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Alamo Group (ALG)
NYSE:ALG
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Alamo Group
(NYSE:ALG)
76Outperform
Positive Factors
Earnings Recovery
M&A remains a potential catalyst, further augmenting earnings recovery.
Industrial Demand
Management noted strong demand from industrial contractors.
Industrial Growth
Industrial operating income increased 36% year/year.
Negative Factors
Demand Weakness
Orders and backlog have decreased year over year, suggesting weaker future demand.
Earnings Pressure
Backlog erosion will pressure earnings in the first half of 2025.
Profitability Concerns
The company's operating margin fell short of expectations, indicating pressure on profitability.
Alamo Group (ALG) vs. S&P 500 (SPY)
Market Cap
$2.18B
Dividend Yield0.6%
Average Volume (3M)140.95K
Price to Earnings (P/E)18.8
Beta (1Y)1.06
Revenue Growth-3.62%
EPS Growth-15.20%
CountryUS
Employees3,750
SectorIndustrials
Sector Strength66
IndustryAgricultural - Machinery
Share Statistics
EPS (TTM)9.63
Shares Outstanding12,063,468
10 Day Avg. Volume187,937
30 Day Avg. Volume140,948
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.36
Price to Cash Flow (P/CF)7.00
P/FCF Ratio7.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$256.00Price Target Upside41.56% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Alamo Group Business Overview & Revenue Model
Company DescriptionAlamo Group (ALG) is a leading global provider of high-quality equipment for infrastructure maintenance, agriculture, and other industrial sectors. The company designs, manufactures, and distributes a wide array of products, including mowing equipment, street sweepers, snow removal gear, and agricultural implements. Alamo Group's diverse portfolio caters to governmental bodies, contractors, and agricultural customers, ensuring essential maintenance and operational needs are efficiently met.
How the Company Makes MoneyAlamo Group makes money primarily through the sale of its engineered products, which are distributed across various sectors such as agriculture and infrastructure maintenance. The company's revenue is generated from multiple streams, including direct sales to end-users, sales through a network of dealers, and governmental contracts for public works equipment. Additionally, Alamo Group benefits from recurring revenue through the provision of parts and services for its equipment, ensuring ongoing customer engagement and support. Strategic acquisitions and partnerships further complement its earnings by expanding its product offerings and market reach.
Alamo Group Financial Statement Overview
Summary
Alamo Group demonstrates strong financial health with consistent revenue growth and improved profitability margins, a solid balance sheet with a strong equity position, and robust cash flow management. However, attention to debt levels and minor revenue dips is advisable.Income Statement
Alamo Group has demonstrated consistent revenue growth with a notable increase from $1.11 billion in 2019 to $1.69 billion in 2023. The gross profit margin has improved over the years, reaching 26.85% in 2023. The net profit margin also increased to 8.06% in 2023 from the previous year. The company maintains strong EBIT and EBITDA margins, indicating efficient operations. However, the slight decline in total revenue from 2023 to 2024 suggests potential challenges ahead.85
Very Positive
Balance Sheet
The balance sheet shows a strong equity base with Stockholders' Equity rising from $569.76 million in 2019 to over $1 billion in 2024. The debt-to-equity ratio has improved, reflecting better leverage management. The equity ratio indicates a stable capital structure, though the total debt level remains significant. Overall, the balance sheet reflects financial stability but suggests monitoring debt levels.80
Positive
Cash Flow
Alamo Group has experienced substantial growth in operating cash flow, with a significant increase in free cash flow by 2023. The free cash flow to net income ratio demonstrates the company's ability to generate cash efficiently relative to its earnings. However, fluctuations in investing and financing cash flows indicate variable investment activities and capital management.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.63B | 1.69B | 1.51B | 1.33B | 1.16B | Gross Profit |
| 412.49M | 453.64M | 376.52M | 334.51M | 292.11M | EBIT |
| 164.81M | 197.97M | 148.59M | 116.94M | 93.17M | EBITDA |
| 223.26M | 249.19M | 195.28M | 161.42M | 143.43M | Net Income Common Stockholders |
| 115.93M | 136.16M | 101.93M | 80.25M | 57.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 197.27M | 51.92M | 47.02M | 42.12M | 50.20M | Total Assets |
| 1.45B | 1.41B | 1.31B | 1.21B | 1.11B | Total Debt |
| 220.48M | 251.88M | 301.95M | 269.55M | 285.39M | Net Debt |
| 23.21M | 199.96M | 254.94M | 227.44M | 235.19M | Total Liabilities |
| 432.02M | 476.62M | 523.15M | 500.08M | 483.69M | Stockholders Equity |
| 1.02B | 932.76M | 785.36M | 705.66M | 625.64M |
| Cash Flow | Free Cash Flow | |||
| 184.78M | 93.41M | -16.77M | 24.36M | 166.46M | Operating Cash Flow |
| 209.78M | 131.15M | 14.53M | 49.67M | 184.33M | Investing Cash Flow |
| -22.18M | -52.62M | -31.74M | -33.44M | -14.17M | Financing Cash Flow |
| -31.97M | -76.88M | 24.45M | -23.00M | -164.24M |
Alamo Group Technical Analysis
Negative
180.84
Price Trends
184.81
Negative
187.73
Negative
182.07
Negative
Market Momentum
0.34
Positive
42.47
Neutral
36.16
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALG, the sentiment is Negative. The current price of 180.84 is below the 20-day moving average (MA) of 184.31, below the 50-day MA of 184.81, and below the 200-day MA of 182.07, indicating a bearish trend. The MACD of 0.34 indicates Positive momentum. The RSI at 42.47 is Neutral, neither overbought nor oversold. The STOCH value of 36.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALG.
