Value
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.2 |
| P/S | 7.5 |
| EV/EBITDA | 3.8 |
| Fwd P/E | 6.5 |
| PEG | 6.1 |
| Analyst target | 3.0 |
- ▸Forward P/E: 19.6x
- ▸PEG: 1.24
MGEE · Why this verdict
Why MGE Energy (MGEE) 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 score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Best-in-class operating margins and strong underlying franchise quality coexist with a confirmed price downtrend, negative free cash flow, and a leadership transition — the risk/reward geometry remains unfavorable and patience is warranted.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock is trading below its 200-day moving average with the average declining at 1.4% over the past 30 days and on-balance volume falling, confirming a downtrend that technical conditions have not yet reversed. Momentum breakdown | On-balance volume turns from distribution to accumulation and price reclaims the 200-day moving average over the next 8 weeks. | ↓Deteriorating |
| CounterMACD is improving and RSI at 55 is neither oversold nor extreme, suggesting the price pressure may be moderating before a full technical reversal is required. | ||
Free cash flow is negative — running at -127% relative to net income — meaning the company is not converting its reported earnings into cash, which pressures the sustainability of its dividend and long-term financial flexibility. Quality breakdown | Free cash flow turns positive relative to net income for 2 consecutive quarters. | →Stable |
| CounterA Piotroski F-score of 8 out of 9 and operating margins of 19% indicate the core business quality is intact; a negative FCF-to-earnings ratio may normalize as balance sheet conditions improve. | ||
Operating margins of 19% are recognized as best-in-class within the peer group, reflecting a structurally efficient operation that earns a premium on the same regulated revenue base as its competitors. Peer rank | Operating margins remain at or above 17% for 4 consecutive quarters, sustaining peer leadership. | →Stable |
| CounterPeer-relative margin advantages can compress with external decisions outside management's control, and the current data does not address the regulatory outlook or whether the 19% level is structurally defensible. | ||
A recent officer departure or appointment — formally disclosed in a current report — introduces organizational uncertainty at a moment when the stock is already in a confirmed downtrend. Gates warning | No additional executive changes are disclosed in the subsequent 2 quarters and EPS beats estimates by more than 5% in both periods. | →Stable |
| CounterInsider transaction signal is neutral with no net share sales in the preceding 90 days, suggesting the transition may be orderly and unlikely to disrupt near-term earnings delivery. | ||
The stock is trading below its 200-day moving average with the average declining at 1.4% over the past 30 days and on-balance volume falling, confirming a downtrend that technical conditions have not yet reversed.
↓DeterioratingMomentum breakdown
- Expectation
- On-balance volume turns from distribution to accumulation and price reclaims the 200-day moving average over the next 8 weeks.
CounterMACD is improving and RSI at 55 is neither oversold nor extreme, suggesting the price pressure may be moderating before a full technical reversal is required.
Free cash flow is negative — running at -127% relative to net income — meaning the company is not converting its reported earnings into cash, which pressures the sustainability of its dividend and long-term financial flexibility.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive relative to net income for 2 consecutive quarters.
CounterA Piotroski F-score of 8 out of 9 and operating margins of 19% indicate the core business quality is intact; a negative FCF-to-earnings ratio may normalize as balance sheet conditions improve.
Operating margins of 19% are recognized as best-in-class within the peer group, reflecting a structurally efficient operation that earns a premium on the same regulated revenue base as its competitors.
→StablePeer rank
- Expectation
- Operating margins remain at or above 17% for 4 consecutive quarters, sustaining peer leadership.
CounterPeer-relative margin advantages can compress with external decisions outside management's control, and the current data does not address the regulatory outlook or whether the 19% level is structurally defensible.
A recent officer departure or appointment — formally disclosed in a current report — introduces organizational uncertainty at a moment when the stock is already in a confirmed downtrend.
→StableGates warning
- Expectation
- No additional executive changes are disclosed in the subsequent 2 quarters and EPS beats estimates by more than 5% in both periods.
CounterInsider transaction signal is neutral with no net share sales in the preceding 90 days, suggesting the transition may be orderly and unlikely to disrupt near-term earnings delivery.
Per-dimension breakdown
Quality
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.6 |
| ROA | 2.5 |
| Gross margin | 4.3 |
| Op margin | 9.4 |
| Net margin | 9.5 |
| Current ratio | 4.5 |
| FCF quality | 0.0 |
| Moat | 6.4 |
| Piotroski F | 8.9 |
- ▸Strong margins: 19%
- ▸Earnings quality RED FLAG: -127% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
5.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.2 |
| EPS growth | 5.2 |
Momentum
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 4.2 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Above 200-MA but MA slope flat
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 4.3 |
| erm sentiment | 10.0 |
- ▸Estimates rising as sentiment proxy (+16.7%)
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
6.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.8 |
| quality rank | 8.0 |
| growth rank | 6.7 |
- ▸Best-in-class margins
- ▸Conservative debt levels
Technical
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.5 |
| support resistance | 4.1 |
| 52w position | 8.2 |
Risk (lower is worse)
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.9 |
| days to cover | 5.6 |
| volatility | 6.7 |
| beta | 8.7 |
| debt equity | 6.8 |
- ▸Concentration risks: 3 MED (10-K Item 1A)
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 9.0 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 5.5 |
| dividend safety | 6.0 |
- ▸Estimates up 16.7% (30d)
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:15d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.5<4.5
- ASYMMETRY:-2.8=NEGATIVE
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-2.76
Upside
-19.2%
Downside
7.0%
Sizing output
AVOID
SetupRange Bound — RSI 54 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $3.1B<$5B
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: INSIDER:OK. Top dim: Insider at 7.3; weakest: Momentum at 3.5. No conviction either direction.
The strongest dimensions are Insider at 7.3, Risk (lower is worse) at 6.9, and Peer rank at 6.5; the weakest are Momentum at 3.5, Growth at 5.2, and Quality at 5.5. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of -2.76 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Confirmed Price Downtrend
Trip ifPrice advances more than 8% above current levels and holds for 2 consecutive weeks.
- P2Negative Free Cash Flow
Trip ifFree cash flow rises above $0 relative to net income for 2 consecutive quarters, indicating the -127% conversion deficit has resolved and dividend sustainability pressure has eased.
- P3Best In Class Operating Margins
Trip ifOperating margin falls below 15% for 2 consecutive quarters.
- P4Leadership Transition Uncertainty
Trip ifEPS surprise exceeds 5% for 2 consecutive quarters.