Value
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.6 |
| P/S | 9.4 |
| EV/EBITDA | 5.8 |
| Fwd P/E | 7.9 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 15.4x
- ▸PEG: 0.17
- ▸Attractively valued
REYN · Why this verdict
Why Reynolds Consumer Products (REYN) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Reynolds Consumer Products offers an attractively valued packaging franchise with a PEG ratio of 0.15 and consistent earnings beats, but the stock has already reached and slightly exceeded analyst price targets while carrying 16% short interest, limiting near-term upside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company trades at a forward P/E of 13.9x with a PEG ratio of 0.15, indicating the market is pricing in minimal growth for a company with an attractive earnings growth profile. Valuation breakdown | The stock's valuation multiple expands as earnings growth is recognized, pushing forward P/E above 16x within 12 months. | →Stable |
| CounterThe current price is already 6.6% above analyst consensus targets, suggesting the cheap multiple is partially explained by limited institutional demand at current levels. | ||
With a Piotroski F-Score of 8/9 and strong free cash flow quality, the company demonstrates solid financial integrity despite thin gross margins in a packaging business. Quality breakdown | Piotroski F-Score remains at 7 or above and free cash flow conversion stays above 90% of net income over the next four quarters. | →Stable |
| CounterGross margin component scores near the bottom of the quality dimension, reflecting the commodity-like nature of packaging that limits pricing power and profitability expansion. | ||
Reynolds has beaten earnings expectations in 3 of the last 4 quarters with an average positive surprise of 6.3%, and the most recent quarter saw a 14.5% beat, demonstrating consistent outperformance. Earnings | Beat streak continues in at least 3 of the next 4 quarters with average surprise remaining above 3%. | ↓Deteriorating |
| CounterThe one inline result (0.09% surprise) shows the company can come in flat, and with high short interest at 16%, any stumble could trigger significant downward pressure. | ||
A short interest level of 16% of float combined with rising OBV and above-200-day moving average positioning sets up a potential squeeze scenario if continued positive results surprise bearish traders. Risk breakdown | Short interest falls below 10% over the next 12 months as negative thesis fails to materialize. | ↓Deteriorating |
| CounterHigh short interest at 16% combined with implied volatility of 119% signals that sophisticated market participants have strong conviction in a negative thesis, which historically has been accurate more often than not. | ||
The company trades at a forward P/E of 13.9x with a PEG ratio of 0.15, indicating the market is pricing in minimal growth for a company with an attractive earnings growth profile.
→StableValuation breakdown
- Expectation
- The stock's valuation multiple expands as earnings growth is recognized, pushing forward P/E above 16x within 12 months.
CounterThe current price is already 6.6% above analyst consensus targets, suggesting the cheap multiple is partially explained by limited institutional demand at current levels.
With a Piotroski F-Score of 8/9 and strong free cash flow quality, the company demonstrates solid financial integrity despite thin gross margins in a packaging business.
→StableQuality breakdown
- Expectation
- Piotroski F-Score remains at 7 or above and free cash flow conversion stays above 90% of net income over the next four quarters.
CounterGross margin component scores near the bottom of the quality dimension, reflecting the commodity-like nature of packaging that limits pricing power and profitability expansion.
Reynolds has beaten earnings expectations in 3 of the last 4 quarters with an average positive surprise of 6.3%, and the most recent quarter saw a 14.5% beat, demonstrating consistent outperformance.
↓DeterioratingEarnings
- Expectation
- Beat streak continues in at least 3 of the next 4 quarters with average surprise remaining above 3%.
CounterThe one inline result (0.09% surprise) shows the company can come in flat, and with high short interest at 16%, any stumble could trigger significant downward pressure.
A short interest level of 16% of float combined with rising OBV and above-200-day moving average positioning sets up a potential squeeze scenario if continued positive results surprise bearish traders.
↓DeterioratingRisk breakdown
- Expectation
- Short interest falls below 10% over the next 12 months as negative thesis fails to materialize.
CounterHigh short interest at 16% combined with implied volatility of 119% signals that sophisticated market participants have strong conviction in a negative thesis, which historically has been accurate more often than not.
Per-dimension breakdown
Quality
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.0 |
| ROA | 4.6 |
| Gross margin | 0.9 |
| Op margin | 4.5 |
| Net margin | 4.4 |
| Current ratio | 6.4 |
| FCF quality | 6.1 |
| Moat | 5.5 |
| Piotroski F | 8.9 |
- ▸Strong Piotroski F-Score: 8/9
Growth
7.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.3 |
| EPS growth | 10.0 |
Momentum
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.6 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 4.2 |
- ▸Uptrend pullback (RSI 39) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.0 |
| Analyst rating | 6.7 |
| Price target | 5.5 |
- ▸Light analyst coverage (7.0) — signal dampened
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
5.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.9 |
| quality rank | 7.2 |
| growth rank | 4.7 |
- ▸Attractive P/E vs peers
- ▸Best-in-class margins
Technical
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.2 |
| support resistance | 7.8 |
| 52w position | 8.7 |
Risk (lower is worse)
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.7 |
| days to cover | 4.5 |
| volatility | 6.2 |
| put call | 0.0 |
| implied vol | 4.2 |
| max pain risk | 3.0 |
| beta | 9.8 |
| debt equity | 6.7 |
- ▸Elevated put/call: 2.00
- ▸Above max pain $12
Catalyst
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.7 |
| dividend safety | 5.5 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/0M
- ▸Earnings in 2 days
- ▸Dividend: 3.6%
How the verdict was assembled
Engine trigger
Earnings in 2 days. Wait until post-earnings.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (5)
- MOMENTUM:5.6>=5.5
- INSIDER:OK
- 8K:CLEAN
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-2.0=NEGATIVE
- EARNINGS_PROXIMITY:2d<=7d
Warning (0)
none
Reward-to-Risk
-2.04
Upside
-10.2%
Downside
5.0%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Earnings in 2 days. Wait until post-earnings. The 10-dimension scores remain Technical at 8.2 (strongest), but ASYMMETRY:-2.0=NEGATIVE also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Technical at 8.2, Insider at 7.3, and Value at 7.2; the weakest are Risk (lower is worse) at 4.6, Quality at 5.1, and Momentum at 5.6. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -2.04 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Valuation Discount To Growth
Trip ifForward P/E contracts below 12x or analyst price targets decline by more than 10% from current levels.
- P2Earnings Beat Momentum
Trip ifEarnings surprise falls below 0% in at least 2 of the next 4 quarters.
- P3High Short Interest Squeeze Risk
Trip ifShort interest rises above 20% of float or the stock drops below $20.
- P4Balance Sheet Financial Health
Trip ifPiotroski F-Score drops below 6 in any reported period.