Value
6.2/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 3.0 |
| P/S | 10.0 |
| EV/EBITDA | 6.8 |
| Fwd P/E | 9.0 |
| PEG | 3.0 |
- ▸Forward P/E: 12.0x
- ▸PEG: 4.13
UVV · Why this verdict
Why Universal (UVV) 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 score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Universal Corporation converts free cash flow at 200% of net income and carries a Piotroski financial strength score of 8 out of 9, but 3 consecutive earnings misses with a devastating average surprise of -46%, an extremely elevated put-to-call ratio of 28, and weak overall growth make this a fragile position.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Universal Corporation converts 200% of net income into free cash flow, signaling that the business generates substantially more actual cash than reported earnings suggest, supporting the thesis that the stock's true earnings power is higher than headline numbers indicate. Quality breakdown | Free cash flow conversion should remain above 150% of net income over the next 12 months. | →Stable |
| CounterThe net margin is less than 1% despite the high free cash flow conversion ratio, meaning the absolute dollar amount of free cash flow is very small, limiting the practical financial benefit of the conversion premium. | ||
Analysts place a consensus price target implying 39% upside from the current $53.33, suggesting the market may be undervaluing the leaf tobacco supply chain business on an asset or cash flow basis despite weak reported earnings. Sentiment breakdown | The price should rise above $60 within 12 months, capturing at least 40% of the implied analyst upside. | ↓Deteriorating |
| CounterRevenue growth is minimal and the PEG ratio of 4.13 indicates the stock is not inexpensive relative to growth, and the dividend is flagged as unsafe relative to its payout level, reducing the yield-as-a-floor argument. | ||
Universal Corporation missed earnings estimates in 3 of the last 4 quarters with an average negative surprise of -46%, including a recent quarter where actual results were -142.6% below expectations, indicating a severe deterioration in near-term earnings predictability. Earnings | EPS surprise should improve to above -10% in at least 2 of the next 4 quarters as the business cycle stabilizes. | →Stable |
| CounterLeaf tobacco processing companies experience significant quarterly earnings volatility due to crop timing and export shipment patterns, and a single-quarter miss can disproportionately distort the average. | ||
A put-to-call ratio of 28.00 is among the highest observed across the screened universe, reflecting extreme bearish or hedging positioning in the options market that signals elevated downside risk uncertainty. Key risks | The put-to-call ratio should decline below 10 within 12 months as fundamental clarity improves and hedging unwinds. | ↓Deteriorating |
| CounterIn very thinly traded options markets for small-cap tobacco distributors, a ratio this extreme often reflects a single large institutional hedge rather than a broad bearish consensus, and may not carry predictive weight. | ||
Universal Corporation converts 200% of net income into free cash flow, signaling that the business generates substantially more actual cash than reported earnings suggest, supporting the thesis that the stock's true earnings power is higher than headline numbers indicate.
→StableQuality breakdown
- Expectation
- Free cash flow conversion should remain above 150% of net income over the next 12 months.
CounterThe net margin is less than 1% despite the high free cash flow conversion ratio, meaning the absolute dollar amount of free cash flow is very small, limiting the practical financial benefit of the conversion premium.
Analysts place a consensus price target implying 39% upside from the current $53.33, suggesting the market may be undervaluing the leaf tobacco supply chain business on an asset or cash flow basis despite weak reported earnings.
↓DeterioratingSentiment breakdown
- Expectation
- The price should rise above $60 within 12 months, capturing at least 40% of the implied analyst upside.
CounterRevenue growth is minimal and the PEG ratio of 4.13 indicates the stock is not inexpensive relative to growth, and the dividend is flagged as unsafe relative to its payout level, reducing the yield-as-a-floor argument.
Universal Corporation missed earnings estimates in 3 of the last 4 quarters with an average negative surprise of -46%, including a recent quarter where actual results were -142.6% below expectations, indicating a severe deterioration in near-term earnings predictability.
→StableEarnings
- Expectation
- EPS surprise should improve to above -10% in at least 2 of the next 4 quarters as the business cycle stabilizes.
CounterLeaf tobacco processing companies experience significant quarterly earnings volatility due to crop timing and export shipment patterns, and a single-quarter miss can disproportionately distort the average.
A put-to-call ratio of 28.00 is among the highest observed across the screened universe, reflecting extreme bearish or hedging positioning in the options market that signals elevated downside risk uncertainty.
↓DeterioratingKey risks
- Expectation
- The put-to-call ratio should decline below 10 within 12 months as fundamental clarity improves and hedging unwinds.
CounterIn very thinly traded options markets for small-cap tobacco distributors, a ratio this extreme often reflects a single large institutional hedge rather than a broad bearish consensus, and may not carry predictive weight.
Per-dimension breakdown
Quality
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.3 |
| ROA | 3.1 |
| Gross margin | 0.0 |
| Op margin | 1.5 |
| Net margin | 0.6 |
| Current ratio | 9.5 |
| FCF quality | 10.0 |
| Moat | 4.5 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 200% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
2.9/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
Momentum
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 1.8 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
6.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 9.1 |
- ▸Analyst upside: 38%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $153,986 (0.012% of mkt cap)
- ▸Institutions accumulating
Peer rank
2.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 0.0 |
| growth rank | 1.7 |
Technical
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.4 |
| support resistance | 0.3 |
| 52w position | 8.7 |
Risk (lower is worse)
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.0 |
| days to cover | 4.7 |
| volatility | 7.7 |
| put call | 8.4 |
| implied vol | 7.4 |
| max pain risk | 3.0 |
| beta | 9.6 |
| debt equity | 7.1 |
- ▸Above max pain $30
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
2.0/10data confidence 100%| Component | Sub-score |
|---|---|
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 3.0 |
- ▸Earnings concerns: 1B/3M
- ▸Earnings in 14 days
- ▸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 (7)
- MOMENTUM:7.0>=5.5
- ASYMMETRY:2.6>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- EARNINGS_PROXIMITY:14d<=14d (soft)
Reward-to-Risk
2.62
Upside
+17.0%
Downside
6.5%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 67, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $1.3B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Insider at 7.3) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 2.62 — supplementary context, not the trigger for this path.
The strongest dimensions are Insider at 7.3, Momentum at 7.0, and Sentiment at 6.8; the weakest are Catalyst at 2.0, Peer rank at 2.7, and Growth at 2.9. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 2.62 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Free Cash Flow Conversion
Trip ifFree cash flow conversion falls below 100% of net income in any of the next 4 quarters.
- P2Earnings Miss Deterioration
Trip ifEPS surprise falls below -50% in at least 2 of the next 4 quarters.
- P3Extreme Put Call Hedging
Trip ifPut-to-call ratio rises above 35, exceeding the current 28 level.
- P4Analyst Upside With Weak Growth
Trip ifPrice drops below $49.69, more than 6.8% below the current $53.33.