Value
4.0/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 2.9 |
| P/S | 8.6 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.7 |
| PEG | 2.5 |
- ▸Forward P/E: 22.6x
- ▸PEG: 5.03
LQDT · Why this verdict
Why Liquidity Services (LQDT) 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 score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten earnings estimates in all four of its last reported quarters, with an average surprise near 21%, a streak the data highlights as a perfect beat streak. Bull case | Continuing to beat estimates over the next several quarters would extend this streak and reinforce execution consistency. | →Stable |
| CounterThe stock is already near its 52-week high and has reached its price target, meaning the market may have already priced in this consistent execution. | ||
The business converts earnings into cash exceptionally well, with free cash flow running at about 230% of net income, alongside a strong Piotroski F-score of 8 out of 9. Quality breakdown | The FCF-to-net-income ratio remaining well above 100% would sustain this cash-conversion strength over the next year. | →Stable |
| CounterThe data separately notes no competitive moat, which could make it harder to sustain such strong cash conversion if competitive pressure intensifies. | ||
The stock carries a rich valuation, trading at roughly 22.6x forward earnings with a PEG ratio above 5, and the data applies a leverage penalty for a debt-to-equity ratio near 6.7. Bear case | The forward P/E and PEG compressing toward more reasonable levels, or leverage declining from its current level, would ease this valuation and balance-sheet concern. | →Stable |
| CounterThe company's excellent cash conversion and consistent earnings beats could justify carrying a premium multiple and higher leverage relative to less consistent peers. | ||
The stock has reached its stated price target with about -2.5% implied upside, the engine's momentum check fails at 4.1 against a 4.5 threshold, and the asymmetry check fails at roughly -0.4. Warnings | A new, higher price target, momentum climbing back above the threshold, or a pullback restoring positive upside would be needed for the setup to turn favorable again. | →Stable |
| CounterThe stock is only just below the momentum threshold and remains above its 200-day moving average, suggesting the setup is closer to constructive than the failed gates alone imply. | ||
Insider activity skews bearish, with a net sale of roughly 219,000 shares across 40 sell transactions over the past 90 days and no offsetting buys. Insider | A shift toward net insider buying, or a marked slowdown in insider sell transactions, would indicate the bearish insider signal is easing. | →Stable |
| CounterThe sales are recorded only in share counts with no disclosed dollar value, and the engine's own insider-selling severity is rated moderate rather than severe. | ||
The company has beaten earnings estimates in all four of its last reported quarters, with an average surprise near 21%, a streak the data highlights as a perfect beat streak.
→StableBull case
- Expectation
- Continuing to beat estimates over the next several quarters would extend this streak and reinforce execution consistency.
CounterThe stock is already near its 52-week high and has reached its price target, meaning the market may have already priced in this consistent execution.
The business converts earnings into cash exceptionally well, with free cash flow running at about 230% of net income, alongside a strong Piotroski F-score of 8 out of 9.
→StableQuality breakdown
- Expectation
- The FCF-to-net-income ratio remaining well above 100% would sustain this cash-conversion strength over the next year.
CounterThe data separately notes no competitive moat, which could make it harder to sustain such strong cash conversion if competitive pressure intensifies.
The stock carries a rich valuation, trading at roughly 22.6x forward earnings with a PEG ratio above 5, and the data applies a leverage penalty for a debt-to-equity ratio near 6.7.
→StableBear case
- Expectation
- The forward P/E and PEG compressing toward more reasonable levels, or leverage declining from its current level, would ease this valuation and balance-sheet concern.
CounterThe company's excellent cash conversion and consistent earnings beats could justify carrying a premium multiple and higher leverage relative to less consistent peers.
The stock has reached its stated price target with about -2.5% implied upside, the engine's momentum check fails at 4.1 against a 4.5 threshold, and the asymmetry check fails at roughly -0.4.
→StableWarnings
- Expectation
- A new, higher price target, momentum climbing back above the threshold, or a pullback restoring positive upside would be needed for the setup to turn favorable again.
CounterThe stock is only just below the momentum threshold and remains above its 200-day moving average, suggesting the setup is closer to constructive than the failed gates alone imply.
Insider activity skews bearish, with a net sale of roughly 219,000 shares across 40 sell transactions over the past 90 days and no offsetting buys.
→StableInsider
- Expectation
- A shift toward net insider buying, or a marked slowdown in insider sell transactions, would indicate the bearish insider signal is easing.
CounterThe sales are recorded only in share counts with no disclosed dollar value, and the engine's own insider-selling severity is rated moderate rather than severe.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Liquidity Services has strung together a perfect four-quarter earnings beat streak with excellent cash conversion, but that sits alongside a rich valuation and elevated leverage, a failed momentum and asymmetry gate near a 52-week high, and bearish insider selling.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.8 |
| ROA | 4.5 |
| Gross margin | 5.3 |
| Op margin | 3.2 |
| Net margin | 3.2 |
| Current ratio | 5.5 |
| FCF quality | 10.0 |
| Moat | 6.5 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 230% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
3.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.4 |
| EPS growth | 2.9 |
Momentum
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 1.5 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 1.9 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.2 |
| erm sentiment | 5.0 |
Insider
3.2/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 2.0 |
| insider conviction | 2.0 |
| holder change | 5.5 |
- ▸Heavy insider selling — $7,943,757 (0.664% of mkt cap)
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.4 |
| quality rank | 5.2 |
| growth rank | 1.4 |
Technical
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.2 |
| support resistance | 5.3 |
| 52w position | 9.0 |
Risk (lower is worse)
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.0 |
| days to cover | 5.2 |
| volatility | 5.0 |
| implied vol | 6.3 |
| beta | 6.7 |
| debt equity | 9.7 |
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:30d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.2<4.5
- ASYMMETRY:-0.3=NEGATIVE
- INSIDER:0.66%=EXTREME
Warning (0)
none
Reward-to-Risk
-0.28
Upside
-1.7%
Downside
6.0%
Sizing output
AVOID
SetupRange Bound — RSI 51 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $1.2B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.2<4.5, ASYMMETRY:-0.3=NEGATIVE, INSIDER:0.66%=EXTREME) reinforce the read. Current asymmetry R:R is -0.28 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 7.5, Risk (lower is worse) at 6.8, and Technical at 6.5; the weakest are Growth at 3.1, Insider at 3.2, and Momentum at 3.2. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of -0.28 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Streak
Trip ifEPS surprise falls below 0% (a miss) for 2 consecutive quarters.
- P2Excellent Cash Conversion
Trip ifThe FCF-to-net-income ratio falls below 100% from the current 230%.
- P3Rich Valuation And Leverage
Trip ifDebt-to-equity falls below 3.0x from the current 6.7x.
- P4Negative Asymmetry Momentum Fail
Trip ifThe risk/reward asymmetry ratio rises above 0 (turns positive) from the current -0.43.
- P5Bearish Insider Selling
Trip ifNet insider transactions turn positive (net buying exceeds 0 shares) over a 90-day period.