ACFN

We rate ACORN ENERGY, INC. (ACFN) as a Reduce with a composite score of 45.9/100 at a current price of $17.22. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (60th percentile) and momentum (39th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (24th percentile) and investment (31th percentile) tempers our overall conviction. We assign a Narrow Moat rating (59/100), High uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

ACORN ENERGY, INC. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 45.9/100 places it at rank #2654 in our full 7,333-stock universe. At $73M in market capitalization, ACORN ENERGY, INC. is a small-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 9%, though momentum at the 39th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 75% (+15.5pp vs sector) narrow to operating margins of 19% (+15.9pp vs sector) and net margins of 17.6%, yielding a gross-to-net conversion rate of 24%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $17.22, ACORN ENERGY, INC. is trading at a premium to fundamental value. Our value factor score of 38/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 19.9x (roughly in line with the sector median of 23.7x), EV/EBITDA of 17.0x (at a premium), P/B of 6.1x, P/S of 3.6x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to ACORN ENERGY, INC.. Key risk factors include elevated market sensitivity (beta of 1.61), below-average price stability (24th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.61); below-average price stability (24th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 24th percentile and quality factor at the 60th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 75% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate ACORN ENERGY, INC.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 30.4%, best-in-class net margins of 17.6%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — ACORN ENERGY, INC. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 17.7% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, ACORN ENERGY, INC. receives a Reduce rating with a composite score of 45.9/100 (rank #2654 of 7,333). Our quantitative framework assigns a Narrow Moat (59/100, trend: stable), High uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 38/100.

Our analysis does not support a constructive view on ACORN ENERGY, INC. at this time. The combination of the current quantitative profile, high uncertainty, and exemplary capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.