Value
7.3/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 8.0 |
| EV/EBITDA | 2.7 |
| Fwd P/E | 6.6 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 19.4x
- ▸PEG: 0.37
- ▸Attractively valued
STM · Why this verdict
Why STMicroelectronics (STM) 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 score6.2/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
STMicroelectronics has missed earnings estimates in 3 of the last 4 quarters with an average negative surprise of 34% and its quality score of 3.5 sits below the minimum threshold, while free cash flow is deeply negative at -245% of net income; the indicated price upside is also negative, making the fundamental and technical cases both weak.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Despite the earnings miss streak, revenue is growing at 23% year-over-year, suggesting that top-line demand exists but is being absorbed by elevated costs or pricing pressure that compresses margins below consensus expectations. Growth breakdown | Operating margin recovery drives earnings back toward consensus levels with at least 1 positive EPS surprise in the next 2 quarters as cost absorption normalizes. | →Stable |
| CounterRevenue growth in semiconductors during a cycle transition can coexist with margin compression as customers demand price concessions and inventory destocking drags average selling prices; cost pressures may persist longer than the revenue growth implies. | ||
STMicroelectronics has missed consensus EPS estimates in 3 of the last 4 quarters with an average negative surprise of 34%, including a 78% miss in the most recent quarter, reflecting a severe semiconductor demand downturn exceeding analyst expectations. Earnings | At least 2 of the next 4 quarterly reports come in at or above consensus estimates, indicating the earnings trough has passed and results are stabilizing relative to expectations. | →Stable |
| CounterSemiconductor earnings cycles can produce multi-quarter miss streaks lasting 6 to 8 quarters during inventory correction phases; the 78% most-recent miss suggests the cycle bottom has not yet been reached. | ||
STM's quality score of 3.5 is below the minimum threshold of 4.0, and free cash flow is deeply negative at -245% of net income, indicating that cash outflows substantially exceed reported accounting earnings. Warnings | The quality score rises above 4.5 and free cash flow improves to at least -50% of net income within 12 months as capital expenditures normalize from a peak investment cycle. | ↑Improving |
| CounterLarge integrated device manufacturers in secular capex cycles can sustain negative free cash flow for 3 to 5 years during fab construction phases; the quality trough may represent the bottom of a structural cycle rather than ongoing deterioration. | ||
The stock is trading approximately 30% above analyst consensus price targets, with indicated upside of negative 29.8%, meaning the current price materially exceeds where analysts believe fair value lies. Warnings | Analyst consensus price target is upgraded to above $90, more than 14% above current price, following evidence of margin recovery or positive earnings guidance within 12 months. | Tripped↑Improving |
| CounterA stock trading 30% above analyst consensus targets with a 3-of-4 earnings miss record and below-threshold quality carries a high probability of price correction toward analyst targets rather than upward target revision. | ||
Despite the earnings miss streak, revenue is growing at 23% year-over-year, suggesting that top-line demand exists but is being absorbed by elevated costs or pricing pressure that compresses margins below consensus expectations.
→StableGrowth breakdown
- Expectation
- Operating margin recovery drives earnings back toward consensus levels with at least 1 positive EPS surprise in the next 2 quarters as cost absorption normalizes.
CounterRevenue growth in semiconductors during a cycle transition can coexist with margin compression as customers demand price concessions and inventory destocking drags average selling prices; cost pressures may persist longer than the revenue growth implies.
STMicroelectronics has missed consensus EPS estimates in 3 of the last 4 quarters with an average negative surprise of 34%, including a 78% miss in the most recent quarter, reflecting a severe semiconductor demand downturn exceeding analyst expectations.
→StableEarnings
- Expectation
- At least 2 of the next 4 quarterly reports come in at or above consensus estimates, indicating the earnings trough has passed and results are stabilizing relative to expectations.
CounterSemiconductor earnings cycles can produce multi-quarter miss streaks lasting 6 to 8 quarters during inventory correction phases; the 78% most-recent miss suggests the cycle bottom has not yet been reached.
STM's quality score of 3.5 is below the minimum threshold of 4.0, and free cash flow is deeply negative at -245% of net income, indicating that cash outflows substantially exceed reported accounting earnings.
↑ImprovingWarnings
- Expectation
- The quality score rises above 4.5 and free cash flow improves to at least -50% of net income within 12 months as capital expenditures normalize from a peak investment cycle.
CounterLarge integrated device manufacturers in secular capex cycles can sustain negative free cash flow for 3 to 5 years during fab construction phases; the quality trough may represent the bottom of a structural cycle rather than ongoing deterioration.
The stock is trading approximately 30% above analyst consensus price targets, with indicated upside of negative 29.8%, meaning the current price materially exceeds where analysts believe fair value lies.
Tripped↑ImprovingWarnings
- Expectation
- Analyst consensus price target is upgraded to above $90, more than 14% above current price, following evidence of margin recovery or positive earnings guidance within 12 months.
CounterA stock trading 30% above analyst consensus targets with a 3-of-4 earnings miss record and below-threshold quality carries a high probability of price correction toward analyst targets rather than upward target revision.
Per-dimension breakdown
Quality
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.9 |
| ROA | 1.4 |
| Gross margin | 2.9 |
| Op margin | 2.8 |
| Net margin | 1.8 |
| Current ratio | 9.3 |
| FCF quality | 1.6 |
| Moat | 6.4 |
| Piotroski F | 10.0 |
- ▸Earnings quality RED FLAG: 20% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
9.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 9.0 |
- ▸Strong growth: 26% YoY
Momentum
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 2.2 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.1 |
| Price target | 9.5 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 48%
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
4.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.2 |
| quality rank | 3.2 |
| growth rank | 4.4 |
Technical
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.3 |
| support resistance | 7.4 |
| 52w position | 2.5 |
| gap | 5.0 |
Risk (lower is worse)
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.0 |
| days to cover | 9.8 |
| volatility | 3.8 |
| put call | 8.8 |
| implied vol | 3.6 |
| beta | 4.9 |
| debt equity | 9.1 |
Catalyst
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 3.0 |
- ▸Earnings concerns: 1B/3M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (8)
- MOMENTUM:4.5>=4.5
- ASYMMETRY:4.1>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:57d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- MOMENTUM:4.5<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
4.10
Upside
+28.6%
Downside
7.0%
Sizing output
AVOID
SetupRange Bound — RSI 40 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.52>1.3
Investment implication
The F-path SELL output reflects an overall score of 4.9 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 9.0) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 4.10 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 9.0, Value at 7.3, and Sentiment at 7.3; the weakest are Catalyst at 2.6, Quality at 4.1, and Momentum at 4.5. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 4.10 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Miss Streak 34pct Avg
Trip ifEPS surprise falls below -20% in at least 2 of the next 4 quarters, indicating the earnings correction is deepening rather than stabilizing.
- P2Below Quality Floor Negative Fcf
Trip ifFree cash flow remains below -100% of net income for 2 or more consecutive quarters, indicating the capex cycle and quality trough are extending beyond 12 months.
- P323pct Revenue Growth Thesis
Trip ifRevenue growth falls below 5% year-over-year in any reported quarter over the next 12 months, indicating both the top-line and margin thesis are failing simultaneously.
- P4Analyst Target Deeply Negative UpsideTripped
Trip ifAnalyst consensus price target falls below $65, more than 18% below current price, as broad analyst downgrades follow further earnings misses.