Value
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.4 |
| P/S | 10.0 |
| EV/EBITDA | 7.7 |
| Fwd P/E | 7.1 |
| PEG | 6.1 |
| Analyst target | 7.5 |
- ▸Forward P/E: 17.6x
- ▸PEG: 1.22
- ▸Attractively valued
KE · Why this verdict
Why Kimball Electronics (KE) 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 score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Kimball Electronics trades at a deep value multiple with strong cash conversion and a recovering technical setup, but a below-floor quality score and a failed asymmetry gate keep the position sizing at avoid despite a string of earnings beats.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company converts 206% of net income into free cash flow, with a strong Piotroski F-Score of 7/9, indicating high-quality earnings despite weak margins. Quality breakdown | FCF/NI conversion should remain above 150% and Piotroski F-Score should stay at 7 or higher over the next 12 months. | →Stable |
| CounterStrong FCF conversion can mask underlying margin erosion; the moat score of 3.9 (no competitive moat) signals the cash quality may not persist as competitive pressure mounts. | ||
The stock trades at a forward P/E of 18.7x with a PEG of 1.30, and the value composite score of 6.8 reflects a discount versus quality/growth peers. Valuation breakdown | Value score should hold at or above 6.5 and forward P/E should stay below 20x over the next 12 months if the discount thesis holds. | →Stable |
| CounterCheap valuation may be a value trap reflecting genuinely weak underlying quality (moat score of 3.9) rather than mispricing. | ||
The overall quality score of 3.9 sits below the engine's 4.0 floor, triggering an action note to exit the position despite recent earnings beats. Warnings | Quality score should recover to at least 4.0 over the next 12 months for the position to be re-considered viable. | ↑Improving |
| CounterThe quality floor breach may be transient, driven by weak margins in a single segment, and could reverse quickly given the strong Piotroski score and cash conversion underlying the same quality composite. | ||
The company has beaten earnings estimates in 3 of the last 4 quarters with an average surprise of 43.4%, most recently missing narrowly by 1.49%. Earnings | Beat rate should stay at 3 of 4 or better and average surprise should remain positive over the next four reported quarters. | ↑Improving |
| CounterThe most recent quarter was a miss, and a declining revenue trend of -6% suggests the beat streak may reflect cost-cutting rather than durable demand strength. | ||
The V9 expert panel flagged a failed asymmetry gate at 1.3 versus the 1.5 threshold, driving a position sizing recommendation of avoid despite passing momentum and insider gates. Engine gate (failed) | The asymmetry ratio should rise to 1.5 or above over the next 12 months for position sizing to move off avoid. | →Stable |
| CounterA momentum score of 5.5 that just cleared its own 5.5 threshold and a death-cross recovery setup suggest the technical picture could improve enough to lift the asymmetry ratio above the gate quickly. | ||
The company converts 206% of net income into free cash flow, with a strong Piotroski F-Score of 7/9, indicating high-quality earnings despite weak margins.
→StableQuality breakdown
- Expectation
- FCF/NI conversion should remain above 150% and Piotroski F-Score should stay at 7 or higher over the next 12 months.
CounterStrong FCF conversion can mask underlying margin erosion; the moat score of 3.9 (no competitive moat) signals the cash quality may not persist as competitive pressure mounts.
The stock trades at a forward P/E of 18.7x with a PEG of 1.30, and the value composite score of 6.8 reflects a discount versus quality/growth peers.
→StableValuation breakdown
- Expectation
- Value score should hold at or above 6.5 and forward P/E should stay below 20x over the next 12 months if the discount thesis holds.
CounterCheap valuation may be a value trap reflecting genuinely weak underlying quality (moat score of 3.9) rather than mispricing.
The overall quality score of 3.9 sits below the engine's 4.0 floor, triggering an action note to exit the position despite recent earnings beats.
↑ImprovingWarnings
- Expectation
- Quality score should recover to at least 4.0 over the next 12 months for the position to be re-considered viable.
CounterThe quality floor breach may be transient, driven by weak margins in a single segment, and could reverse quickly given the strong Piotroski score and cash conversion underlying the same quality composite.
The company has beaten earnings estimates in 3 of the last 4 quarters with an average surprise of 43.4%, most recently missing narrowly by 1.49%.
↑ImprovingEarnings
- Expectation
- Beat rate should stay at 3 of 4 or better and average surprise should remain positive over the next four reported quarters.
CounterThe most recent quarter was a miss, and a declining revenue trend of -6% suggests the beat streak may reflect cost-cutting rather than durable demand strength.
The V9 expert panel flagged a failed asymmetry gate at 1.3 versus the 1.5 threshold, driving a position sizing recommendation of avoid despite passing momentum and insider gates.
→StableEngine gate (failed)
- Expectation
- The asymmetry ratio should rise to 1.5 or above over the next 12 months for position sizing to move off avoid.
CounterA momentum score of 5.5 that just cleared its own 5.5 threshold and a death-cross recovery setup suggest the technical picture could improve enough to lift the asymmetry ratio above the gate quickly.
Per-dimension breakdown
Quality
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.5 |
| ROA | 2.4 |
| Gross margin | 0.0 |
| Op margin | 1.4 |
| Net margin | 0.9 |
| Current ratio | 7.3 |
| FCF quality | 10.0 |
| Moat | 3.9 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 206% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
5.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.1 |
| EPS growth | 10.0 |
- ▸Declining revenue: -6%
Momentum
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 3.9 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -2.8%/30d — confirmed downtrend
Sentiment
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.1 |
| Price target | 9.1 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (4.0) — signal dampened
- ▸Analyst upside: 38%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.1 |
| quality rank | 3.1 |
| growth rank | 0.4 |
Technical
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.8 |
| support resistance | 5.2 |
| 52w position | 5.0 |
| gap | 6.0 |
Risk (lower is worse)
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.7 |
| days to cover | 2.2 |
| volatility | 2.1 |
| put call | 7.8 |
| implied vol | 0.6 |
| beta | 6.1 |
| debt equity | 8.8 |
- ▸High IV: 77%
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (7)
- ASYMMETRY:2.1>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:20d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.7<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
2.06
Upside
+17.1%
Downside
8.3%
Sizing output
AVOID
SetupRange Bound — RSI 48 mid-range, Bollinger mid-band
EdgeCatalyst-Driven — Earnings in 20d with 3/4 beat streak
SuitabilityAggressive — MCap $0.6B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 2.7<4.5 outcome against Insider at 7.3 and asymmetric R:R of 2.06.
The strongest dimensions are Insider at 7.3, Value at 7.2, and Sentiment at 7.2; the weakest are Momentum at 2.7, Quality at 3.9, and Peer rank at 4.6. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 2.06 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deep Value Multiple
Trip ifValue composite score falls below 5.0 from the current 6.8.
- P2Strong Cash Conversion
Trip ifFCF-to-net-income conversion drops below 100% from the current 206%.
- P3Quality Below Floor Risk
Trip ifQuality score falls below 3.5, further below the 4.0 floor, for 2 consecutive quarters.
- P4Earnings Beat Momentum
Trip ifEarnings surprise stays below 0% for 2 consecutive quarters.
- P5Failed Asymmetry Gate
Trip ifAsymmetry ratio compresses below 1.0, further from the 1.5 gate threshold.