Alamo Group Risk Analysis
Alamo Group disclosed 31 risk factors in its most recent earnings report. Alamo Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Alamo Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $2.56B | 7.76 | 19.13% | 1.77% | -0.47% | -34.74% | |
76 Outperform | $2.18B | 18.78 | 11.88% | 0.60% | -3.62% | -15.20% | |
74 Outperform | $126.29B | 20.62 | 27.91% | 1.29% | -20.93% | -34.33% | |
68 Neutral | $6.09B | 9.11 | 17.34% | 2.00% | 11.36% | 13.78% | |
66 Neutral | $50.87B | 12.26 | 24.93% | 1.27% | -4.29% | -9.76% | |
62 Neutral | $8.06B | 13.61 | 3.91% | 3.11% | 3.80% | -14.06% | |
52 Neutral | $6.98B | 46.40 | -10.11% | 1.24% | -19.08% | -136.41% |
* Industrials Sector Average
Performance Comparison
ALG
Alamo Group
180.84
-31.81
-14.96%
AGCO
Agco
93.53
-22.91
-19.68%
DE
Deere
465.31
65.69
16.44%
OSK
Oshkosh
94.31
-26.77
-22.11%
PCAR
Paccar
96.91
-21.36
-18.06%
TEX
Terex
38.48
-23.79
-38.20%
Alamo Group Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -1.86% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment. The Industrial Equipment division showed strong growth and cost reduction initiatives are expected to yield significant savings. However, the Vegetation Management division experienced a significant decline in sales, impacting overall revenue and net income. The company remains optimistic about future growth, supported by improved cash flow, debt reduction, and dividend increase.Highlights
Industrial Equipment Division Growth
Net sales for the Industrial Equipment division grew by 11% in Q4 2024 compared to the same period in 2023, with strong sales in snow removal equipment.
Cost Reduction Initiatives
The company executed significant cost reduction actions in 2024, resulting in a workforce reduction of approximately 14% and expected annual savings of $25 to $30 million.
Improved Cash Flow and Debt Reduction
Operating cash flow increased by 60% to $209.8 million in 2024, and total debt was reduced by $160.2 million, improving the debt position by 87.3%.
Dividend Increase
The board approved a 15% increase in the quarterly dividend, reflecting confidence in the company's financial stability.
Lowlights
Vegetation Management Division Decline
Net sales for the Vegetation Management division dropped by 25.5% in Q4 2024 compared to Q4 2023, impacted by elevated interest rates and lower commodity prices.
Overall Revenue Decline
Q4 2024 revenue was $385.3 million, reflecting a 7.7% decline compared to the same period last year, driven by lower volume in the vegetation management division.
Decreased Net Income
Net income for Q4 2024 was $28.1 million, down from $31.5 million in Q4 2023, with a decline in operating margin by 180 basis points.
Company Guidance
During the Alamo Group's fourth-quarter 2024 earnings call, management provided guidance for 2025, highlighting several key metrics and strategic initiatives. The Industrial Equipment division, which experienced an 11% increase in net sales to $225.5 million, is expected to maintain strong performance, with mid-single-digit organic sales growth anticipated. The division's operating margin improved slightly to 12.4%, and the company aims to reach a 15% operating margin by the end of 2025. Conversely, the Vegetation Management division faced challenges, reporting a 25.5% decline in net sales to $159.8 million. However, sequential order improvements suggest potential recovery, with sales expected to show modest growth in the second half of 2025. The company is executing cost reduction initiatives, targeting $25 million to $30 million in annualized savings, primarily in the Vegetation Management division. These efforts are anticipated to enhance operating margins, which were 8.9% in Q4 2024, with an overall goal of exceeding 10% in 2025. Additionally, Alamo Group is exploring inorganic growth opportunities, with a robust M&A pipeline supported by a strong balance sheet, having reduced total debt by $160.2 million or 87.3% year-over-year.Alamo Group Corporate Events
Executive/Board Changes
Alamo Group CEO Jeff Leonard to Retire in 2025
Neutral
Dec 20, 2024
Alamo Group Inc. has announced that its President and CEO, Jeff Leonard, plans to retire by mid-year 2025 following the appointment of his successor. The Board of Directors, which has been preparing for this transition as part of its succession planning efforts, anticipates naming a new leader in the coming months. Leonard, who has been with the company since 2011, expressed confidence in the company’s ongoing growth and the leadership team. Rick Parod, the Board’s Independent Chair, acknowledged Leonard’s significant contributions to the company’s growth and reputation, and emphasized the Board’s commitment to ensuring a smooth leadership transition.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.