Value
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.2 |
| P/S | 9.5 |
| EV/EBITDA | 3.2 |
| Fwd P/E | 7.2 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 17.5x
- ▸PEG: 0.48
RS · Why this verdict
Why Reliance (RS) 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 score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company trades at a price-to-earnings growth ratio of 0.53, well below the typical fair-value benchmark of 1.0, suggesting the market is underpricing the company's earnings growth relative to its historical trajectory. Valuation breakdown | Forward price-to-earnings ratio remains below 25 times over the next 12 months, preserving the valuation discount relative to earnings growth. | →Stable |
| CounterThe low price-to-earnings growth ratio is partially illusory if the three consecutive quarterly earnings misses continue, as downward earnings revisions would raise the effective multiple and erode the apparent value. | ||
The stock carries an RSI reading of 73, indicating overbought conditions, while on-balance volume is falling, suggesting that the recent price appreciation is not being confirmed by volume and that distribution may be underway. Momentum breakdown | RSI pulls back to below 65 within the next 3 months as the overbought condition resolves, without triggering a sustained downtrend. | →Stable |
| CounterOverbought RSI combined with falling on-balance volume and three consecutive earnings misses creates a high probability of a mean-reversion pullback, especially as the stock already trades above the analyst consensus target. | ||
The company missed earnings estimates in 3 of the last 4 quarters, with an average negative surprise of approximately 3.1%, suggesting analysts have been consistently more optimistic than actual results delivered. Earnings | Earnings per share surprise turns positive in at least 2 of the next 4 quarters, reversing the recent miss pattern. | →Stable |
| CounterThree consecutive misses often indicate structural headwinds such as steel price deflation or margin compression rather than temporary one-time factors, making a reversal dependent on commodity cycle improvement. | ||
A Piotroski F-Score of 8 out of 9 signals strong financial health across profitability, leverage change, and liquidity dimensions, providing a buffer against operational headwinds. Quality breakdown | Piotroski score remains at 7 or above over the next 12 months, indicating sustained financial discipline. | →Stable |
| CounterFree cash flow at 52% of net income is adequate but not exceptional, and earnings quality is mediocre relative to higher-quality industrial peers, suggesting the Piotroski strength may be partially offset by cash flow shortfalls. | ||
The company trades at a price-to-earnings growth ratio of 0.53, well below the typical fair-value benchmark of 1.0, suggesting the market is underpricing the company's earnings growth relative to its historical trajectory.
→StableValuation breakdown
- Expectation
- Forward price-to-earnings ratio remains below 25 times over the next 12 months, preserving the valuation discount relative to earnings growth.
CounterThe low price-to-earnings growth ratio is partially illusory if the three consecutive quarterly earnings misses continue, as downward earnings revisions would raise the effective multiple and erode the apparent value.
The stock carries an RSI reading of 73, indicating overbought conditions, while on-balance volume is falling, suggesting that the recent price appreciation is not being confirmed by volume and that distribution may be underway.
→StableMomentum breakdown
- Expectation
- RSI pulls back to below 65 within the next 3 months as the overbought condition resolves, without triggering a sustained downtrend.
CounterOverbought RSI combined with falling on-balance volume and three consecutive earnings misses creates a high probability of a mean-reversion pullback, especially as the stock already trades above the analyst consensus target.
The company missed earnings estimates in 3 of the last 4 quarters, with an average negative surprise of approximately 3.1%, suggesting analysts have been consistently more optimistic than actual results delivered.
→StableEarnings
- Expectation
- Earnings per share surprise turns positive in at least 2 of the next 4 quarters, reversing the recent miss pattern.
CounterThree consecutive misses often indicate structural headwinds such as steel price deflation or margin compression rather than temporary one-time factors, making a reversal dependent on commodity cycle improvement.
A Piotroski F-Score of 8 out of 9 signals strong financial health across profitability, leverage change, and liquidity dimensions, providing a buffer against operational headwinds.
→StableQuality breakdown
- Expectation
- Piotroski score remains at 7 or above over the next 12 months, indicating sustained financial discipline.
CounterFree cash flow at 52% of net income is adequate but not exceptional, and earnings quality is mediocre relative to higher-quality industrial peers, suggesting the Piotroski strength may be partially offset by cash flow shortfalls.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Reliance Inc. is a metals distributor with a low price-to-earnings growth ratio of 0.53 and a strong Piotroski financial health score, but three consecutive earnings misses and a stock near overbought territory with falling on-balance volume signal deteriorating near-term earnings quality despite the attractive valuation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.8 |
| ROA | 4.5 |
| Gross margin | 1.7 |
| Op margin | 3.7 |
| Net margin | 2.7 |
| Current ratio | 8.6 |
| FCF quality | 4.2 |
| Moat | 6.4 |
| Piotroski F | 8.9 |
- ▸Earnings quality warning: 52% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
7.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.4 |
| EPS growth | 9.3 |
Momentum
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 0.1 |
- ▸Oversold in uptrend (RSI 29)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.4 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $1,253,403 (0.007% of mkt cap)
Peer rank
4.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.4 |
| quality rank | 6.9 |
| growth rank | 6.7 |
Technical
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.4 |
| support resistance | 9.2 |
| 52w position | 7.7 |
| gap | 5.0 |
Risk (lower is worse)
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.6 |
| days to cover | 7.5 |
| volatility | 4.5 |
| put call | 10.0 |
| implied vol | 5.4 |
| beta | 7.2 |
| debt equity | 8.9 |
Catalyst
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 1.0 |
| dividend safety | 5.2 |
- ▸Earnings concerns: 1B/3M
- ▸Dividend: 134.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:18d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.6<4.5
- ASYMMETRY:-1.6=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.65
Upside
-10.5%
Downside
6.4%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.6<4.5, ASYMMETRY:-1.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.65 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.9, Technical at 7.8, and Risk (lower is worse) at 7.4; the weakest are Momentum at 2.6, Catalyst at 3.2, and Peer rank at 4.3. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.65 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Low Peg Ratio Valuation
Trip ifForward price-to-earnings ratio rises above 30 times due to earnings estimate reductions, erasing the valuation discount.
- P2Earnings Miss Trend Risk
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, indicating the miss pattern is deepening rather than reversing.
- P3Piotroski Financial Health Strength
Trip ifPiotroski score drops below 6, more than 2 points below the current 8 out of 9, indicating deterioration in financial health.
- P4Overbought Distribution Signal
Trip ifRSI remains above 70 for more than 30 consecutive trading days while on-balance volume continues declining, indicating persistent distribution at elevated prices.