Value
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 4.1 |
| Fwd P/E | 2.8 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 39.3x
- ▸PEG: 0.08
POWI · Why this verdict
Why Power Integrations (POWI) 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 score4.3/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The top ten customers account for 81% of revenue and 98% of sales are generated outside the United States, creating a dual concentration where losing one or two major accounts or facing an international trade disruption could materially impair revenue. Bear case | Revenue from the top ten customers falls below 75% over the next 12 months as the customer base diversifies. | →Stable |
| CounterLong-standing relationships with major electronics manufacturers create stickiness; switching power supply design wins typically persist across multiple product cycles. | ||
The current price of $83.31 sits 23.1% above the analyst consensus target, meaning the stock has priced in more optimism than professional analysts believe is warranted, leaving virtually no margin of safety for new buyers at current levels. Bear case | Analyst consensus price targets rise to exceed the current stock price within 6 months, restoring at least 10% upside to target. | →Stable |
| CounterStock prices exceeding analyst targets can reflect institutional accumulation driven by non-consensus views; a cluster of four recent analyst upgrades noted in the news suggests some analysts see higher fair value. | ||
Free cash flow equals 476% of net income, indicating extraordinary cash generation relative to reported earnings, and the Piotroski F-Score is a perfect 9/9, reflecting strong balance sheet health and operational efficiency across multiple financial dimensions. Quality breakdown | Free cash flow remains above 200% of net income in each of the next 2 annual reporting periods. | →Stable |
| CounterHigh FCF-to-earnings ratios in semiconductor companies can reflect timing differences in working capital or low capital expenditure intensity rather than durable structural advantages. | ||
Power Integrations beat consensus EPS estimates in 3 of the last 4 quarters with average positive surprise of 7.4%, and momentum score of 5.1 with rising on-balance volume and a position above the 200-day moving average indicates the stock has maintained technical constructiveness. Catalyst breakdown | The company beats consensus EPS in at least 2 of the next 3 reported quarters. | →Stable |
| CounterRevenue growth is only 3.1% and earnings growth is minimal, meaning the beat streak is sustained by cost control rather than top-line expansion, which is harder to maintain as competition intensifies. | ||
The top ten customers account for 81% of revenue and 98% of sales are generated outside the United States, creating a dual concentration where losing one or two major accounts or facing an international trade disruption could materially impair revenue.
→StableBear case
- Expectation
- Revenue from the top ten customers falls below 75% over the next 12 months as the customer base diversifies.
CounterLong-standing relationships with major electronics manufacturers create stickiness; switching power supply design wins typically persist across multiple product cycles.
The current price of $83.31 sits 23.1% above the analyst consensus target, meaning the stock has priced in more optimism than professional analysts believe is warranted, leaving virtually no margin of safety for new buyers at current levels.
→StableBear case
- Expectation
- Analyst consensus price targets rise to exceed the current stock price within 6 months, restoring at least 10% upside to target.
CounterStock prices exceeding analyst targets can reflect institutional accumulation driven by non-consensus views; a cluster of four recent analyst upgrades noted in the news suggests some analysts see higher fair value.
Free cash flow equals 476% of net income, indicating extraordinary cash generation relative to reported earnings, and the Piotroski F-Score is a perfect 9/9, reflecting strong balance sheet health and operational efficiency across multiple financial dimensions.
→StableQuality breakdown
- Expectation
- Free cash flow remains above 200% of net income in each of the next 2 annual reporting periods.
CounterHigh FCF-to-earnings ratios in semiconductor companies can reflect timing differences in working capital or low capital expenditure intensity rather than durable structural advantages.
Power Integrations beat consensus EPS estimates in 3 of the last 4 quarters with average positive surprise of 7.4%, and momentum score of 5.1 with rising on-balance volume and a position above the 200-day moving average indicates the stock has maintained technical constructiveness.
→StableCatalyst breakdown
- Expectation
- The company beats consensus EPS in at least 2 of the next 3 reported quarters.
CounterRevenue growth is only 3.1% and earnings growth is minimal, meaning the beat streak is sustained by cost control rather than top-line expansion, which is harder to maintain as competition intensifies.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Power Integrations boasts exceptional free cash flow conversion at 476% of net income and a perfect 9/9 Piotroski F-Score, but the stock has already exceeded its analyst price target with negative implied upside, and heavy customer concentration with 81% of revenue from the top ten customers adds meaningful fragility to the earnings outlook.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.8 |
| ROA | 1.2 |
| Gross margin | 6.8 |
| Op margin | 3.0 |
| Net margin | 1.9 |
| Current ratio | 6.1 |
| FCF quality | 10.0 |
| Moat | 5.8 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 476% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
3.1/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 3.1 |
Momentum
2.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 0.4 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.5 |
| Price target | 5.6 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (5.0) — signal dampened
Insider
3.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 2.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Heavy insider selling — $27,322,971 (0.672% of mkt cap)
Peer rank
3.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.7 |
| quality rank | 3.7 |
| growth rank | 1.1 |
Technical
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.9 |
| support resistance | 8.3 |
| 52w position | 6.0 |
| gap | 5.0 |
Risk (lower is worse)
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.0 |
| days to cover | 7.4 |
| volatility | 0.0 |
| put call | 6.7 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 4.8 |
- ▸High IV: 111%
- ▸Above max pain $20
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.2 |
| dividend safety | 4.2 |
- ▸Strong earnings: 3B/0M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (4)
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.2<4.5
- ASYMMETRY:-0.6=NEGATIVE
- INSIDER:0.67%=HEAVY
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.62
Upside
-9.3%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.56>1.3, MCap $4.1B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.2<4.5, ASYMMETRY:-0.6=NEGATIVE, INSIDER:0.67%=HEAVY) reinforce the read. Current asymmetry R:R is -0.62 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 7.1, Catalyst at 6.1, and Sentiment at 5.8; the weakest are Momentum at 2.2, Insider at 3.0, and Growth at 3.1. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.62 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 Quality
Trip ifFree cash flow falls below 100% of net income in any reported annual period over the next 12 months.
- P2Analyst Target Exceeded Negative Upside
Trip ifThe stock price remains more than 15% above the analyst consensus price target for more than 3 consecutive months.
- P3Customer Geographic Double Concentration
Trip ifRevenue from the top ten customers rises above 85% of total revenue in any reported period.
- P4Beat Streak Earnings Resilience
Trip ifEPS surprise falls below 0% in at least 2 of the next 3 reported quarters.