EONR

We rate EON Resources Inc. (EONR) as Avoid with a composite score of 35.4/100 at a current price of $0.38. 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 (54th percentile) and investment (37th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (9th percentile) and stability (32th percentile) tempers our overall conviction. We assign a No Moat rating (22/100), Low uncertainty, and Poor 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.

EON Resources Inc. holds a top-quartile position (#0 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 35.4/100 places it at rank #4072 in our full 7,333-stock universe. At $27M in market capitalization, EON Resources Inc. is a small-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -14% combined with momentum at the 9th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 32% (-11.2pp vs sector) narrow to operating margins of -6% (-18.2pp vs sector) and net margins of 4.8%, yielding a gross-to-net conversion rate of 15%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $0.38, EON Resources Inc. is trading near fair value based on current fundamentals. Our value factor score of 54/100 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. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 2.6x (a 81% discount to the sector median of 13.7x), EV/EBITDA of 0.5x (discounted to peers), P/B of 0.3x, P/S of 0.9x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to EON Resources Inc.. The company exhibits strong financial stability with a beta of 0.41, conservative leverage (9% D/E), and a stability factor in the 32th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: below-average price stability (32th percentile); weak quality scores (33th percentile); low beta of 0.41 — while defensive, this may indicate limited upside participation in bull markets. 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 32th percentile and quality factor at the 33th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (9% 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 EON Resources Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-1.4%), weak asset returns (ROA -0.9%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — EON Resources Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, EON Resources Inc. receives a Avoid rating with a composite score of 35.4/100 (rank #4072 of 7,333). Our quantitative framework assigns a No Moat (22/100, trend: stable), Low uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 33/100.

Our analysis does not support a constructive view on EON Resources Inc. at this time. The combination of limited competitive advantages, low uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.