Value
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.8 |
| P/S | 7.1 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 6.6 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 19.3x
- ▸PEG: 0.04
QTWO · Why this verdict
Why Q2 Holdings (QTWO) 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
TrendMatrix Research · core thesis
Engine thesis — one sentence
Q2 Holdings is a fintech software company with a wide economic moat, exceptional free cash flow conversion of 243%, and analyst consensus implying 47% upside, but a confirmed death cross pattern and momentum score of just 1.6 out of 10 indicate the market is pricing in a sustained downtrend that must reverse before the fundamental case can be realized.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The analyst consensus price target of $64.60 against a current price of $44.05 implies 46.7% upside with a PEG ratio of 0.03, suggesting the stock trades at a steep discount to its growth-adjusted fair value as assessed by sell-side analysts. Sentiment breakdown | The stock price rises above $55 within 12 months as momentum recovers and the valuation discount narrows. | ↓Deteriorating |
| CounterA death cross and momentum score of 1.6 out of 10 suggest the market is actively disagreeing with analyst targets; large analyst upside gaps often persist in declining-momentum stocks for extended periods. | ||
Q2 Holdings carries a wide economic moat designation and converts 243% of net income into free cash flow, a ratio reflecting that the financial services software business model generates far more cash than accounting profits suggest, providing a durable competitive advantage. Quality breakdown | Free cash flow conversion remains above 200% for at least 2 of the next 3 reported annual periods. | →Stable |
| CounterThe wide moat is concentrated in the financial services industry per the customer concentration risk disclosure, meaning a regulatory shift or banking sector consolidation could rapidly erode switching-cost advantages. | ||
The stock is in a confirmed death cross pattern with the 50-day moving average below the 200-day moving average, falling on-balance volume, and a -7.8% moving average slope over 30 days, indicating sustained institutional selling that blocks near-term entry. Warnings | The death cross resolves with the 50-day moving average crossing back above the 200-day moving average within 6 months. | ↓Deteriorating |
| CounterThe asymmetry ratio of 4.1 indicates the potential upside far exceeds the downside even from this position, and death crosses in high-quality compounder software stocks have historically preceded strong recoveries. | ||
Q2 Holdings has beaten earnings estimates in 3 of the last 4 quarters with an average positive surprise of 23.3%, including a 77.5% beat in July 2025, demonstrating management's consistent ability to outperform conservative guidance. Earnings | Earnings beats continue in at least 3 of the next 4 quarters with average positive surprise above 10%. | ↓Deteriorating |
| CounterThe most recent quarter produced a -8.7% miss, and with high implied volatility of 101%, the market is pricing in significant uncertainty about the sustainability of the beat streak. | ||
The analyst consensus price target of $64.60 against a current price of $44.05 implies 46.7% upside with a PEG ratio of 0.03, suggesting the stock trades at a steep discount to its growth-adjusted fair value as assessed by sell-side analysts.
↓DeterioratingSentiment breakdown
- Expectation
- The stock price rises above $55 within 12 months as momentum recovers and the valuation discount narrows.
CounterA death cross and momentum score of 1.6 out of 10 suggest the market is actively disagreeing with analyst targets; large analyst upside gaps often persist in declining-momentum stocks for extended periods.
Q2 Holdings carries a wide economic moat designation and converts 243% of net income into free cash flow, a ratio reflecting that the financial services software business model generates far more cash than accounting profits suggest, providing a durable competitive advantage.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 200% for at least 2 of the next 3 reported annual periods.
CounterThe wide moat is concentrated in the financial services industry per the customer concentration risk disclosure, meaning a regulatory shift or banking sector consolidation could rapidly erode switching-cost advantages.
The stock is in a confirmed death cross pattern with the 50-day moving average below the 200-day moving average, falling on-balance volume, and a -7.8% moving average slope over 30 days, indicating sustained institutional selling that blocks near-term entry.
↓DeterioratingWarnings
- Expectation
- The death cross resolves with the 50-day moving average crossing back above the 200-day moving average within 6 months.
CounterThe asymmetry ratio of 4.1 indicates the potential upside far exceeds the downside even from this position, and death crosses in high-quality compounder software stocks have historically preceded strong recoveries.
Q2 Holdings has beaten earnings estimates in 3 of the last 4 quarters with an average positive surprise of 23.3%, including a 77.5% beat in July 2025, demonstrating management's consistent ability to outperform conservative guidance.
↓DeterioratingEarnings
- Expectation
- Earnings beats continue in at least 3 of the next 4 quarters with average positive surprise above 10%.
CounterThe most recent quarter produced a -8.7% miss, and with high implied volatility of 101%, the market is pricing in significant uncertainty about the sustainability of the beat streak.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.0 |
| ROA | 3.0 |
| Gross margin | 7.4 |
| Op margin | 5.3 |
| Net margin | 5.4 |
| Current ratio | 3.8 |
| FCF quality | 10.0 |
| Moat | 8.4 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 207% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
- ▸Strong Piotroski F-Score: 8/9
Growth
7.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.6 |
| EPS growth | 10.0 |
Momentum
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.0 |
| MACD | 7.1 |
| OBV | 1.0 |
| MA position | 7.5 |
| Volume | 2.5 |
- ▸Overbought (RSI 79)
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat/negative + RSI 79 (late-cycle distribution risk)
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 7.6 |
| erm sentiment | 5.0 |
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $1,208,768 (0.031% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.5 |
| quality rank | 5.8 |
| growth rank | 4.6 |
Technical
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.9 |
| support resistance | 1.8 |
| 52w position | 3.3 |
| gap | 6.0 |
Risk (lower is worse)
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.0 |
| days to cover | 5.8 |
| volatility | 1.1 |
| put call | 0.0 |
| implied vol | 2.3 |
| beta | 5.7 |
| debt equity | 9.7 |
- ▸Elevated put/call: 3.79
- ▸High IV: 66%
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 5.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:84d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:4.4<4.5
- ASYMMETRY:0.2<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
0.23
Upside
+3.4%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 79
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.33>1.3, MCap $4.0B<$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: Growth at 7.8; weakest: Technical at 3.5. No conviction either direction.
The strongest dimensions are Growth at 7.8, Sentiment at 6.7, and Quality at 6.4; the weakest are Technical at 3.5, Risk (lower is worse) at 4.2, and Momentum at 4.4. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of 0.23 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat Cash Conversion
Trip ifFree cash flow conversion falls below 150% of net income in any reported annual period.
- P2Large Analyst Upside Gap
Trip ifAnalyst consensus price target declines below $50, reducing implied upside to less than 15%.
- P3Death Cross Momentum Hard Block
Trip ifThe 200-day moving average slope declines beyond -10% over any 30-day window, accelerating the downtrend.
- P4Earnings Beat History
Trip ifEPS surprise falls below -15% in at least 2 of the next 4 quarters.