Value
7.5/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 6.8 |
| P/S | 9.8 |
| EV/EBITDA | 6.4 |
| Fwd P/E | 8.9 |
| PEG | 5.9 |
- ▸Forward P/E: 12.2x
- ▸PEG: 1.27
- ▸Attractively valued
IIIN · Why this verdict
Why Insteel Industries (IIIN) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score4.9/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Insteel Industries is a small-cap steel wire products maker with attractive valuation (forward P/E 12.2x) and a Piotroski 7/9, but a confirmed downtrend with a death cross and two recent earnings misses keep the setup unfavorable.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock is attractively valued at a forward P/E of 12.2x, with 10.5% upside to the $31.45 analyst target against 7.5% downside. Valuation breakdown | Price converges toward the $31.45 analyst target as earnings stabilize. | ↓Deteriorating |
| CounterReward-to-risk of 1.4 is thin for a small cap in a confirmed downtrend, and the target may be cut if earnings keep missing. | ||
Financial health is solid, with a Piotroski F-Score of 7/9, but earnings quality shows a warning at 65% FCF/NI. Quality breakdown | FCF-to-net-income recovers above 80% while Piotroski F-Score stays at 7 or higher. | ↑Improving |
| CounterMargins are thin (operating margin 2.0/10) and gross margin scores 0.0/10, so profitability is fragile if steel spreads tighten. | ||
Earnings have disappointed recently: two consecutive misses and 2 beats in 4 quarters, with an average surprise of -12.4%. Bear case | The company beats estimates in the next two quarters and revenue holds above the $173.9M estimate. | ↑Improving |
| CounterRevenue has risen strongly to $209.3M in the latest quarter, so misses may reflect cost timing rather than weakening demand. | ||
The chart is in a confirmed downtrend: death cross, price below all moving averages, RSI 39 and bearish MACD. Momentum breakdown | Price reclaims the 200-day average and momentum rises above 4.5 within 12 months. | ↓Deteriorating |
| CounterRising on-balance volume shows accumulation, suggesting the sell-off may be near exhaustion. | ||
The company is a dividend aristocrat with dividend safety at 8.5/10 and a strong balance sheet (current ratio 9.3/10). Catalyst breakdown | The dividend is maintained or raised over 12 months. | ↓Deteriorating |
| CounterThe yield is only 0.4%, so income provides little cushion against price declines. | ||
The stock is attractively valued at a forward P/E of 12.2x, with 10.5% upside to the $31.45 analyst target against 7.5% downside.
↓DeterioratingValuation breakdown
- Expectation
- Price converges toward the $31.45 analyst target as earnings stabilize.
CounterReward-to-risk of 1.4 is thin for a small cap in a confirmed downtrend, and the target may be cut if earnings keep missing.
Financial health is solid, with a Piotroski F-Score of 7/9, but earnings quality shows a warning at 65% FCF/NI.
↑ImprovingQuality breakdown
- Expectation
- FCF-to-net-income recovers above 80% while Piotroski F-Score stays at 7 or higher.
CounterMargins are thin (operating margin 2.0/10) and gross margin scores 0.0/10, so profitability is fragile if steel spreads tighten.
Earnings have disappointed recently: two consecutive misses and 2 beats in 4 quarters, with an average surprise of -12.4%.
↑ImprovingBear case
- Expectation
- The company beats estimates in the next two quarters and revenue holds above the $173.9M estimate.
CounterRevenue has risen strongly to $209.3M in the latest quarter, so misses may reflect cost timing rather than weakening demand.
The chart is in a confirmed downtrend: death cross, price below all moving averages, RSI 39 and bearish MACD.
↓DeterioratingMomentum breakdown
- Expectation
- Price reclaims the 200-day average and momentum rises above 4.5 within 12 months.
CounterRising on-balance volume shows accumulation, suggesting the sell-off may be near exhaustion.
The company is a dividend aristocrat with dividend safety at 8.5/10 and a strong balance sheet (current ratio 9.3/10).
↓DeterioratingCatalyst breakdown
- Expectation
- The dividend is maintained or raised over 12 months.
CounterThe yield is only 0.4%, so income provides little cushion against price declines.
Per-dimension breakdown
Quality
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.6 |
| ROA | 3.4 |
| Gross margin | 0.0 |
| Op margin | 2.0 |
| Net margin | 2.0 |
| Current ratio | 9.3 |
| FCF quality | 5.0 |
| Moat | 6.4 |
| Piotroski F | 7.8 |
- ▸Earnings quality warning: 65% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
3.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 7.0 |
| EPS growth | 0.0 |
Momentum
2.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 2.6 |
| OBV | 1.6 |
| MA position | 1.0 |
| Volume | 1.7 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -1.4%/30d — confirmed downtrend
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 8.5 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 28%
Insider
4.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 3.9 |
| notable moves | 3.0 |
- ▸Insider selling (low materiality) — $49,704 (0.009% of mkt cap)
Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.0 |
| quality rank | 2.1 |
| growth rank | 4.4 |
Technical
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.6 |
| support resistance | 6.0 |
| 52w position | 5.0 |
| gap | 5.0 |
Risk (lower is worse)
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.3 |
| days to cover | 4.3 |
| volatility | 3.1 |
| put call | 10.0 |
| implied vol | 2.2 |
| beta | 9.8 |
| debt equity | 10.0 |
- ▸High IV: 67%
Catalyst
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 8.5 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend aristocrat: 0.4% yield
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:72d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (4)
- MOMENTUM:2.1<4.5
- ASYMMETRY:1.2<1.5@spot
- DEATH_CROSS:HARD_BLOCK
- 8K_SERIOUS:2.05
Warning (0)
none
Reward-to-Risk
1.21
Upside
+9.0%
Downside
7.5%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 38, MACD bearish
EdgeInst Constrain — Small cap ($0.6B) below institutional reach
SuitabilityAggressive — MCap $0.6B<$5B
Investment implication
The F-path SELL output reflects an overall score of 3.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.1<4.5, ASYMMETRY:1.2<1.5@spot, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 1.21 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.5, Risk (lower is worse) at 6.7, and Sentiment at 6.1; the weakest are Momentum at 2.1, Growth at 3.5, and Insider at 4.0. The V9 engine flagged 4 failed gates, producing an asymmetric reward-to-risk of 1.21 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 rises above 16x from current 12.2x.
- P2Solid Financial Health Weak Cash
Trip ifPiotroski F-Score falls below 5 from current 7 of 9.
- P3Consecutive Earnings Misses
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P4Confirmed Downtrend Death Cross
Trip ifPrice falls below the $26.51 stop-loss level.
- P5Dividend Aristocrat Balance Sheet
Trip ifDividend safety score falls below 5 from current 8.5.