Value
6.5/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 3.2 |
| P/S | 0.0 |
| EV/EBITDA | 0.2 |
| PEG | 10.0 |
- ▸PEG: 0.07
VMET · Why this verdict
Why Versamet Royalties (VMET) 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 score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Gross margins of 58%, an operating margin scored at the maximum level, and a confirmed wide economic moat characterize the royalty business model as a high-quality compounder with structural cost advantages over direct mining operators. Quality breakdown | Gross margins stay above 50% and the wide moat rating is maintained through the next 2 annual reporting periods. | →Stable |
| CounterRoyalty companies have limited control over the underlying mines producing their revenue stream; production disruptions, mine closures, or reserve depletion at counterparty mines can impair revenue without any management action. | ||
A Rule of 40 score of 351 — far above the 40-point threshold for quality growth companies — reflects exceptional unit economics in the royalty model where revenue growth translates directly to high-margin income. Quality breakdown | Rule of 40 score stays above 100 through the next 2 annual reporting periods, confirming continued elite unit economics. | →Stable |
| CounterAn extremely high Rule of 40 score in a royalty company primarily reflects the lack of operating costs rather than genuine growth momentum; it measures quality more than growth trajectory. | ||
A Piotroski financial-strength score of 8 out of 9 across balance sheet, profitability, and operational efficiency dimensions indicates a financially healthy royalty company with improving fundamentals. Quality breakdown | Piotroski score stays at 7 or above through the next 2 annual reporting periods. | →Stable |
| CounterStrong Piotroski scores at small royalty companies can reflect simple balance sheet structures rather than genuine improvement in growth capacity. | ||
Despite high operating margins, free cash flow is negative at minus 415% of net income, indicating the business is investing heavily or that reported earnings are materially ahead of actual cash generation, raising a concern about earnings quality. Quality breakdown | Free cash flow turns positive and reaches at least 50% of net income within the next 2 annual reporting periods. | →Stable |
| CounterRoyalty companies frequently report negative free cash flow during periods of royalty acquisition investment, which is capital deployment rather than operational weakness. | ||
Gross margins of 58%, an operating margin scored at the maximum level, and a confirmed wide economic moat characterize the royalty business model as a high-quality compounder with structural cost advantages over direct mining operators.
→StableQuality breakdown
- Expectation
- Gross margins stay above 50% and the wide moat rating is maintained through the next 2 annual reporting periods.
CounterRoyalty companies have limited control over the underlying mines producing their revenue stream; production disruptions, mine closures, or reserve depletion at counterparty mines can impair revenue without any management action.
A Rule of 40 score of 351 — far above the 40-point threshold for quality growth companies — reflects exceptional unit economics in the royalty model where revenue growth translates directly to high-margin income.
→StableQuality breakdown
- Expectation
- Rule of 40 score stays above 100 through the next 2 annual reporting periods, confirming continued elite unit economics.
CounterAn extremely high Rule of 40 score in a royalty company primarily reflects the lack of operating costs rather than genuine growth momentum; it measures quality more than growth trajectory.
A Piotroski financial-strength score of 8 out of 9 across balance sheet, profitability, and operational efficiency dimensions indicates a financially healthy royalty company with improving fundamentals.
→StableQuality breakdown
- Expectation
- Piotroski score stays at 7 or above through the next 2 annual reporting periods.
CounterStrong Piotroski scores at small royalty companies can reflect simple balance sheet structures rather than genuine improvement in growth capacity.
Despite high operating margins, free cash flow is negative at minus 415% of net income, indicating the business is investing heavily or that reported earnings are materially ahead of actual cash generation, raising a concern about earnings quality.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive and reaches at least 50% of net income within the next 2 annual reporting periods.
CounterRoyalty companies frequently report negative free cash flow during periods of royalty acquisition investment, which is capital deployment rather than operational weakness.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Versamet Royalties holds a wide economic moat within the precious metals royalty sector, with gross margins of 58%, a Rule of 40 score of 351, and a strong Piotroski score of 8, though no analyst price target is available, earnings data is absent, and technical upside is exhausted at the current price level.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.7 |
| ROA | 7.3 |
| Gross margin | 9.5 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 5.0 |
| FCF quality | 0.0 |
| Moat | 7.9 |
| Rule of 40 | 9.5 |
| Piotroski F | 8.9 |
- ▸Strong margins: 58%
- ▸Earnings quality RED FLAG: -415% FCF/NI
- ▸Wide economic moat
- ▸Rule of 40: 351 (elite)
Growth
5.0/10data confidence 50%Momentum
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 3.5 |
| OBV | 1.0 |
| MA position | 2.5 |
| Volume | 1.6 |
- ▸Volume distribution (falling OBV)
Sentiment
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.8 |
| quality rank | 6.5 |
| growth rank | 10.0 |
- ▸Industry growth leader
Technical
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.9 |
| support resistance | 7.4 |
| 52w position | 6.7 |
| gap | 5.0 |
Risk (lower is worse)
7.2/10data confidence 80%| Component | Sub-score |
|---|---|
| short interest | 9.7 |
| days to cover | 9.5 |
| volatility | 0.0 |
| debt equity | 9.5 |
Catalyst
5.0/10data confidence 25%| Component | Sub-score |
|---|---|
| erm | 5.0 |
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:2.6<4.5
Warning (1)
- ASYMMETRY:UPSIDE_EXHAUSTED (upside=0.0%)
Reward-to-Risk
0.00
Upside
+0.0%
Downside
13.3%
Sizing output
AVOID
SetupRange Bound — RSI 40 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $1.3B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.6<4.5) reinforce the read. Current asymmetry R:R is 0.00 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.2, Risk (lower is worse) at 7.2, and Value at 6.5; the weakest are Momentum at 2.6, Peer rank at 4.6, and Catalyst at 5.0. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat High Margin Royalty Model
Trip ifGross margins fall below 45% in any annual reporting period, indicating a structural change in the royalty portfolio's profitability.
- P2Elite Rule Of 40 Score
Trip ifRule of 40 score falls below 80, signaling a meaningful decline in unit economics from the current elite level.
- P3Strong Financial Health Piotroski
Trip ifPiotroski score drops below 5 in any annual reporting period.
- P4Negative Free Cashflow Quality Flag
Trip ifFree cash flow remains negative at more than 200% of net income for at least 2 consecutive annual periods, indicating the cash gap is not closing.