Value
7.4/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 7.0 |
| P/S | 7.7 |
| Fwd P/E | 7.7 |
| PEG | 9.6 |
| Analyst target | 5.0 |
- ▸Forward P/E: 15.9x
- ▸PEG: 0.57
- ▸Attractively valued
FRSH · Why this verdict
Why Freshworks (FRSH) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. People who build TrendMatrix, or entities they control, may hold positions, long or short, in securities it covers, and may trade them at any time. Positions are not disclosed individually. Verdicts are generated by an automated model applied by the same rules to every covered stock, and are not adjusted for any position held by the people who build TrendMatrix. We do not accept payment from issuers for coverage.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictHOLD
Overall score6.4/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Freshworks is a high-quality software compounder (Piotroski 9/9, Rule of 40 at 45, wide moat) with a consistent earnings beat record, but the stock has already passed its analyst target and reports earnings in 2 days, leaving limited upside near term.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Cash conversion is excellent at 141% FCF/NI and the Rule of 40 score is 45, balancing growth and profitability. Quality breakdown | Free cash flow stays above net income and Rule of 40 stays above 40. | →Stable |
| CounterRevenue growth component is only 6.5/10 on low confidence, so the Rule of 40 could slip if growth decelerates. | ||
Freshworks is a high-quality business with a wide economic moat, a Piotroski F-Score of 9/9 and strong 20% margins. Quality breakdown | Piotroski F-Score stays at 8 or higher and margins hold near 20% over 12 months. | →Stable |
| CounterOperating margin scores only 2.2/10 and ROA 1.1/10, so reported quality may rely on non-operating items rather than durable operating profit. | ||
The company beat earnings estimates in 3 of the last 4 quarters with no misses and an average surprise of 19.4%. Earnings track record | Beats continue in at least 3 of the next 4 quarters. | ↑Improving |
| CounterEarnings are due in 2 days, a binary event where a high bar after past beats could trigger a sharp drop. | ||
The analyst target has been reached: the price of $14.72 sits above the $12.86 target, with upside of -12.6% and downside of 13.2%. Warnings | Analysts raise targets above the current price, or the price retreats toward the 13.43 entry target. | →Stable |
| CounterTargets typically lag a rerating, and positive analyst news and a breakout setup with a golden cross could carry the stock higher. | ||
High short interest of 13% and an elevated put/call ratio of 1.67 signal bearish positioning into the earnings event. Key risks | Short interest declines below 10% after earnings as the quarter confirms growth. | →Stable |
| CounterHeavy short interest and elevated implied volatility (79%) can fuel a squeeze, so bearish positioning may be wrong. | ||
Cash conversion is excellent at 141% FCF/NI and the Rule of 40 score is 45, balancing growth and profitability.
→StableQuality breakdown
- Expectation
- Free cash flow stays above net income and Rule of 40 stays above 40.
CounterRevenue growth component is only 6.5/10 on low confidence, so the Rule of 40 could slip if growth decelerates.
Freshworks is a high-quality business with a wide economic moat, a Piotroski F-Score of 9/9 and strong 20% margins.
→StableQuality breakdown
- Expectation
- Piotroski F-Score stays at 8 or higher and margins hold near 20% over 12 months.
CounterOperating margin scores only 2.2/10 and ROA 1.1/10, so reported quality may rely on non-operating items rather than durable operating profit.
The company beat earnings estimates in 3 of the last 4 quarters with no misses and an average surprise of 19.4%.
↑ImprovingEarnings track record
- Expectation
- Beats continue in at least 3 of the next 4 quarters.
CounterEarnings are due in 2 days, a binary event where a high bar after past beats could trigger a sharp drop.
The analyst target has been reached: the price of $14.72 sits above the $12.86 target, with upside of -12.6% and downside of 13.2%.
→StableWarnings
- Expectation
- Analysts raise targets above the current price, or the price retreats toward the 13.43 entry target.
CounterTargets typically lag a rerating, and positive analyst news and a breakout setup with a golden cross could carry the stock higher.
High short interest of 13% and an elevated put/call ratio of 1.67 signal bearish positioning into the earnings event.
→StableKey risks
- Expectation
- Short interest declines below 10% after earnings as the quarter confirms growth.
CounterHeavy short interest and elevated implied volatility (79%) can fuel a squeeze, so bearish positioning may be wrong.
Per-dimension breakdown
Quality
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.6 |
| ROA | 1.1 |
| Gross margin | 10.0 |
| Op margin | 2.2 |
| Net margin | 10.0 |
| Current ratio | 6.1 |
| FCF quality | 9.7 |
| Moat | 8.4 |
| Rule of 40 | 7.6 |
| Piotroski F | 10.0 |
- ▸Strong margins: 20%
- ▸Excellent cash conversion: 141% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
6.5/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 6.5 |
Momentum
2.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 1.4 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.1 |
| Analyst rating | 7.2 |
| Price target | 7.2 |
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $744,489 (0.022% of mkt cap)
- ▸Institutions accumulating
Peer rank
7.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.9 |
| quality rank | 7.4 |
| growth rank | 5.5 |
- ▸Conservative debt levels
Technical
8.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.5 |
| support resistance | 8.7 |
| 52w position | 6.9 |
Risk (lower is worse)
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.6 |
| days to cover | 6.6 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 2.0 |
| max pain risk | 3.0 |
| beta | 8.4 |
| debt equity | 9.8 |
| news risk | 5.0 |
- ▸High IV: 68%
- ▸Above max pain $2
Catalyst
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (5)
- INSIDER:OK
- NEWS_BOOST:ANALYST:0.70
- EARNINGS_PROXIMITY:96d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.4<4.5
- ASYMMETRY:0.0<1.5@spot
- 8K_SERIOUS:2.05
Warning (0)
none
Reward-to-Risk
0.04
Upside
+0.4%
Downside
10.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $3.5B<$5B
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: INSIDER:OK. Top dim: Technical at 8.4; weakest: Momentum at 2.4. No conviction either direction.
The strongest dimensions are Technical at 8.4, Catalyst at 7.6, and Value at 7.4; the weakest are Momentum at 2.4, Risk (lower is worse) at 5.4, and Insider at 5.9. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 0.04 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality Compounder
Trip ifPiotroski F-Score falls below 6 from current 9 of 9.
- P2Excellent Cash Conversion
Trip ifRule of 40 score falls below 30 from current 45.
- P3Consistent Earnings Beats
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P4Analyst Target Already Reached
Trip ifPrice falls more than 13% from the current $14.72.
- P5Short Interest Event Risk
Trip ifShort interest rises above 20% of float from current 13%.