Value
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.7 |
| P/S | 10.0 |
| EV/EBITDA | 10.0 |
| Fwd P/E | 6.6 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 19.3x
- ▸PEG: 0.45
- ▸Attractively valued
KARO · Why this verdict
Why Karooooo (KARO) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.7/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business earns a 31% return on equity with net margins of 18%, a wide economic moat, and a Piotroski financial health score of 8 out of 9 — a combination that reflects durable competitive positioning and disciplined capital allocation that compounds returns over time. Quality breakdown | Return on equity stays above 25% and net margins remain above 15% over the next four reporting periods. | →Stable |
| CounterThe free cash flow quality score, while positive, is not at the top of the peer group; if margins compress or capital intensity rises, the quality narrative could weaken faster than headline ROE suggests. | ||
At a forward price-to-earnings multiple of 17.3 times and a PEG ratio of 0.42, the stock screens attractively relative to its growth rate, and analysts are pricing in 25% upside to their consensus target — a meaningful premium to the current price. Valuation breakdown | Analyst consensus target holds above $53.54 and earnings estimates remain stable or rise over the next two quarters. | →Stable |
| CounterAnalyst coverage is light, which dampens signal reliability; the 25% upside estimate rests on a small number of forecasters and could compress materially if the recent earnings miss triggers downward revisions to the growth outlook. | ||
Three of the prior four quarters delivered positive earnings surprises; reading the record recent-to-oldest, the most recent quarter was a 17% miss, but the three quarters before that each beat consensus by 5-10%, demonstrating a reasonably consistent track record of meeting or exceeding expectations prior to the recent stumble. Earnings | EPS surprise turns positive in each of the next 2 quarterly reports, re-establishing the beat pattern. | →Stable |
| CounterThe most recent quarter missed by 17%, which is a material break from the prior streak; if this reflects a structural growth deceleration rather than a one-quarter blip, the prior beat record loses its forward predictive value. | ||
A golden cross is in place, the stock is trading above all major moving averages, on-balance volume is rising, and MACD is bullish — a configuration that signals accumulation and supports a continued constructive price trend. Momentum breakdown | On-balance volume continues to rise and price stays above the 200-day moving average for the next 60 days. | →Stable |
| CounterRSI at 54 is mid-range and volume on the advance has been modest; momentum could fade quickly if the broad market rotates away from smaller technology names or if the recent earnings miss weighs on sentiment. | ||
The business earns a 31% return on equity with net margins of 18%, a wide economic moat, and a Piotroski financial health score of 8 out of 9 — a combination that reflects durable competitive positioning and disciplined capital allocation that compounds returns over time.
→StableQuality breakdown
- Expectation
- Return on equity stays above 25% and net margins remain above 15% over the next four reporting periods.
CounterThe free cash flow quality score, while positive, is not at the top of the peer group; if margins compress or capital intensity rises, the quality narrative could weaken faster than headline ROE suggests.
At a forward price-to-earnings multiple of 17.3 times and a PEG ratio of 0.42, the stock screens attractively relative to its growth rate, and analysts are pricing in 25% upside to their consensus target — a meaningful premium to the current price.
→StableValuation breakdown
- Expectation
- Analyst consensus target holds above $53.54 and earnings estimates remain stable or rise over the next two quarters.
CounterAnalyst coverage is light, which dampens signal reliability; the 25% upside estimate rests on a small number of forecasters and could compress materially if the recent earnings miss triggers downward revisions to the growth outlook.
Three of the prior four quarters delivered positive earnings surprises; reading the record recent-to-oldest, the most recent quarter was a 17% miss, but the three quarters before that each beat consensus by 5-10%, demonstrating a reasonably consistent track record of meeting or exceeding expectations prior to the recent stumble.
→StableEarnings
- Expectation
- EPS surprise turns positive in each of the next 2 quarterly reports, re-establishing the beat pattern.
CounterThe most recent quarter missed by 17%, which is a material break from the prior streak; if this reflects a structural growth deceleration rather than a one-quarter blip, the prior beat record loses its forward predictive value.
A golden cross is in place, the stock is trading above all major moving averages, on-balance volume is rising, and MACD is bullish — a configuration that signals accumulation and supports a continued constructive price trend.
→StableMomentum breakdown
- Expectation
- On-balance volume continues to rise and price stays above the 200-day moving average for the next 60 days.
CounterRSI at 54 is mid-range and volume on the advance has been modest; momentum could fade quickly if the broad market rotates away from smaller technology names or if the recent earnings miss weighs on sentiment.
TrendMatrix Research · core thesis
Engine thesis — one sentence
A high-quality, attractively valued technology franchise with a wide economic moat, strong margins, and constructive price momentum; the near-term constraint is that the current price sits above the optimal entry target of $44.75, making patience for a pullback the logical posture before committing capital.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 9.6 |
| Op margin | 9.2 |
| Net margin | 9.1 |
| Current ratio | 4.2 |
| FCF quality | 6.2 |
| Moat | 8.2 |
| Rule of 40 | 5.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 31%
- ▸Strong margins: 18%
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
8.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 7.2 |
| EPS growth | 10.0 |
Momentum
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.1 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 7.5 |
| Volume | 7.7 |
- ▸Overbought (RSI 77)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat/negative + RSI 77 (late-cycle distribution risk)
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.3 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.2 |
| quality rank | 7.7 |
| growth rank | 6.2 |
- ▸Superior ROE vs peers
Technical
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.4 |
| 52w position | 8.3 |
Risk (lower is worse)
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.3 |
| days to cover | 9.5 |
| volatility | 3.0 |
| beta | 7.7 |
| debt equity | 8.6 |
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 | 5.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 510.0%
How the verdict was assembled
Engine trigger
Downgraded from BUY WAIT — price $56.32 has reached target $55.63. No upside to wait for.
Engine technical detail
verdict_path:
L4:PATH_C2_GARP_WAIT|SANITY:WAIT+price>=TPPassed (7)
- MOMENTUM:7.9>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:16d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.35
Upside
-5.3%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 16d with 3/4 beat streak
SuitabilityAggressive — MCap $1.7B<$5B
Investment implication
The C-path quality+growth combination triggered the HOLD_IF_HOLDING verdict: quality 8.1 and growth 8.6 both clear their thresholds, with asymmetric R:R of -0.35 supporting the read.
The strongest dimensions are Growth at 8.6, Quality at 8.1, and Momentum at 7.9; the weakest are Technical at 2.9, Catalyst at 5.0, and Insider at 5.0. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.35 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 Compounding Franchise
Trip ifReturn on equity falls below 20% for 2 consecutive reporting periods.
- P2Earnings Beat Record
Trip ifEPS surprise falls below 0% for 2 consecutive quarterly reports.
- P3Attractive Valuation
Trip ifForward P/E multiple expands above 25x with no corresponding upward revision to consensus earnings estimates.
- P4Constructive Price Momentum
Trip ifOn-balance volume turns negative and price falls below the 200-day moving average for 4 consecutive weeks.