Value
7.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 3.7 |
| P/S | 9.7 |
| EV/EBITDA | 5.4 |
| Fwd P/E | 7.3 |
| PEG | 10.0 |
- ▸Forward P/E: 17.2x
- ▸PEG: 0.17
- ▸Attractively valued
VREX · Why this verdict
Why Varex Imaging (VREX) 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 score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Varex Imaging has beaten or matched EPS estimates in each of the last 4 quarters, but weak cash conversion, falling estimates, heavy insider selling and a price above the $16.06 analyst target outweigh its modest valuation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
EPS beat estimates in 3 of the last 4 quarters and was in line in the other, with an average surprise of 70%, including $0.31 against $0.20 in the latest quarter. Last 4 quarters | EPS keeps meeting or beating estimates over the next 4 quarters, including the report due in 16 days. | ↑Improving |
| CounterBeats come from low EPS estimates on a small base, and the company missed three quarters in a row in 2024. | ||
Earnings quality shows a red flag, with free cash flow at -179% of net income and no competitive moat, despite a strong Piotroski F-Score of 8 of 9. Quality breakdown | Free cash flow turns positive relative to net income over the next 12 months. | →Stable |
| CounterWorking capital timing and inventory build at medical device makers can distort one year of cash flow without changing underlying profitability. | ||
Earnings estimates are down 37.5% over 30 days, signaling analysts expect weaker results ahead of the next report. Catalyst breakdown | Estimate revisions turn flat or positive over the next 12 months as results hold up. | ↑Improving |
| CounterEstimate cuts after a run of beats can reflect conservative resets that the company then beats again. | ||
At $18.43 the stock trades above the $16.06 analyst target (upside -12.8%), leaving a negative reward-to-risk ratio of -0.86 against 15% downside. Analyst target | Analyst targets are raised toward the current price if beats continue. | →Stable |
| CounterThe price sits above its 200-day average and near the top of its 52-week range, so the market may be pricing in a recovery that analysts have not caught up with. | ||
Insiders sold about $2.55M of stock in 90 days with no buys, equal to 0.326% of market cap, alongside an elevated put/call ratio of 3.00. Insider | Insider net selling slows and the put/call ratio falls over the next 12 months. | →Stable |
| CounterWith only 2 sales, the selling may reflect a single executive's planned diversification rather than a view on the business. | ||
EPS beat estimates in 3 of the last 4 quarters and was in line in the other, with an average surprise of 70%, including $0.31 against $0.20 in the latest quarter.
↑ImprovingLast 4 quarters
- Expectation
- EPS keeps meeting or beating estimates over the next 4 quarters, including the report due in 16 days.
CounterBeats come from low EPS estimates on a small base, and the company missed three quarters in a row in 2024.
Earnings quality shows a red flag, with free cash flow at -179% of net income and no competitive moat, despite a strong Piotroski F-Score of 8 of 9.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive relative to net income over the next 12 months.
CounterWorking capital timing and inventory build at medical device makers can distort one year of cash flow without changing underlying profitability.
Earnings estimates are down 37.5% over 30 days, signaling analysts expect weaker results ahead of the next report.
↑ImprovingCatalyst breakdown
- Expectation
- Estimate revisions turn flat or positive over the next 12 months as results hold up.
CounterEstimate cuts after a run of beats can reflect conservative resets that the company then beats again.
At $18.43 the stock trades above the $16.06 analyst target (upside -12.8%), leaving a negative reward-to-risk ratio of -0.86 against 15% downside.
→StableAnalyst target
- Expectation
- Analyst targets are raised toward the current price if beats continue.
CounterThe price sits above its 200-day average and near the top of its 52-week range, so the market may be pricing in a recovery that analysts have not caught up with.
Insiders sold about $2.55M of stock in 90 days with no buys, equal to 0.326% of market cap, alongside an elevated put/call ratio of 3.00.
→StableInsider
- Expectation
- Insider net selling slows and the put/call ratio falls over the next 12 months.
CounterWith only 2 sales, the selling may reflect a single executive's planned diversification rather than a view on the business.
Per-dimension breakdown
Quality
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.5 |
| ROA | 2.8 |
| Gross margin | 2.9 |
| Op margin | 4.3 |
| Net margin | 1.3 |
| Current ratio | 9.6 |
| FCF quality | 0.0 |
| Moat | 4.5 |
| Piotroski F | 8.9 |
- ▸Earnings quality RED FLAG: -179% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
6.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.4 |
| EPS growth | 10.0 |
Momentum
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 3.4 |
| OBV | 1.0 |
| MA position | 7.0 |
| Volume | 6.7 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.0 |
| Analyst rating | 5.0 |
| Price target | 5.4 |
Insider
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.6 |
| notable moves | 3.0 |
- ▸Notable insider selling — $2,550,136 (0.326% of mkt cap)
Peer rank
4.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.1 |
| quality rank | 5.2 |
| growth rank | 1.8 |
Technical
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.2 |
| support resistance | 3.1 |
| 52w position | 9.8 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 7.8 |
| volatility | 10.0 |
| put call | 0.0 |
| implied vol | 0.8 |
| beta | 7.2 |
| debt equity | 6.5 |
| news risk | 6.0 |
- ▸Elevated put/call: 3.00
- ▸High IV: 75%
Catalyst
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 7.0 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- MOMENTUM:4.7>=4.5
- 8K:CLEAN
- EARNINGS_PROXIMITY:15d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.9=NEGATIVE
- INSIDER:0.33%=HEAVY
Warning (1)
- MOMENTUM:4.7<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.86
Upside
-13.0%
Downside
15.0%
Sizing output
AVOID
SetupRange Bound — RSI 49 mid-range, Bollinger mid-band
EdgeCatalyst-Driven — Earnings in 15d with 3/4 beat streak
SuitabilityAggressive — MCap $0.8B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's -0.9=NEGATIVE outcome against Value at 7.7 and asymmetric R:R of -0.86.
The strongest dimensions are Value at 7.7, Catalyst at 7.1, and Growth at 6.7; the weakest are Insider at 3.4, Quality at 4.0, and Peer rank at 4.1. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.86 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Reliable Earnings Beats
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P2Poor Cash Conversion
Trip ifFree cash flow to net income rises above 50% from the current -179%.
- P3Falling Estimates
Trip if30-day estimate revision exceeds 0% from the current -37.5%.
- P4Price Above Analyst Target
Trip ifAnalyst target rises above $20 from the current $16.06.
- P5Heavy Insider Selling
Trip ifInsider net selling stays below $500,000 over 90 days.