Value
4.0/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 8.1 |
| P/S | 8.2 |
| EV/EBITDA | 0.0 |
| Analyst target | 3.0 |
SKYT · Why this verdict
Why SkyWater Technology (SKYT) 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 score5.6/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue grew 162% year-over-year, placing SkyWater among the highest growth names in the semiconductor peer set, but with a Piotroski F-Score of only 1 out of 9 the company has not yet demonstrated the financial discipline that typically sustains such expansion. Quality breakdown | Revenue growth rate remains above 50% and Piotroski F-Score improves to at least 5 within 12 months as the business matures. | →Stable |
| CounterHypergrowth in semiconductor services can be lumpy and project-driven; a single program delay could cause revenue to contract sharply while fixed costs remain elevated. | ||
Free cash flow is only 31% of net income, a significant earnings quality red flag indicating that reported profits are not converting to cash and the company may need external financing to sustain operations. Quality breakdown | Free cash flow as a percentage of net income rises above 70% within 12 months, demonstrating that earnings are real and self-funding. | →Stable |
| CounterCapital-intensive semiconductor foundry expansion may legitimately require heavy investment; investors may accept negative FCF during a build-out phase if revenue continues growing. | ||
Volume is accumulating (rising on-balance volume) and the stock is above its 200-day moving average, but price is trading well below the take-profit target of $39.13 with only 3.2% upside, meaning near-term return potential is exhausted at current levels. Targets | Price rises above $42, expanding upside headroom beyond 10% within 12 months as business quality improves. | →Stable |
| CounterThe stock has a beta of 3.32, meaning it can correct sharply in broad market pullbacks, erasing any near-term gains before quality metrics improve. | ||
Institutional holders are accumulating shares while insider net transactions are flat at zero shares traded, suggesting institutional confidence without the insider conviction that would signal a compelling near-term catalyst. Insider breakdown | Insider buying activity begins with at least 1 net purchase transaction in the next 6 months, corroborating the institutional accumulation signal. | →Stable |
| CounterInstitutional accumulation can simply reflect index rebalancing or passive flows rather than a conviction call on the company's prospects. | ||
Revenue grew 162% year-over-year, placing SkyWater among the highest growth names in the semiconductor peer set, but with a Piotroski F-Score of only 1 out of 9 the company has not yet demonstrated the financial discipline that typically sustains such expansion.
→StableQuality breakdown
- Expectation
- Revenue growth rate remains above 50% and Piotroski F-Score improves to at least 5 within 12 months as the business matures.
CounterHypergrowth in semiconductor services can be lumpy and project-driven; a single program delay could cause revenue to contract sharply while fixed costs remain elevated.
Free cash flow is only 31% of net income, a significant earnings quality red flag indicating that reported profits are not converting to cash and the company may need external financing to sustain operations.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income rises above 70% within 12 months, demonstrating that earnings are real and self-funding.
CounterCapital-intensive semiconductor foundry expansion may legitimately require heavy investment; investors may accept negative FCF during a build-out phase if revenue continues growing.
Volume is accumulating (rising on-balance volume) and the stock is above its 200-day moving average, but price is trading well below the take-profit target of $39.13 with only 3.2% upside, meaning near-term return potential is exhausted at current levels.
→StableTargets
- Expectation
- Price rises above $42, expanding upside headroom beyond 10% within 12 months as business quality improves.
CounterThe stock has a beta of 3.32, meaning it can correct sharply in broad market pullbacks, erasing any near-term gains before quality metrics improve.
Institutional holders are accumulating shares while insider net transactions are flat at zero shares traded, suggesting institutional confidence without the insider conviction that would signal a compelling near-term catalyst.
→StableInsider breakdown
- Expectation
- Insider buying activity begins with at least 1 net purchase transaction in the next 6 months, corroborating the institutional accumulation signal.
CounterInstitutional accumulation can simply reflect index rebalancing or passive flows rather than a conviction call on the company's prospects.
TrendMatrix Research · core thesis
Engine thesis — one sentence
SkyWater Technology posted 162% revenue growth year-over-year and carries a 96% return on equity, but negative free cash flow quality and a below-floor quality score signal the business has not yet translated top-line expansion into durable financial strength.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 0.0 |
| Gross margin | 0.0 |
| Op margin | 0.0 |
| Net margin | 10.0 |
| Current ratio | 2.1 |
| FCF quality | 2.5 |
| Moat | 6.0 |
| Piotroski F | 1.1 |
- ▸Excellent ROE: 96%
- ▸Strong margins: 21%
- ▸Earnings quality RED FLAG: 31% FCF/NI
- ▸Weak Piotroski F-Score: 1/9
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 162% YoY
Momentum
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 3.4 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.3 |
| erm sentiment | 5.0 |
Insider
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Notable insider selling — $5,191,435 (0.308% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.8 |
| quality rank | 8.3 |
| growth rank | 9.4 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.6 |
| support resistance | 8.7 |
| 52w position | 7.2 |
Risk (lower is worse)
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.8 |
| days to cover | 8.1 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 0.5 |
| beta | 0.0 |
| debt equity | 4.5 |
- ▸High IV: 77%
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (5)
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.8<4.5
- ASYMMETRY:-1.3=NEGATIVE
- INSIDER:0.31%=HEAVY
Warning (0)
none
Reward-to-Risk
-1.29
Upside
-13.1%
Downside
10.2%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 3.32>1.3, MCap $1.7B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Growth at 10.0 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:2.8<4.5.
The strongest dimensions are Growth at 10.0, Technical at 8.2, and Peer rank at 6.6; the weakest are Momentum at 2.8, Quality at 3.5, and Value at 4.0. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of -1.29 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Hypergrowth Revenue Unconfirmed
Trip ifRevenue growth falls below 30% year-over-year in any of the next 2 reported quarters.
- P2Negative Free Cash Flow
Trip ifFree cash flow as a percentage of net income remains below 40% for more than 2 consecutive quarters.
- P3Momentum Technicals Diverge
Trip ifStock price drops below $33, more than 13% below the current price of $37.90.
- P4Insider Institution Signals
Trip ifInsider net share sales exceed 50,000 shares in any 90-day window.