Value
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.8 |
| P/S | 8.5 |
| EV/EBITDA | 4.5 |
| Fwd P/E | 7.8 |
| PEG | 7.3 |
| Analyst target | 3.0 |
- ▸Forward P/E: 15.5x
- ▸PEG: 0.95
FTDR · Why this verdict
Why frontdoor (FTDR) 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 score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten earnings estimates in all four of its most recently reported quarters, delivering an average positive surprise of roughly 25%, including a standout 74% beat two quarters ago — evidence of consistent execution well above market expectations. Earnings | EPS surprise remains positive in each of the next two reported quarters, sustaining the four-quarter beat streak. | →Stable |
| CounterThe most recent quarterly beat narrowed to 7.9% versus the 74% beat two quarters earlier, suggesting that analysts have recalibrated to management's guidance pattern and future upside surprises may become incrementally harder to achieve. | ||
Free cash flow is running at approximately 127% of net income, meaning cash generation comfortably exceeds reported profits — a high-quality earnings profile that reduces the risk of accrual inflation in the reported income statement. Quality breakdown | Free cash flow to net income ratio stays above 100% over the next four reported quarters, confirming durable cash conversion. | →Stable |
| CounterA debt-to-equity ratio of 5.2 signals substantial leverage; a meaningful share of operating cash flow is likely committed to debt service obligations, limiting the direct benefit of strong cash conversion for equity holders. | ||
With less than 1% of headroom to the near-term technical resistance level and a risk/reward ratio of roughly 0.1-to-1, potential downside to the stop level is approximately ten times the available upside — the geometry is unfavorable for entering or adding to a position at current levels. Price targets | A pullback that restores at least 8% upside to the resistance level would bring the risk/reward above 1.5-to-1 and make the setup constructive. | →Stable |
| CounterThe stock is trading with strong technical momentum — volume running at 2.2 times the average on an up move and a rising on-balance volume indicator — which can carry momentum-driven names above near-term resistance in the short term. | ||
A debt-to-equity ratio of 5.2 introduces a material leverage penalty on the quality profile, and the put-to-call ratio of 4.0 reflects heavy institutional demand for downside protection — a combination signaling elevated tail-risk concern at current levels. Risk breakdown | Put/call ratio falls below 2.0 and the debt-to-equity ratio declines below 3.0 over the next four quarters, reflecting reduced hedging pressure and balance sheet improvement. | →Stable |
| CounterElevated put/call ratios in rising stocks often reflect systematic portfolio hedging or covered call writing by existing long holders rather than directional bearish conviction, potentially overstating the signal's predictive value. | ||
The company has beaten earnings estimates in all four of its most recently reported quarters, delivering an average positive surprise of roughly 25%, including a standout 74% beat two quarters ago — evidence of consistent execution well above market expectations.
→StableEarnings
- Expectation
- EPS surprise remains positive in each of the next two reported quarters, sustaining the four-quarter beat streak.
CounterThe most recent quarterly beat narrowed to 7.9% versus the 74% beat two quarters earlier, suggesting that analysts have recalibrated to management's guidance pattern and future upside surprises may become incrementally harder to achieve.
Free cash flow is running at approximately 127% of net income, meaning cash generation comfortably exceeds reported profits — a high-quality earnings profile that reduces the risk of accrual inflation in the reported income statement.
→StableQuality breakdown
- Expectation
- Free cash flow to net income ratio stays above 100% over the next four reported quarters, confirming durable cash conversion.
CounterA debt-to-equity ratio of 5.2 signals substantial leverage; a meaningful share of operating cash flow is likely committed to debt service obligations, limiting the direct benefit of strong cash conversion for equity holders.
With less than 1% of headroom to the near-term technical resistance level and a risk/reward ratio of roughly 0.1-to-1, potential downside to the stop level is approximately ten times the available upside — the geometry is unfavorable for entering or adding to a position at current levels.
→StablePrice targets
- Expectation
- A pullback that restores at least 8% upside to the resistance level would bring the risk/reward above 1.5-to-1 and make the setup constructive.
CounterThe stock is trading with strong technical momentum — volume running at 2.2 times the average on an up move and a rising on-balance volume indicator — which can carry momentum-driven names above near-term resistance in the short term.
A debt-to-equity ratio of 5.2 introduces a material leverage penalty on the quality profile, and the put-to-call ratio of 4.0 reflects heavy institutional demand for downside protection — a combination signaling elevated tail-risk concern at current levels.
→StableRisk breakdown
- Expectation
- Put/call ratio falls below 2.0 and the debt-to-equity ratio declines below 3.0 over the next four quarters, reflecting reduced hedging pressure and balance sheet improvement.
CounterElevated put/call ratios in rising stocks often reflect systematic portfolio hedging or covered call writing by existing long holders rather than directional bearish conviction, potentially overstating the signal's predictive value.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Frontdoor has delivered four consecutive quarters of beating earnings estimates with free cash flow running at roughly 127% of net income, yet the stock is within less than 1% of its near-term technical resistance target with a risk/reward ratio of approximately 0.1-to-1 — a quality business at an unattractive current entry point.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 8.0 |
| Gross margin | 7.0 |
| Op margin | 5.9 |
| Net margin | 6.1 |
| Current ratio | 5.4 |
| FCF quality | 9.2 |
| Moat | 6.9 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 121%
- ▸Excellent cash conversion: 127% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
4.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.0 |
| EPS growth | 5.3 |
Momentum
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.6 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 3.2 |
- ▸Overbought (RSI 88)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.3 |
| Price target | 4.5 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (4.0) — signal dampened
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 | 3.1 |
| quality rank | 6.1 |
| growth rank | 4.3 |
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.1 |
| support resistance | 0.9 |
| 52w position | 9.6 |
Risk (lower is worse)
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.1 |
| days to cover | 4.7 |
| volatility | 4.7 |
| put call | 8.3 |
| implied vol | 5.2 |
| beta | 5.2 |
| debt equity | 0.0 |
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| 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:7.2>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:30d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.2=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.20
Upside
-18.0%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.46>1.3
Investment implication
The F-path SELL output reflects an overall score of 4.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.20 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 7.5, Quality at 7.4, and Momentum at 7.2; the weakest are Technical at 3.9, Peer rank at 4.6, and Growth at 4.7. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.20 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 Consistency
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Strong Free Cash Conversion
Trip ifFree cash flow to net income ratio falls below 80% for 2 consecutive quarters.
- P3Price At Near Term Ceiling
Trip ifStock price falls to $63.00 or below, restoring more than 10% upside to the resistance target.
- P4Leverage And Options Market Caution
Trip ifPut/call ratio falls below 1.5 for 4 consecutive weeks and debt-to-equity ratio declines below 3.0.