Value
6.0/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 4.9 |
| Fwd P/E | 7.1 |
| PEG | 8.2 |
| Analyst target | 5.0 |
- ▸Forward P/E: 17.6x
- ▸PEG: 0.79
PRM · Why this verdict
Why Perimeter Solutions (PRM) 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 score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With the stock at $36.36 above its take-profit level of $35.69, the implied upside is -1.8% and RSI is at 73, placing the stock in overbought territory with no entry edge at current prices. Warnings | Price corrects to below $30 or analyst targets are revised upward by more than 20%, restoring a positive reward-to-risk ratio above 1.5. | →Stable |
| CounterStocks with strong momentum and industry growth leadership can remain overbought for extended periods while continuing to appreciate. | ||
Perimeter Solutions grew revenue by 74% year over year and beat earnings estimates in all 4 of the last 4 quarters with an average positive surprise of 73.9%, including a 221% beat in the most recent quarter ended May 2026. Growth breakdown | Revenue growth remains above 20% annually and the earnings beat streak extends to at least 6 consecutive quarters. | →Stable |
| CounterThe 74% revenue growth rate is likely inflated by an acquisition or favorable wildfire season timing, making it unsustainable without continued external tailwinds. | ||
Despite strong operating results, the company is burning free cash flow at 23% of revenue, and this negative cash generation has driven the quality score to 4.4, below the threshold needed for a high-conviction investment case. Quality breakdown | Free cash flow turns positive (above 0% of revenue) within the next 2 annual reporting periods, resolving the quality floor concern. | →Stable |
| CounterSpecialty chemical and fire retardant businesses often require heavy seasonal inventory builds that temporarily suppress free cash flow without reflecting underlying business quality. | ||
Approximately 76% of Perimeter Solutions revenue comes from the United States, making the business heavily dependent on domestic wildfire season severity, government procurement, and regulatory trends in a single geography. Bear case | Non-US revenue grows to more than 30% of total revenue within 3 years, reducing geographic concentration below 70%. | →Stable |
| CounterThe US wildfire market is large and recurring enough that geographic concentration may be a feature of market leadership rather than a structural risk. | ||
With the stock at $36.36 above its take-profit level of $35.69, the implied upside is -1.8% and RSI is at 73, placing the stock in overbought territory with no entry edge at current prices.
→StableWarnings
- Expectation
- Price corrects to below $30 or analyst targets are revised upward by more than 20%, restoring a positive reward-to-risk ratio above 1.5.
CounterStocks with strong momentum and industry growth leadership can remain overbought for extended periods while continuing to appreciate.
Perimeter Solutions grew revenue by 74% year over year and beat earnings estimates in all 4 of the last 4 quarters with an average positive surprise of 73.9%, including a 221% beat in the most recent quarter ended May 2026.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 20% annually and the earnings beat streak extends to at least 6 consecutive quarters.
CounterThe 74% revenue growth rate is likely inflated by an acquisition or favorable wildfire season timing, making it unsustainable without continued external tailwinds.
Despite strong operating results, the company is burning free cash flow at 23% of revenue, and this negative cash generation has driven the quality score to 4.4, below the threshold needed for a high-conviction investment case.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive (above 0% of revenue) within the next 2 annual reporting periods, resolving the quality floor concern.
CounterSpecialty chemical and fire retardant businesses often require heavy seasonal inventory builds that temporarily suppress free cash flow without reflecting underlying business quality.
Approximately 76% of Perimeter Solutions revenue comes from the United States, making the business heavily dependent on domestic wildfire season severity, government procurement, and regulatory trends in a single geography.
→StableBear case
- Expectation
- Non-US revenue grows to more than 30% of total revenue within 3 years, reducing geographic concentration below 70%.
CounterThe US wildfire market is large and recurring enough that geographic concentration may be a feature of market leadership rather than a structural risk.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Perimeter Solutions achieved 74% year-over-year revenue growth with a 4-for-4 earnings beat record, but the stock at $36.36 has exceeded its price target and is burning cash at a rate equal to 23% of revenue, creating a quality floor concern that offsets the strong top-line momentum.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 7.3 |
| Op margin | 10.0 |
| Net margin | 0.0 |
| Current ratio | 9.9 |
| FCF quality | 0.0 |
| Moat | 5.8 |
| Piotroski F | 6.7 |
- ▸Cash-burning: FCF -23% of revenue
Growth
8.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 6.4 |
- ▸Strong growth: 74% YoY
Momentum
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.7 |
| erm sentiment | 3.8 |
- ▸Analyst upside: 20%
Insider
3.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Notable insider selling — $21,846,623 (0.395% of mkt cap)
Peer rank
2.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.0 |
| quality rank | 0.7 |
| growth rank | 9.8 |
- ▸Industry growth leader
Technical
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.1 |
| support resistance | 5.1 |
| 52w position | 7.8 |
| gap | 5.0 |
Risk (lower is worse)
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.0 |
| days to cover | 7.1 |
| volatility | 0.0 |
| put call | 6.7 |
| implied vol | 3.0 |
| beta | 3.7 |
| debt equity | 4.7 |
- ▸High IV: 62%
- ▸Concentration risks: 1 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| 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:31d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.5<4.5
- ASYMMETRY:0.2<1.5@spot
Warning (1)
- INSIDER:0.40%=MODERATE
Reward-to-Risk
0.17
Upside
+2.0%
Downside
12.0%
Sizing output
AVOID
SetupRange Bound — RSI 45 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.89>1.3
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 ( Growth at 8.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.5<4.5, ASYMMETRY:0.2<1.5@spot) reinforce the read. Current asymmetry R:R is 0.17 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 8.2, Catalyst at 7.1, and Value at 6.0; the weakest are Momentum at 2.5, Peer rank at 2.6, and Insider at 3.4. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.17 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Revenue Growth Beat Streak
Trip ifAnnual revenue growth falls below 10% in the next reported fiscal year.
- P2Cash Burn Quality Floor Breach
Trip ifFree cash flow as a percentage of revenue remains below -15% for 2 consecutive annual reporting periods.
- P3Geographic Concentration Us 76pct
Trip ifUS revenue concentration rises above 85% as disclosed in any annual filing.
- P4Target Exhausted Overbought
Trip ifPrice falls below $28 on weekly close or RSI drops below 30, indicating overbought conditions have unwound sharply.