Value
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.8 |
| P/S | 6.2 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.6 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 26.9x
- ▸PEG: 0.41
MASI · Why this verdict
Why Masimo (MASI) 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 score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company converts earnings into cash at a rate approximately 430% of net income, far exceeding what the income statement suggests and reflecting durable cash generation characteristics that underpin the quality of the franchise. Quality breakdown | Free cash flow relative to net income remains above 200% over the next 12 months, confirming that the cash generation advantage is structural rather than a one-period timing benefit. | →Stable |
| CounterA free cash flow-to-net income ratio this high can reflect working capital timing or deferred obligations; if those unwind, the ratio may revert sharply and strip away what appeared to be exceptional cash quality. | ||
The business carries a wide economic moat designation alongside a perfect Piotroski F-Score of 9 out of 9, signaling broad-based financial strength across profitability, leverage, and efficiency dimensions simultaneously. Quality breakdown | Piotroski F-Score remains at 8 or above for the next 4 consecutive reporting periods, confirming that the quality profile is durable rather than peak-cycle. | →Stable |
| CounterThe business depends on sole or limited-source suppliers for critical components, an acknowledged concentration risk that could erode the moat advantage if a key supplier is disrupted or gains negotiating leverage. | ||
After two consecutive beats, the two most recent quarters both missed estimates — by 9.5% and 4.7% respectively — suggesting that execution may be slipping against expectations that have not yet been reset to a lower base. Earnings | This pillar is falsified if the company beats estimates by more than 5% for 2 consecutive quarters, re-establishing a pattern of consistent out-delivery. | →Stable |
| CounterBoth misses were modest in absolute terms and the two prior quarters delivered solid beats; a single additional beat would re-establish the long-run delivery pattern and likely shift sentiment quickly. | ||
The stock is currently trading above its near-term price target, leaving no upside buffer and producing a risk/reward ratio of roughly -5-to-1 — a geometry that strongly disfavors new commitment and makes existing holders exposed to a correction back toward the target. Price targets | Either the stock retreats more than 10% from current levels to create a positive upside buffer, or analysts raise their price targets materially, before the setup becomes actionable. | →Stable |
| CounterHigh-quality franchises with wide moats and strong cash generation can sustain valuations well above near-term technical price targets for extended periods when institutional demand is steady, as evidenced by ongoing institutional accumulation. | ||
The company converts earnings into cash at a rate approximately 430% of net income, far exceeding what the income statement suggests and reflecting durable cash generation characteristics that underpin the quality of the franchise.
→StableQuality breakdown
- Expectation
- Free cash flow relative to net income remains above 200% over the next 12 months, confirming that the cash generation advantage is structural rather than a one-period timing benefit.
CounterA free cash flow-to-net income ratio this high can reflect working capital timing or deferred obligations; if those unwind, the ratio may revert sharply and strip away what appeared to be exceptional cash quality.
The business carries a wide economic moat designation alongside a perfect Piotroski F-Score of 9 out of 9, signaling broad-based financial strength across profitability, leverage, and efficiency dimensions simultaneously.
→StableQuality breakdown
- Expectation
- Piotroski F-Score remains at 8 or above for the next 4 consecutive reporting periods, confirming that the quality profile is durable rather than peak-cycle.
CounterThe business depends on sole or limited-source suppliers for critical components, an acknowledged concentration risk that could erode the moat advantage if a key supplier is disrupted or gains negotiating leverage.
After two consecutive beats, the two most recent quarters both missed estimates — by 9.5% and 4.7% respectively — suggesting that execution may be slipping against expectations that have not yet been reset to a lower base.
→StableEarnings
- Expectation
- This pillar is falsified if the company beats estimates by more than 5% for 2 consecutive quarters, re-establishing a pattern of consistent out-delivery.
CounterBoth misses were modest in absolute terms and the two prior quarters delivered solid beats; a single additional beat would re-establish the long-run delivery pattern and likely shift sentiment quickly.
The stock is currently trading above its near-term price target, leaving no upside buffer and producing a risk/reward ratio of roughly -5-to-1 — a geometry that strongly disfavors new commitment and makes existing holders exposed to a correction back toward the target.
→StablePrice targets
- Expectation
- Either the stock retreats more than 10% from current levels to create a positive upside buffer, or analysts raise their price targets materially, before the setup becomes actionable.
CounterHigh-quality franchises with wide moats and strong cash generation can sustain valuations well above near-term technical price targets for extended periods when institutional demand is steady, as evidenced by ongoing institutional accumulation.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Masimo Corporation is a genuinely high-quality medical device franchise with a perfect Piotroski F-Score of 9/9, a wide economic moat, and exceptional cash conversion at roughly 430% of net income, but the stock is trading above its near-term price target and the two most recent quarters both missed earnings estimates — a combination that warrants holding rather than adding at current prices.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.3 |
| ROA | 6.8 |
| Gross margin | 8.3 |
| Op margin | 9.4 |
| Net margin | 2.4 |
| Current ratio | 9.0 |
| FCF quality | 10.0 |
| Moat | 7.6 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 430% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
- ▸Strong Piotroski F-Score: 9/9
Growth
7.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.6 |
| EPS growth | 10.0 |
Momentum
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.4 |
| MACD | 7.8 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 10.0 |
| vol acceleration | 5.5 |
- ▸Overbought (RSI 72)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.0 |
Insider
5.0/10data confidence 50%Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.2 |
| quality rank | 7.3 |
| growth rank | 4.5 |
- ▸Superior ROE vs peers
Technical
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.2 |
| 52w position | 10.0 |
Risk (lower is worse)
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.3 |
| days to cover | 6.8 |
| volatility | 10.0 |
| beta | 6.6 |
| debt equity | 7.3 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.0/10data confidence 50%How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (7)
- MOMENTUM:7.8>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.0=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.00
Upside
-15.0%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:7.8>=5.5. Top dim: Quality at 8.0; weakest: Technical at 3.4. No conviction either direction.
The strongest dimensions are Quality at 8.0, Momentum at 7.8, and Risk (lower is worse) at 7.4; the weakest are Technical at 3.4, Peer rank at 3.5, and Value at 4.7. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -1.00 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 Conversion
Trip ifFree cash flow relative to net income falls below 100% for 2 consecutive quarters, indicating a structural deterioration in cash conversion.
- P2Wide Moat Quality Franchise
Trip ifPiotroski F-Score falls below 7 for 2 consecutive reporting periods.
- P3Recent Earnings Execution Slip
Trip ifEPS beats analyst estimates by more than 5% for 2 consecutive quarters, re-establishing a sustained out-delivery pattern.
- P4Stock Above Near Term Target
Trip ifStock price falls more than 10% below current levels (below approximately $162), restoring positive upside to the near-term price target.