Value
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.2 |
| P/S | 6.6 |
| EV/EBITDA | 4.9 |
| Fwd P/E | 9.6 |
| PEG | 8.7 |
| Analyst target | 6.0 |
- ▸Forward P/E: 8.0x
- ▸PEG: 0.72
- ▸Attractively valued
HTGC · Why this verdict
Why Hercules Capital (HTGC) 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 score6.0/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward P/E of 7.8x and a PEG ratio of 0.70, shares screen as attractively valued relative to the company's earnings growth, with analysts projecting approximately 25% upside to their consensus target from the current price. Valuation breakdown | The stock closes at least half the gap to the analyst consensus target over 12 months, with the forward P/E remaining below 12x. | →Stable |
| CounterA low forward multiple can persist when the market is pricing in an earnings deterioration that historical data does not yet reflect; if near-term earnings soften, the apparently cheap valuation may prove warranted rather than mistaken. | ||
Three beats in the last four quarters demonstrate that the company has generally delivered at or above Wall Street expectations, supporting confidence in near-term earnings visibility and management's guidance credibility. Earnings | EPS meets or exceeds consensus in each of the next three quarters, maintaining a beat rate of at least 75% on a trailing four-quarter basis. | →Stable |
| CounterThe one miss in the last four quarters — and an average positive surprise of only roughly 1.5% — signals that the beat margin is thin; a small shortfall against already modest estimates could disproportionately weigh on sentiment. | ||
The 200-day moving average has been declining at -1.7% per month and volume accumulation has turned negative (falling), indicating a confirmed technical downtrend that creates near-term price resistance and supports holding over adding at the current level. Momentum breakdown | If the technical picture improves, price should reclaim the 200-day moving average and the moving average slope should turn positive within three months, with volume accumulation resuming. | →Stable |
| CounterThe fundamental case — attractive valuation, 25% analyst upside, and 60% operating margins — could draw buyers who look through near-term technical weakness, particularly if a positive catalyst resets market sentiment before the trend formally reverses. | ||
Operating margins of 60% and a Rule of 40 score of 63 — well above the 40 threshold — place this business in a top-tier position relative to its peers on profitability, signaling durable earnings power and above-average earnings quality. Quality breakdown | Operating margin holds above 50% and the Rule of 40 score remains above 40 over the next four quarters, confirming the margin advantage is structural. | →Stable |
| CounterThe moderate leverage at 1.1 times equity and the current negative momentum suggest the market may be pricing in a coming margin compression that the trailing figures do not yet show, limiting confidence that the current profitability level is stable. | ||
At a forward P/E of 7.8x and a PEG ratio of 0.70, shares screen as attractively valued relative to the company's earnings growth, with analysts projecting approximately 25% upside to their consensus target from the current price.
→StableValuation breakdown
- Expectation
- The stock closes at least half the gap to the analyst consensus target over 12 months, with the forward P/E remaining below 12x.
CounterA low forward multiple can persist when the market is pricing in an earnings deterioration that historical data does not yet reflect; if near-term earnings soften, the apparently cheap valuation may prove warranted rather than mistaken.
Three beats in the last four quarters demonstrate that the company has generally delivered at or above Wall Street expectations, supporting confidence in near-term earnings visibility and management's guidance credibility.
→StableEarnings
- Expectation
- EPS meets or exceeds consensus in each of the next three quarters, maintaining a beat rate of at least 75% on a trailing four-quarter basis.
CounterThe one miss in the last four quarters — and an average positive surprise of only roughly 1.5% — signals that the beat margin is thin; a small shortfall against already modest estimates could disproportionately weigh on sentiment.
The 200-day moving average has been declining at -1.7% per month and volume accumulation has turned negative (falling), indicating a confirmed technical downtrend that creates near-term price resistance and supports holding over adding at the current level.
→StableMomentum breakdown
- Expectation
- If the technical picture improves, price should reclaim the 200-day moving average and the moving average slope should turn positive within three months, with volume accumulation resuming.
CounterThe fundamental case — attractive valuation, 25% analyst upside, and 60% operating margins — could draw buyers who look through near-term technical weakness, particularly if a positive catalyst resets market sentiment before the trend formally reverses.
Operating margins of 60% and a Rule of 40 score of 63 — well above the 40 threshold — place this business in a top-tier position relative to its peers on profitability, signaling durable earnings power and above-average earnings quality.
→StableQuality breakdown
- Expectation
- Operating margin holds above 50% and the Rule of 40 score remains above 40 over the next four quarters, confirming the margin advantage is structural.
CounterThe moderate leverage at 1.1 times equity and the current negative momentum suggest the market may be pricing in a coming margin compression that the trailing figures do not yet show, limiting confidence that the current profitability level is stable.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Hercules Capital offers a forward P/E of 7.8x, a PEG of 0.70, and analysts implying roughly 25% upside — set against operating margins of 60% and a Rule of 40 score of 63 — but a confirmed technical downtrend with a declining 200-day moving average and negative volume accumulation argues for holding rather than adding until the technical picture improves.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.2 |
| ROA | 4.4 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 0.5 |
| FCF quality | 5.6 |
| Moat | 6.9 |
| Rule of 40 | 9.5 |
| Piotroski F | 4.4 |
- ▸Strong margins: 60%
- ▸Earnings quality warning: 75% FCF/NI
- ▸Rule of 40: 63 (elite)
Growth
5.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 7.1 |
| EPS growth | 4.2 |
Momentum
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.8 |
| MACD | 7.7 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 1.8 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.9%/30d — confirmed downtrend
Sentiment
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.8 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 21%
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
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.6 |
| quality rank | 7.8 |
| growth rank | 8.4 |
- ▸Best-in-class margins
- ▸Industry growth leader
Technical
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.3 |
| support resistance | 1.8 |
| 52w position | 7.7 |
Risk (lower is worse)
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.9 |
| days to cover | 3.1 |
| volatility | 7.9 |
| put call | 8.7 |
| implied vol | 5.6 |
| beta | 8.6 |
| debt equity | 4.7 |
Catalyst
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.3 |
| dividend safety | 5.2 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 1178.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.9>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:1.0<1.5@spot
Warning (2)
- DEATH_CROSS:momentum=5.9>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.99
Upside
+5.5%
Downside
5.6%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 62
EdgeCatalyst-Driven — Earnings in 27d with 3/4 beat streak
SuitabilityAggressive — MCap $3.0B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:1.0<1.5@spot) reinforce the read. Current asymmetry R:R is 0.99 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.6, Quality at 6.7, and Risk (lower is worse) at 6.5; the weakest are Technical at 3.3, Catalyst at 5.0, and Insider at 5.0. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.99 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Attractive Valuation Analyst Upside
Trip ifForward P/E expands above 12x as earnings estimates are revised downward, eliminating the valuation discount.
- P2Best In Class Margins Quality
Trip ifOperating margin compresses below 50% for 2 consecutive quarters.
- P3Consistent Earnings Delivery
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P4Confirmed Technical Downtrend Headwind
Trip ifPrice reclaims and holds above the 200-day moving average for 4 consecutive weeks while OBV turns upward, confirming the downtrend has reversed.