Value
4.0/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 0.5 |
| P/S | 2.5 |
| Fwd P/E | 2.9 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 37.9x
- ▸PEG: 0.08
FORM · Why this verdict
Why FormFactor (FORM) 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 score6.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Three consecutive earnings beats averaging over 30% upside surprise and 32% revenue growth confirm strong near-term business momentum in semiconductor test equipment, but a forward P/E of 54.7x, free cash flow that is negative relative to net income, and sole-source supplier concentration leave the stock priced for perfection with meaningful downside if execution falters.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing at 32% year-over-year, a rate that places the company among the top growth performers in the semiconductor equipment space and suggests strong end-market demand for its products. Growth breakdown | Revenue growth stays above 20% YoY for the next two reported quarters. | →Stable |
| CounterThe bear case explicitly cites a sole-source supplier concentration risk; a supply disruption could abruptly constrain the company's ability to fulfill orders, cutting directly into the growth trajectory. | ||
At a forward P/E of 54.7x and with free cash flow running at -1% relative to net income—meaning the company is not converting earnings into cash—the current price embeds an elevated growth premium that leaves little margin for error. Quality breakdown | This pillar is falsified if the forward P/E compresses below 35x while revenue growth is sustained, or if FCF turns meaningfully positive (FCF-to-net-income ratio rises above 50%). | →Stable |
| CounterA PEG ratio of 0.24 suggests that relative to the growth rate the multiple is not as demanding as the absolute P/E implies; if revenue acceleration continues, the earnings base could grow rapidly into the current price. | ||
The company relies on sole-source suppliers, a concentration risk flagged in its public disclosures that could impair production capacity or margin if a key supplier faces disruption or renegotiates terms. Bear case | This pillar is falsified if the company discloses meaningful diversification of its supply base over the next 12 months, reducing single-source dependency. | ↓Deteriorating |
| CounterSole-source relationships are common in specialized semiconductor equipment manufacturing and can reflect deep technical integration that competitors cannot easily replicate—the same dependency that creates risk may also reflect proprietary process advantages. | ||
The company has beaten consensus EPS estimates in three of the last four quarters with an average positive surprise of roughly 31%, demonstrating a pattern of delivering results ahead of expectations during a period of strong demand. Earnings | EPS beats continue in at least two of the next three reported quarters, sustaining the positive surprise trend. | →Stable |
| CounterThe sole miss in the streak showed a -10% surprise, and with an extremely elevated forward multiple, the market has already priced in continued outperformance—any moderation in the beat magnitude could weigh heavily on the stock. | ||
Revenue is growing at 32% year-over-year, a rate that places the company among the top growth performers in the semiconductor equipment space and suggests strong end-market demand for its products.
→StableGrowth breakdown
- Expectation
- Revenue growth stays above 20% YoY for the next two reported quarters.
CounterThe bear case explicitly cites a sole-source supplier concentration risk; a supply disruption could abruptly constrain the company's ability to fulfill orders, cutting directly into the growth trajectory.
At a forward P/E of 54.7x and with free cash flow running at -1% relative to net income—meaning the company is not converting earnings into cash—the current price embeds an elevated growth premium that leaves little margin for error.
→StableQuality breakdown
- Expectation
- This pillar is falsified if the forward P/E compresses below 35x while revenue growth is sustained, or if FCF turns meaningfully positive (FCF-to-net-income ratio rises above 50%).
CounterA PEG ratio of 0.24 suggests that relative to the growth rate the multiple is not as demanding as the absolute P/E implies; if revenue acceleration continues, the earnings base could grow rapidly into the current price.
The company relies on sole-source suppliers, a concentration risk flagged in its public disclosures that could impair production capacity or margin if a key supplier faces disruption or renegotiates terms.
↓DeterioratingBear case
- Expectation
- This pillar is falsified if the company discloses meaningful diversification of its supply base over the next 12 months, reducing single-source dependency.
CounterSole-source relationships are common in specialized semiconductor equipment manufacturing and can reflect deep technical integration that competitors cannot easily replicate—the same dependency that creates risk may also reflect proprietary process advantages.
The company has beaten consensus EPS estimates in three of the last four quarters with an average positive surprise of roughly 31%, demonstrating a pattern of delivering results ahead of expectations during a period of strong demand.
→StableEarnings
- Expectation
- EPS beats continue in at least two of the next three reported quarters, sustaining the positive surprise trend.
CounterThe sole miss in the streak showed a -10% surprise, and with an extremely elevated forward multiple, the market has already priced in continued outperformance—any moderation in the beat magnitude could weigh heavily on the stock.
Per-dimension breakdown
Quality
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.7 |
| ROA | 4.9 |
| Gross margin | 5.2 |
| Op margin | 9.6 |
| Net margin | 6.4 |
| Current ratio | 8.9 |
| FCF quality | 7.0 |
| Moat | 7.1 |
| Piotroski F | 10.0 |
- ▸Strong Piotroski F-Score: 9/9
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 32% YoY
Momentum
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.7 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.8 |
| Price target | 5.8 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (8.0) — signal dampened
Insider
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 2.1 |
| notable moves | 3.0 |
- ▸Modest insider selling — $4,230,282 (0.041% of mkt cap)
- ▸Institutions reducing
Peer rank
6.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.1 |
| quality rank | 6.0 |
| growth rank | 6.8 |
- ▸Conservative debt levels
Technical
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.0 |
| support resistance | 0.8 |
| 52w position | 6.4 |
| gap | 6.0 |
Risk (lower is worse)
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 9.4 |
| volatility | 0.0 |
| put call | 0.0 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 6.0 |
| debt equity | 9.9 |
- ▸Elevated put/call: 2.86
- ▸High IV: 100%
- ▸Above max pain $55
- ▸Concentration risks: 1 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.9>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:73d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.56
Upside
-8.4%
Downside
15.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 69, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output fired on the hard insider floor: insider score of 2.9 sits below the 3.0 threshold (heavy insider selling), which triggers SELL regardless of other dimensions. Co-occurring failed gates ( ASYMMETRY:-0.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.56 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 10.0, Catalyst at 7.8, and Quality at 7.0; the weakest are Insider at 2.9, Technical at 3.6, and Value at 4.0. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.56 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Strong Revenue Growth Profile
Trip ifRevenue growth falls below 15% YoY for 2 consecutive quarters.
- P3Rich Valuation With Negative Fcf
Trip ifForward P/E compresses below 35x while revenue growth is sustained above 15%, or FCF-to-net-income ratio rises above 50%.
- P4Sole Source Supplier Concentration
Trip ifCompany discloses a supply disruption affecting more than 10% of production capacity for 1 quarter.