Value
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.4 |
| P/S | 8.3 |
| EV/EBITDA | 8.9 |
| Fwd P/E | 5.9 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 21.7x
- ▸PEG: 0.23
HGTY · Why this verdict
Why Hagerty (HGTY) 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 score4.5/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
After three consecutive earnings beats delivering 14%, 62%, and 140% positive surprises in successive quarters, the company posted a significant miss of 386% below estimates in its most recent quarter — a reversal that raises questions about whether the prior streak reflected a durable trend or a favorable period. Earnings | The company returns to positive EPS surprises of at least 5% in each of the next two reported quarters, re-establishing the pattern of outperformance. | →Stable |
| CounterThe most recent estimate was very small at $0.01, making the percentage miss of 386% less indicative of structural deterioration than the figure implies; a small absolute shortfall does not necessarily reflect a fundamental change in the business. | ||
Approximately 91% of the business flows through a single alliance agreement with one counterparty, and roughly 92% of revenues are concentrated in a single product segment — a level of concentration where any disruption to that relationship would leave virtually no revenue cushion. Bear case | Concentration figures remain unchanged in the next annual disclosure — or if a new partnership is announced, single-counterparty revenue exposure falls below 75%. | →Stable |
| CounterDominant insurance alliances in specialty niches can provide durable competitive advantages and pricing power; high concentration is not inherently negative if the relationship is contractually protected and the addressable market is expanding. | ||
Free cash flow is running at approximately ten times reported net income, indicating the business generates significantly more cash than accounting earnings reflect — a quality attribute that reduces reliance on external financing and provides flexibility for investment or distribution. Quality breakdown | Free cash flow remains positive and above 300% of net income for at least 3 of the next 4 reported quarters. | →Stable |
| CounterFree cash flow this far above net income may reflect temporarily low capital expenditures or favorable timing in claims payments rather than a structural advantage; a normalization of either could rapidly compress the conversion ratio. | ||
Revenue contracted approximately 5% year-over-year, indicating the company is shrinking on the top line even as it attempts to grow earnings, which limits the durability of earnings growth if the revenue trend does not reverse. Growth breakdown | Revenue growth turns positive above 5% year-over-year for at least 2 consecutive reported quarters. | →Stable |
| CounterAn insurance company can grow earnings without growing revenue if loss ratios improve and investment income rises; top-line contraction need not indicate a deteriorating franchise if earned premium per policy and retention rates remain stable. | ||
After three consecutive earnings beats delivering 14%, 62%, and 140% positive surprises in successive quarters, the company posted a significant miss of 386% below estimates in its most recent quarter — a reversal that raises questions about whether the prior streak reflected a durable trend or a favorable period.
→StableEarnings
- Expectation
- The company returns to positive EPS surprises of at least 5% in each of the next two reported quarters, re-establishing the pattern of outperformance.
CounterThe most recent estimate was very small at $0.01, making the percentage miss of 386% less indicative of structural deterioration than the figure implies; a small absolute shortfall does not necessarily reflect a fundamental change in the business.
Approximately 91% of the business flows through a single alliance agreement with one counterparty, and roughly 92% of revenues are concentrated in a single product segment — a level of concentration where any disruption to that relationship would leave virtually no revenue cushion.
→StableBear case
- Expectation
- Concentration figures remain unchanged in the next annual disclosure — or if a new partnership is announced, single-counterparty revenue exposure falls below 75%.
CounterDominant insurance alliances in specialty niches can provide durable competitive advantages and pricing power; high concentration is not inherently negative if the relationship is contractually protected and the addressable market is expanding.
Free cash flow is running at approximately ten times reported net income, indicating the business generates significantly more cash than accounting earnings reflect — a quality attribute that reduces reliance on external financing and provides flexibility for investment or distribution.
→StableQuality breakdown
- Expectation
- Free cash flow remains positive and above 300% of net income for at least 3 of the next 4 reported quarters.
CounterFree cash flow this far above net income may reflect temporarily low capital expenditures or favorable timing in claims payments rather than a structural advantage; a normalization of either could rapidly compress the conversion ratio.
Revenue contracted approximately 5% year-over-year, indicating the company is shrinking on the top line even as it attempts to grow earnings, which limits the durability of earnings growth if the revenue trend does not reverse.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive above 5% year-over-year for at least 2 consecutive reported quarters.
CounterAn insurance company can grow earnings without growing revenue if loss ratios improve and investment income rises; top-line contraction need not indicate a deteriorating franchise if earned premium per policy and retention rates remain stable.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Hagerty produces free cash flow well in excess of reported earnings and delivered three consecutive beats before a significant miss in its most recent quarter, but revenue contraction of 5% year-over-year, extreme dependence on a single counterparty for over 90% of business, and thin near-term upside leave the setup cautious despite an attractive PEG ratio.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.0 |
| ROA | 4.0 |
| Gross margin | 8.0 |
| Op margin | 5.1 |
| Net margin | 1.0 |
| Current ratio | 5.6 |
| FCF quality | 10.0 |
| Moat | 5.9 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 1000% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
1.2/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 1.2 |
- ▸Declining revenue: -5%
Momentum
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.2 |
| MACD | 9.0 |
| OBV | 10.0 |
| MA position | 7.5 |
| Volume | 0.0 |
- ▸Overbought (RSI 75)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat/negative + RSI 75 (late-cycle distribution risk)
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 5.0 |
| Price target | 5.6 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸Negligible insider buying — $99,370 (0.002% of mkt cap)
Peer rank
1.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.6 |
| quality rank | 2.5 |
| growth rank | 0.8 |
Technical
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.9 |
| support resistance | 0.6 |
| 52w position | 7.7 |
| gap | 5.0 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 3.2 |
| volatility | 4.0 |
| put call | 0.0 |
| implied vol | 1.0 |
| beta | 8.3 |
| debt equity | 8.7 |
- ▸Elevated put/call: 5.00
- ▸High IV: 74%
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:6.1>=5.5
- INSIDER:OK
- EARNINGS_PROXIMITY:28d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=6.1>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.63
Upside
-9.5%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 75
EdgeCatalyst-Driven — Earnings in 28d with 3/4 beat streak
SuitabilitySpeculative — Binary industry: Insurance - Property & Casualty
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 ( Value at 6.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.63 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 6.6, Momentum at 6.1, and Quality at 5.9; the weakest are Peer rank at 1.0, Growth at 1.2, and Technical at 3.5. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.63 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Beat Streak Disrupted By Miss
Trip ifEPS surprise exceeds 20% for 2 consecutive quarters, confirming the beat pattern has decisively re-established itself.
- P2Extreme Counterparty Concentration
Trip ifA new partnership or distribution agreement reduces single-counterparty revenue dependence below 70% on a pro-forma basis.
- P3Strong Free Cash Flow Conversion
Trip ifFree cash flow falls below 100% of net income for 2 consecutive quarters.
- P4Revenue Declining Five Percent
Trip ifRevenue growth exceeds 5% year-over-year for 2 consecutive quarters.