Value
7.1/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 9.1 |
| Fwd P/E | 3.1 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 34.4x
- ▸PEG: 0.18
- ▸Attractively valued
PTRN · Why this verdict
Why Pattern Group Inc. - Series A (PTRN) 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 score6.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Pattern Group Inc. delivers 43% year-over-year revenue growth and a Piotroski F-Score of 8/9 with free cash flow conversion of 397%, but 93% customer concentration in a single customer and a leverage ratio of 5.1 times debt-to-equity create existential concentration risk that outweighs the growth story.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Amazon accounts for 93% of total revenue, meaning the entire growth and cash flow thesis depends on a single customer relationship that could be renegotiated, reduced, or terminated by a counterparty with far greater bargaining power. Bear case | Amazon's share of revenue falls below 85% within 24 months as the company diversifies to new customers. | ↑Improving |
| CounterA 93% revenue share from Amazon may reflect a deeply integrated operational relationship, effectively functioning as a captive vendor with predictable and growing contract value. | ||
Revenue is growing at 43% year over year, placing the company as an industry growth leader at the 9.3/10 rank in its peer group, supported by free cash flow conversion of 397% relative to net income and a Piotroski F-Score of 8/9. Growth breakdown | Revenue growth sustains above 20% year over year in each of the next 2 annual reporting periods. | →Stable |
| CounterRevenue growth driven primarily by a single large customer is not the same as organic market share gains; if Amazon reduces volume, the headline growth rate could reverse sharply. | ||
The debt-to-equity ratio of 5.1 times triggers a leverage penalty that reduces the quality score, and combined with the customer concentration, creates a scenario where a customer volume reduction could impair debt service coverage. Risk breakdown | Debt-to-equity ratio falls below 3.0 within 18 months through earnings retention or debt repayment. | ↑Improving |
| CounterFree cash flow conversion of 397% relative to net income provides substantial capacity to service and reduce debt faster than the headline leverage ratio suggests. | ||
A recent extreme gap down of -10.1% occurred on a 2.2x average volume surge, historically a pattern associated with capitulation selling where the most motivated sellers exit at once, potentially creating a technical floor. Technical breakdown | Price recovers above $20.97 resistance within 6 months as selling pressure subsides following the gap down. | ↑Improving |
| CounterA gap down on high volume in a company with 93% customer concentration and high leverage may reflect informed sellers acting on fundamental knowledge, not indiscriminate panic. | ||
Amazon accounts for 93% of total revenue, meaning the entire growth and cash flow thesis depends on a single customer relationship that could be renegotiated, reduced, or terminated by a counterparty with far greater bargaining power.
↑ImprovingBear case
- Expectation
- Amazon's share of revenue falls below 85% within 24 months as the company diversifies to new customers.
CounterA 93% revenue share from Amazon may reflect a deeply integrated operational relationship, effectively functioning as a captive vendor with predictable and growing contract value.
Revenue is growing at 43% year over year, placing the company as an industry growth leader at the 9.3/10 rank in its peer group, supported by free cash flow conversion of 397% relative to net income and a Piotroski F-Score of 8/9.
→StableGrowth breakdown
- Expectation
- Revenue growth sustains above 20% year over year in each of the next 2 annual reporting periods.
CounterRevenue growth driven primarily by a single large customer is not the same as organic market share gains; if Amazon reduces volume, the headline growth rate could reverse sharply.
The debt-to-equity ratio of 5.1 times triggers a leverage penalty that reduces the quality score, and combined with the customer concentration, creates a scenario where a customer volume reduction could impair debt service coverage.
↑ImprovingRisk breakdown
- Expectation
- Debt-to-equity ratio falls below 3.0 within 18 months through earnings retention or debt repayment.
CounterFree cash flow conversion of 397% relative to net income provides substantial capacity to service and reduce debt faster than the headline leverage ratio suggests.
A recent extreme gap down of -10.1% occurred on a 2.2x average volume surge, historically a pattern associated with capitulation selling where the most motivated sellers exit at once, potentially creating a technical floor.
↑ImprovingTechnical breakdown
- Expectation
- Price recovers above $20.97 resistance within 6 months as selling pressure subsides following the gap down.
CounterA gap down on high volume in a company with 93% customer concentration and high leverage may reflect informed sellers acting on fundamental knowledge, not indiscriminate panic.
Per-dimension breakdown
Quality
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.5 |
| ROA | 1.8 |
| Gross margin | 4.7 |
| Op margin | 2.0 |
| Net margin | 0.4 |
| Current ratio | 8.4 |
| FCF quality | 10.0 |
| Moat | 7.1 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 397% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 43% YoY
Momentum
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.8 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Uptrend pullback (RSI 37) - buy opportunity
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.9 |
| Price target | 5.6 |
| erm sentiment | 4.8 |
- ▸Light analyst coverage (8.0) — signal dampened
Insider
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 2.0 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Heavy insider selling — $167,097,408 (3.394% of mkt cap)
- ▸Institutions accumulating
Peer rank
7.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.9 |
| quality rank | 3.4 |
| growth rank | 9.4 |
- ▸Industry growth leader
Technical
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.0 |
| support resistance | 7.7 |
| 52w position | 5.5 |
| gap | 6.0 |
Risk (lower is worse)
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.8 |
| days to cover | 9.2 |
| volatility | 0.0 |
| put call | 5.1 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| debt equity | 9.8 |
- ▸High IV: 91%
- ▸Above max pain $12
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Earnings in 13 days
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (3)
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.0<4.5
- ASYMMETRY:-0.7=NEGATIVE
- INSIDER:3.39%=EXTREME
Warning (2)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
- EARNINGS_PROXIMITY:13d<=14d (soft)
Reward-to-Risk
-0.71
Upside
-9.5%
Downside
13.4%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $4.9B<$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: NEWS_EVENTS:NONE_RECENT. Top dim: Growth at 10.0; weakest: Momentum at 3.0. No conviction either direction.
The strongest dimensions are Growth at 10.0, Value at 7.1, and Peer rank at 7.1; the weakest are Momentum at 3.0, Risk (lower is worse) at 4.7, and Quality at 5.1. The V9 engine flagged 3 failed gates with 2 warnings, producing an asymmetric reward-to-risk of -0.71 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Amazon Concentration Existential Risk
Trip ifAmazon's share of revenue rises above 95% or declines below 80% in any annual filing.
- P2Revenue Growth Strength
Trip ifRevenue growth falls below 15% year over year for 2 consecutive quarters.
- P3High Leverage Risk
Trip ifDebt-to-equity ratio rises above 6.0 in any quarterly report.
- P4Selloff Volume Reversal Signal
Trip ifPrice falls below $18.00 and volume exceeds 2 times the 30-day average for more than 5 consecutive days.