Value
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.6 |
| P/S | 9.4 |
| EV/EBITDA | 3.1 |
| Fwd P/E | 6.9 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 18.5x
- ▸PEG: 0.44
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 score6.5/10
ConfidenceMEDIUM
MacroNEUTRAL
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.
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. | Tripped↑Improving |
| 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. | ↑Improving |
| 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. | ↑Improving |
| 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.
Tripped↑ImprovingValuation 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.
↑ImprovingMomentum 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.
↑ImprovingEarnings
- 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.
Per-dimension breakdown
Quality
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.1 |
| ROA | 4.9 |
| Gross margin | 1.6 |
| Op margin | 3.8 |
| Net margin | 2.8 |
| Current ratio | 8.7 |
| FCF quality | 3.1 |
| Moat | 6.9 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: 38% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
9.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 9.1 |
| EPS growth | 10.0 |
- ▸Strong growth: 26% YoY
Momentum
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.4 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 3.2 |
- ▸Overbought (RSI 73)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.7 |
| Analyst rating | 5.0 |
| Price target | 4.4 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $1,253,403 (0.006% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.8 |
| quality rank | 7.1 |
| growth rank | 8.3 |
- ▸Industry growth leader
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 1.3 |
| 52w position | 9.4 |
| gap | 5.0 |
Risk (lower is worse)
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 8.4 |
| volatility | 6.0 |
| put call | 7.3 |
| implied vol | 7.1 |
| beta | 7.2 |
| debt equity | 8.9 |
| news risk | 5.0 |
Catalyst
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 3.5 |
| dividend safety | 5.2 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULT|L3:NEWS_MOD=-1Passed (7)
- MOMENTUM:7.3>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:EARNINGS:0.70
- EARNINGS_PROXIMITY:88d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.7=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.67
Upside
-16.4%
Downside
9.8%
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 default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: MOMENTUM:7.3>=5.5. Top dim: Growth at 9.6; weakest: Technical at 3.9. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Growth at 9.6, Momentum at 7.3, and Insider at 7.3; the weakest are Technical at 3.9, Quality at 4.9, and Catalyst at 5.0. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -1.67 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 ValuationTripped
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.