BNC

We rate CEA Industries Inc. (BNC) as Avoid with a composite score of 36.8/100 at a current price of $3.71. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in value (77th percentile) and quality (58th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (8th percentile) and stability (19th percentile) tempers our overall conviction. We assign a Narrow Moat rating (57/100), Medium uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. 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.

CEA Industries Inc. holds a lower-quartile position (#14 of 17) within the Agriculture, Forestry, And Fishing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 36.8/100 places it at rank #3925 in our full 7,333-stock universe. At $320M in market capitalization, CEA Industries Inc. is a small-cap player in the Agriculture, Forestry, And Fishing space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 306%, though momentum at the 8th 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 10% (-8.1pp vs sector) narrow to operating margins of 581% (+578.6pp vs sector) and net margins of 1938.0%, yielding a gross-to-net conversion rate of 19070%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $3.71, CEA Industries Inc. appears undervalued relative to its fundamentals. Our value factor score of 77/100 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 stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 0.3x (a 97% discount to the sector median of 11.1x), EV/EBITDA of 0.3x (discounted to peers), P/B of 0.3x, P/S of 7.8x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to CEA Industries Inc.. The stock presents a balanced risk profile: below-average price stability (19th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: below-average price stability (19th 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 19th percentile and quality factor at the 58th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (27% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate CEA Industries Inc.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 116.8%, disciplined leverage (27% D/E), best-in-class net margins of 1938.0%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — CEA Industries 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 91.9% 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, CEA Industries Inc. receives a Avoid rating with a composite score of 36.8/100 (rank #3925 of 7,333). Our quantitative framework assigns a Narrow Moat (57/100, trend: stable), Medium uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 37/100.

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