV: 93%
- ▸Above max pain $25
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 8.0 |
- ▸Earnings concerns: 0B/4M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- MOMENTUM:6.9>=5.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:49d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.32
Upside
-4.8%
Downside
15.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 57, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $0.7B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's -0.3=NEGATIVE outcome against Momentum at 6.9 and asymmetric R:R of -0.32.
The strongest dimensions are Momentum at 6.9, Sentiment at 6.7, and Insider at 5.0; the weakest are Growth at 0.0, Peer rank at 2.9, and Quality at 3.1. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.32 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consecutive Earnings Miss Streak
Trip ifEarnings surprise rises above 0% at the July 9, 2026 report, ending the recent miss pattern.
- P2Earnings Quality Red FlagTripped
Trip ifFCF/NI rises above 0%, reversing the current -98% red flag.
- P3Target Reached Negative Asymmetry
Trip ifAsymmetry ratio rises above 0, clearing the current -0.09 gate failure.
- P4Revenue Decline With Rich Valuation
Trip ifRevenue growth rises above 0% YoY, reversing the current -11% decline.
- P5Oversold Technical Setup In Uptrend
Trip ifPrice falls more than 5% below the 200-day moving average, confirming a broken uptrend.