Value
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.3 |
| P/S | 9.7 |
| EV/EBITDA | 3.4 |
| Fwd P/E | 8.7 |
| PEG | 4.7 |
| Analyst target | 6.0 |
- ▸Forward P/E: 13.0x
- ▸PEG: 1.82
TNC · Why this verdict
Why Tennant (TNC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Tennant Company has exceptional cash conversion at 170% of net income and a Piotroski score of 8 out of 9, but three consecutive earnings misses, negative asymmetry, and a below-average quality score create a weak investment thesis at current prices.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow conversion of 170% relative to net income is exceptional and indicates the business generates substantially more cash than reported earnings suggest, making the stock potentially cheaper on a cash flow basis than the reported price-to-earnings multiple implies. Quality breakdown | Free cash flow as a percentage of net income remains above 120% over the next 12 months, confirming the cash quality is structural. | ↓Deteriorating |
| CounterExceptional free cash flow relative to net income in an industrial machinery company often reflects deferred capital expenditure rather than genuine cash generation efficiency, which could normalize when maintenance reinvestment catches up. | ||
Three consecutive earnings misses — including a -71.7% negative surprise in Q4 2025 — with an average surprise of -9.8% over the past year indicate that analyst estimates consistently overshoot actual delivery, undermining confidence in the forward earnings outlook. Earnings | Beat count reaches at least 2 of the next 4 quarters and the average surprise percentage rises above -5% over the next year. | ↑Improving |
| CounterThe most recent quarter delivered a 43.8% positive surprise against a very low bar estimate of $0.40, which may signal that expectations have now been reset to a level the company can meet. | ||
Revenue growth is registering in the low single digits and earnings growth is at 0.0 out of 10, with the peer ranking for growth at the bottom of its group — placing Tennant in the weakest quartile for growth among specialty industrial machinery companies. Growth | Revenue growth accelerates above 5% year-over-year within 12 months, bringing the growth score above 3.0 out of 10. | ↑Improving |
| CounterLow growth industrial companies can deliver strong total returns through disciplined capital allocation and share buybacks even without top-line acceleration, particularly when trading at reasonable multiples. | ||
With upside of only 0.6% to the resistance target, asymmetry of -1.23, and the stock trading 10.2% above the analyst target, the price-to-target structure is unfavorable — meaning a position started today has more expected downside than upside on a 12-month basis. Warnings | Analyst consensus price target rises above $95, more than 9% above the current price of $86.59, re-establishing positive asymmetry for a new entry. | ↑Improving |
| CounterHigh short interest of 10% creates a potential short-squeeze dynamic that could push price above the analyst target if any positive catalyst emerges, amplifying upside beyond the stated target. | ||
Free cash flow conversion of 170% relative to net income is exceptional and indicates the business generates substantially more cash than reported earnings suggest, making the stock potentially cheaper on a cash flow basis than the reported price-to-earnings multiple implies.
↓DeterioratingQuality breakdown
- Expectation
- Free cash flow as a percentage of net income remains above 120% over the next 12 months, confirming the cash quality is structural.
CounterExceptional free cash flow relative to net income in an industrial machinery company often reflects deferred capital expenditure rather than genuine cash generation efficiency, which could normalize when maintenance reinvestment catches up.
Three consecutive earnings misses — including a -71.7% negative surprise in Q4 2025 — with an average surprise of -9.8% over the past year indicate that analyst estimates consistently overshoot actual delivery, undermining confidence in the forward earnings outlook.
↑ImprovingEarnings
- Expectation
- Beat count reaches at least 2 of the next 4 quarters and the average surprise percentage rises above -5% over the next year.
CounterThe most recent quarter delivered a 43.8% positive surprise against a very low bar estimate of $0.40, which may signal that expectations have now been reset to a level the company can meet.
Revenue growth is registering in the low single digits and earnings growth is at 0.0 out of 10, with the peer ranking for growth at the bottom of its group — placing Tennant in the weakest quartile for growth among specialty industrial machinery companies.
↑ImprovingGrowth
- Expectation
- Revenue growth accelerates above 5% year-over-year within 12 months, bringing the growth score above 3.0 out of 10.
CounterLow growth industrial companies can deliver strong total returns through disciplined capital allocation and share buybacks even without top-line acceleration, particularly when trading at reasonable multiples.
With upside of only 0.6% to the resistance target, asymmetry of -1.23, and the stock trading 10.2% above the analyst target, the price-to-target structure is unfavorable — meaning a position started today has more expected downside than upside on a 12-month basis.
↑ImprovingWarnings
- Expectation
- Analyst consensus price target rises above $95, more than 9% above the current price of $86.59, re-establishing positive asymmetry for a new entry.
CounterHigh short interest of 10% creates a potential short-squeeze dynamic that could push price above the analyst target if any positive catalyst emerges, amplifying upside beyond the stated target.
Per-dimension breakdown
Quality
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.3 |
| ROA | 1.6 |
| Gross margin | 3.7 |
| Op margin | 3.1 |
| Net margin | 0.9 |
| Current ratio | 7.5 |
| FCF quality | 4.4 |
| Moat | 5.8 |
| Piotroski F | 7.8 |
- ▸Earnings quality warning: 56% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
7.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.1 |
| EPS growth | 10.0 |
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.1 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 3.5 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.6%/30d — confirmed downtrend
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.2 |
| Analyst rating | 6.3 |
| Price target | 8.1 |
- ▸Light analyst coverage (4.0) — signal dampened
- ▸Analyst upside: 24%
Insider
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 6.5 |
| insider conviction | 8.0 |
| holder change | 7.2 |
| notable moves | 7.0 |
- ▸Modest insider buying — $849,240 (0.068% of mkt cap)
Peer rank
3.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.3 |
| quality rank | 1.2 |
| growth rank | 3.1 |
Technical
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.8 |
| support resistance | 3.9 |
| 52w position | 5.5 |
| gap | 5.0 |
Risk (lower is worse)
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.2 |
| days to cover | 1.7 |
| volatility | 4.1 |
| put call | 2.5 |
| implied vol | 4.3 |
| beta | 6.5 |
| debt equity | 6.7 |
- ▸Elevated put/call: 1.62
Catalyst
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 4.0 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
- ▸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 (5)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- EARNINGS_PROXIMITY:109d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.6<1.5@spot
Warning (2)
- DEATH_CROSS:momentum=6.5>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.58
Upside
+5.3%
Downside
9.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 69
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $1.2B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Insider at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.6<1.5@spot) reinforce the read. Current asymmetry R:R is 0.58 — supplementary context, not the trigger for this path.
The strongest dimensions are Insider at 7.2, Growth at 7.0, and Sentiment at 6.8; the weakest are Peer rank at 3.0, Technical at 3.8, and Quality at 4.0. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.58 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Cash Conversion
Trip ifFree cash flow as a percentage of net income falls below 80%, more than 90 percentage points below the current 170%, signaling meaningful cash quality deterioration.
- P2Consecutive Earnings Misses
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, confirming that the 3-quarter miss streak has not resolved despite the recent low-bar beat.
- P3Near Zero Growth Profile
Trip ifRevenue growth falls below 0% year-over-year in at least 2 of the next 4 reported quarters, confirming an absolute revenue contraction.
- P4Negative Asymmetry Target Reached
Trip ifAnalyst consensus price target falls below $78, more than 10% below the current price of $86.59, confirming the negative asymmetry is worsening rather than resolving.