Value
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.0 |
| P/S | 8.3 |
| EV/EBITDA | 3.6 |
| Fwd P/E | 7.1 |
| PEG | 3.8 |
| Analyst target | 4.0 |
- ▸Forward P/E: 17.8x
- ▸PEG: 2.85
TXNM · Why this verdict
Why TXNM Energy (TXNM) 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 score4.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
TXNM Energy is a regulated electric utility that has missed earnings in all four of the last four quarters with an average negative surprise of 27%, has estimates trending down 34% over 30 days, and is in an RSI-14 capitulation-risk downtrend, while its free cash flow is negative 434% of net income.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow is negative 434% of net income, meaning for every dollar of earnings reported, the company is actually consuming more than four dollars in cash, reflecting extremely heavy capital investment in regulated electric infrastructure that far exceeds current earnings capacity. Quality breakdown | The ratio of free cash flow to net income improves to less than negative 200% within the next 2 annual periods as capital expenditures moderate. | →Stable |
| CounterRegulated utilities are obligated to invest in infrastructure to meet service territory requirements and earn approved rate of return on those investments; high capex relative to earnings is structurally expected and does not signal financial distress. | ||
TXNM has missed analyst earnings estimates in every single quarter of the last four, with an average negative surprise of 27.1% and the worst miss at negative 39.2%, while 30-day forward estimates have been cut by 34.4%, indicating a systematic overestimation of the company's ability to translate revenue into earnings. Catalyst breakdown | The company delivers at least 1 positive earnings surprise in the next 4 quarters, reversing the 4-for-4 miss streak. | ↑Improving |
| CounterRegulated utility earnings depend heavily on rate case approvals; if a favorable rate decision is granted, earnings could jump substantially above depressed estimates in a single quarter. | ||
RSI has fallen to 14 with the stock below its 200-day moving average and falling on-balance volume, representing the deepest oversold condition in the assigned batch and signaling either a capitulation bottom or the continuation of a serious fundamental deterioration. Momentum breakdown | RSI recovers above 30 within the next 45 days without the stock breaching the stop-loss level at $56.07, indicating a stabilization of the selling pressure. | ↑Improving |
| CounterRSI of 14 in a utility stock that has missed 4 of 4 quarters with estimates still declining is not a contrarian opportunity but rather a reflection of justified fundamental concern. | ||
The analyst consensus price target at the stop-loss zone already implies negative upside of 6.7% from the current price, and the dividend payout is flagged as potentially unsustainable, creating a dual income and capital risk for investors holding the position. Warnings | Analyst price targets are revised upward to at least $62, representing more than 8% upside from the current $57.05, on a positive rate case outcome. | ↑Improving |
| CounterUtility stocks trading at deep discounts to near-term analyst targets sometimes reflect temporary rate case timing concerns that resolve when regulatory decisions are issued. | ||
Free cash flow is negative 434% of net income, meaning for every dollar of earnings reported, the company is actually consuming more than four dollars in cash, reflecting extremely heavy capital investment in regulated electric infrastructure that far exceeds current earnings capacity.
→StableQuality breakdown
- Expectation
- The ratio of free cash flow to net income improves to less than negative 200% within the next 2 annual periods as capital expenditures moderate.
CounterRegulated utilities are obligated to invest in infrastructure to meet service territory requirements and earn approved rate of return on those investments; high capex relative to earnings is structurally expected and does not signal financial distress.
TXNM has missed analyst earnings estimates in every single quarter of the last four, with an average negative surprise of 27.1% and the worst miss at negative 39.2%, while 30-day forward estimates have been cut by 34.4%, indicating a systematic overestimation of the company's ability to translate revenue into earnings.
↑ImprovingCatalyst breakdown
- Expectation
- The company delivers at least 1 positive earnings surprise in the next 4 quarters, reversing the 4-for-4 miss streak.
CounterRegulated utility earnings depend heavily on rate case approvals; if a favorable rate decision is granted, earnings could jump substantially above depressed estimates in a single quarter.
RSI has fallen to 14 with the stock below its 200-day moving average and falling on-balance volume, representing the deepest oversold condition in the assigned batch and signaling either a capitulation bottom or the continuation of a serious fundamental deterioration.
↑ImprovingMomentum breakdown
- Expectation
- RSI recovers above 30 within the next 45 days without the stock breaching the stop-loss level at $56.07, indicating a stabilization of the selling pressure.
CounterRSI of 14 in a utility stock that has missed 4 of 4 quarters with estimates still declining is not a contrarian opportunity but rather a reflection of justified fundamental concern.
The analyst consensus price target at the stop-loss zone already implies negative upside of 6.7% from the current price, and the dividend payout is flagged as potentially unsustainable, creating a dual income and capital risk for investors holding the position.
↑ImprovingWarnings
- Expectation
- Analyst price targets are revised upward to at least $62, representing more than 8% upside from the current $57.05, on a positive rate case outcome.
CounterUtility stocks trading at deep discounts to near-term analyst targets sometimes reflect temporary rate case timing concerns that resolve when regulatory decisions are issued.
Per-dimension breakdown
Quality
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.8 |
| ROA | 1.4 |
| Gross margin | 7.7 |
| Op margin | 6.1 |
| Net margin | 3.3 |
| Current ratio | 2.2 |
| FCF quality | 0.0 |
| Moat | 5.2 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: -434% FCF/NI
- ▸No competitive moat
Growth
1.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.7 |
| EPS growth | 0.0 |
Momentum
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.4 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.3 |
- ▸Overbought (RSI 72)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.0 |
| Analyst rating | 5.0 |
| Price target | 5.7 |
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
2.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.1 |
| quality rank | 0.2 |
| growth rank | 2.8 |
Technical
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.2 |
| 52w position | 9.5 |
Risk (lower is worse)
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.7 |
| days to cover | 7.6 |
| volatility | 9.6 |
| put call | 10.0 |
| implied vol | 5.7 |
| beta | 10.0 |
| debt equity | 3.7 |
| news risk | 5.5 |
- ▸Concentration risks: 4 MED (10-K Item 1A)
Catalyst
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 2.0 |
| news activity | 6.0 |
- ▸Earnings concerns: 0B/4M
- ▸Earnings in 9 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- MOMENTUM:6.7>=5.5
- INSIDER:OK
- 8K:CLEAN
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.8=NEGATIVE
Warning (1)
- EARNINGS_PROXIMITY:9d<=14d (soft)
Reward-to-Risk
-1.79
Upside
-9.0%
Downside
5.0%
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 SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's -1.8=NEGATIVE outcome against Insider at 7.3 and asymmetric R:R of -1.79.
The strongest dimensions are Insider at 7.3, Risk (lower is worse) at 7.3, and Momentum at 6.7; the weakest are Growth at 1.9, Peer rank at 2.2, and Catalyst at 2.8. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.79 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Persistent Earnings Miss Estimate Cuts
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, extending the miss streak beyond 7 consecutive quarters.
- P2Catastrophic Fcf Quality
Trip ifFree cash flow remains below negative 300% of net income for more than 2 consecutive annual periods.
- P3Capitulation Risk Extreme Momentum
Trip ifStock price drops below $54, more than 5% below the current $57.05, confirming the capitulation is accelerating rather than bottoming.
- P4Target Already Exceeded Negative Upside
Trip ifAnalyst price targets fall below $52, more than 8% below the current price, indicating the consensus has given up on near-term recovery.