Value
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 9.3 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 9.5 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 8.4x
- ▸PEG: 0.01
LZ · Why this verdict
Why LegalZoom.com (LZ) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business converts net income into free cash flow at a rate far exceeding 100%, and the competitive position has been assessed as wide — a combination that supports franchise durability even during revenue softness. Quality breakdown | Free cash flow conversion remains above 200% of net income over the next four quarters, and the moat score holds above 7.0. | →Stable |
| CounterA wide moat and high cash conversion are balance-sheet attributes; if consecutive earnings misses persist, the market will discount intrinsic quality and the stock can remain depressed for an extended period. | ||
At a forward price-to-earnings of 7.2x and a near-zero PEG ratio, the stock screens among the least expensive in its peer set, offering a 23.6% gap to the consensus analyst price target. Valuation breakdown | The forward multiple expands above 10x within 12 months as earnings stabilize, closing at least half the gap to the analyst target. | →Stable |
| CounterLow multiples can persist or compress further when earnings estimates are in a downward revision cycle; the two recent misses suggest consensus forecasts may still be too optimistic. | ||
The company has missed consensus estimates in two of the last four quarters, with an average earnings surprise of negative five percent, signaling that management is not guiding the street accurately or that execution is softening. Earnings | The earnings surprise turns positive — at or above zero percent — in each of the next two quarterly reports. | →Stable |
| CounterA negative catalyst score at near the floor of its range suggests that analyst expectations may eventually reset low enough for the company to clear the bar, providing an asymmetric recovery once beats resume. | ||
The stock trades below its 200-day moving average, which is declining at roughly six percent per month, and a death-cross pattern has formed — all consistent with a confirmed downtrend that keeps near-term buyers at bay. Warnings | The 200-day moving average slope turns flat-to-positive and the stock reclaims and holds that level for at least three consecutive weeks. | →Stable |
| CounterVolume accumulation (rising on-balance volume) diverges from the price trend, which can precede a technical reversal; if buyers are quietly stepping in, the downtrend may be closer to exhaustion than the price alone suggests. | ||
The business converts net income into free cash flow at a rate far exceeding 100%, and the competitive position has been assessed as wide — a combination that supports franchise durability even during revenue softness.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 200% of net income over the next four quarters, and the moat score holds above 7.0.
CounterA wide moat and high cash conversion are balance-sheet attributes; if consecutive earnings misses persist, the market will discount intrinsic quality and the stock can remain depressed for an extended period.
At a forward price-to-earnings of 7.2x and a near-zero PEG ratio, the stock screens among the least expensive in its peer set, offering a 23.6% gap to the consensus analyst price target.
→StableValuation breakdown
- Expectation
- The forward multiple expands above 10x within 12 months as earnings stabilize, closing at least half the gap to the analyst target.
CounterLow multiples can persist or compress further when earnings estimates are in a downward revision cycle; the two recent misses suggest consensus forecasts may still be too optimistic.
The company has missed consensus estimates in two of the last four quarters, with an average earnings surprise of negative five percent, signaling that management is not guiding the street accurately or that execution is softening.
→StableEarnings
- Expectation
- The earnings surprise turns positive — at or above zero percent — in each of the next two quarterly reports.
CounterA negative catalyst score at near the floor of its range suggests that analyst expectations may eventually reset low enough for the company to clear the bar, providing an asymmetric recovery once beats resume.
The stock trades below its 200-day moving average, which is declining at roughly six percent per month, and a death-cross pattern has formed — all consistent with a confirmed downtrend that keeps near-term buyers at bay.
→StableWarnings
- Expectation
- The 200-day moving average slope turns flat-to-positive and the stock reclaims and holds that level for at least three consecutive weeks.
CounterVolume accumulation (rising on-balance volume) diverges from the price trend, which can precede a technical reversal; if buyers are quietly stepping in, the downtrend may be closer to exhaustion than the price alone suggests.
TrendMatrix Research · core thesis
Engine thesis — one sentence
LegalZoom carries a wide economic moat and exceptional cash generation, but a confirmed price downtrend, consecutive earnings misses, and heavy short-seller interest make this a story where the underlying business quality has not yet translated into positive price momentum or earnings execution.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.3 |
| ROA | 1.6 |
| Gross margin | 9.2 |
| Op margin | 0.8 |
| Net margin | 0.7 |
| Current ratio | 2.8 |
| FCF quality | 10.0 |
| Moat | 7.9 |
| Rule of 40 | 5.5 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 1000% FCF/NI
- ▸Wide economic moat
- ▸Strong Piotroski F-Score: 8/9
Growth
5.7/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 5.7 |
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 2.8 |
| MACD | 9.6 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 4.3 |
- ▸Overbought bear rally (RSI 73)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -7.6%/30d — confirmed downtrend
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.6 |
| Price target | 6.9 |
| erm sentiment | 6.1 |
- ▸Light analyst coverage (6.0) — signal dampened
Insider
5.2/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 6.5 |
| insider conviction | 4.0 |
| holder change | 5.2 |
- ▸Modest insider buying — $545,883 (0.046% of mkt cap)
Peer rank
3.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.7 |
| quality rank | 3.6 |
| growth rank | 7.9 |
Technical
2.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 1.0 |
| 52w position | 1.4 |
| gap | 6.0 |
Risk (lower is worse)
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.9 |
| days to cover | 4.2 |
| volatility | 0.5 |
| put call | 2.5 |
| implied vol | 0.0 |
| beta | 5.8 |
| debt equity | 9.6 |
- ▸Elevated put/call: 1.62
- ▸High IV: 90%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
- ▸Earnings concerns: 0B/2M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.1=NEGATIVE
Warning (1)
- DEATH_CROSS:momentum=6.5>=5.0 recovering
Reward-to-Risk
-0.08
Upside
-1.1%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 73
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -43% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 5.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 6.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.1=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.08 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 6.6, Momentum at 6.5, and Value at 5.9; the weakest are Technical at 2.1, Catalyst at 2.9, and Risk (lower is worse) at 3.6. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.08 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Cash Generation Moat
Trip ifFree cash flow as a percentage of net income falls below 150% for 2 consecutive quarters.
- P2Cheap Forward Valuation
Trip ifForward P/E expands above 15x without a corresponding earnings revision upward, indicating multiple expansion without fundamental support.
- P3Consecutive Earnings Misses
Trip ifEPS surprise stays below 0% for 2 more consecutive quarters (total 4 of last 6 as misses).
- P4Confirmed Price Downtrend
Trip ifThe 200-day moving average slope steepens beyond -8% per 30-day period, accelerating the downtrend.