Allegro Microsystems, Inc. (ALGM)
NASDAQ:ALGM
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Allegro MicroSystems
(NASDAQ:ALGM)
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Rating:74Outperform
Price Target:
$51.00
▲(27.50% Upside)
Action:Reiterated
Date:05/14/26
The score is driven primarily by improving financial momentum and strong cash generation, reinforced by a bullish technical setup and a positive earnings call with robust growth and margin guidance. These positives are tempered by weak valuation signals (negative P/E) and still-not-fully-normalized profitability.
Positive Factors
Free cash flow generation
Sustained, strong free cash flow provides durable internal funding for R&D, capital expenditures, voluntary debt paydowns and strategic investments. High cash conversion near 1x reduces reliance on external financing and supports deleveraging and operational flexibility across business cycles.
Negative Factors
Automotive concentration risk
Heavy automotive exposure creates sensitivity to OEM cycles, region-specific seasonality and long qualification timelines. A downturn or delayed ramps in auto programs can depress revenue, extend recovery timelines and magnify volatility despite product-specific wins in other end markets.
Read all positive and negative factors
Positive Factors
Negative Factors
Free cash flow generation
Sustained, strong free cash flow provides durable internal funding for R&D, capital expenditures, voluntary debt paydowns and strategic investments. High cash conversion near 1x reduces reliance on external financing and supports deleveraging and operational flexibility across business cycles.
Read all positive factors
Allegro MicroSystems (ALGM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.66B
Dividend YieldN/A
Average Volume (3M)2.39M
Price to Earnings (P/E)―
Beta (1Y)1.93
Revenue Growth22.77%
EPS Growth79.17%
CountryUS
Employees4,593
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)-0.08
Shares Outstanding185,290,860
10 Day Avg. Volume3,137,746
30 Day Avg. Volume2,390,697
Financial Highlights & Ratios
PEG Ratio4.72
Price to Book (P/B)5.84
Price to Sales (P/S)6.27
P/FCF Ratio44.69
Enterprise Value/Market Cap1.09
Enterprise Value/Revenue9.36
Enterprise Value/Gross Profit20.22
Enterprise Value/Ebitda92.68
Forecast
1Y Price Target
$52.78Price Target Upside31.94% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
EPS Forecast (FY)0.98
Revenue Forecast (FY)$1.06B
Allegro MicroSystems Business Overview & Revenue Model
Company Description
Allegro MicroSystems, Inc. designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as p...
How the Company Makes Money
Allegro primarily makes money by selling semiconductor integrated circuits (ICs) to original equipment manufacturers (OEMs) and to automotive and industrial supply-chain customers through direct sales and distribution channels. Revenue is largely ...
Allegro MicroSystems Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call conveyed materially positive operating momentum: broad-based revenue growth (23% FY), expanding design wins and backlog, record free cash flow, and margin improvement despite commodity headwinds. Management acknowledged cost pressures (notably gold, fuel/freight) and seasonality-driven effects in China and pricing negotiations, and some new product revenue is back-end loaded. On balance, the scale and durability of revenue, margin progress, and cash generation outweigh the manageable near-term headwinds.Positive Updates
Consistent Revenue and EPS Growth
Q4 sales of $243M (5th consecutive quarter of sales growth), Q4 non-GAAP EPS $0.17 (nearly 3x YoY). Fiscal 2026 sales $890M, up 23% YoY; FY26 non-GAAP EPS $0.54, more than doubled YoY.
Negative Updates
Commodity and Cost Headwinds
Cost of gold was an ~200 bps headwind to gross margin in FY26; recent increases in fuel and freight have also pressured costs. Management indicated selective price increases will begin end of Q1 to offset some costs.
Read all updates
Q4-2026 Updates
Positive
Negative
Consistent Revenue and EPS Growth
Q4 sales of $243M (5th consecutive quarter of sales growth), Q4 non-GAAP EPS $0.17 (nearly 3x YoY). Fiscal 2026 sales $890M, up 23% YoY; FY26 non-GAAP EPS $0.54, more than doubled YoY.
Read all positive updates
Company Guidance
For Q1 FY2027 Allegro guided non‑GAAP sales of $245–$255 million (midpoint ≈ 23% year‑over‑year growth), non‑GAAP gross margin of 50–51% (management noted drop‑through into Q1 is closer to ~70%), operating expenses of $80 million ± $2 million (a sequential decline), interest expense of about $4 million, a non‑GAAP tax rate of ~9% and a weighted average diluted share count of ~187 million, implying non‑GAAP EPS of $0.19–$0.23; management also said these results assume continued strategic R&D and sales investments funded largely through reallocation and process efficiencies, with data center strength and a modest auto uptick supporting the outlook.Allegro MicroSystems Financial Statement Overview
Summary
Income Statement
56
Neutral
Balance Sheet
72
Positive
Cash Flow
81
Very Positive
| Breakdown | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 890.10M | 725.01M | 1.05B | 973.65M | 768.67M |
| Gross Profit | 412.64M | 321.53M | 574.53M | 546.08M | 407.46M |
| EBITDA | 110.28M | 9.17M | 276.94M | 264.49M | 191.77M |
| Net Income | -14.90M | -73.01M | 152.70M | 187.36M | 119.41M |
Balance Sheet | |||||
| Total Assets | 1.42B | 1.42B | 1.53B | 1.18B | 892.62M |
| Cash, Cash Equivalents and Short-Term Investments | 168.75M | 121.33M | 212.14M | 351.58M | 282.38M |
| Total Debt | 287.28M | 368.49M | 275.21M | 42.54M | 41.45M |
| Total Liabilities | 459.73M | 489.86M | 398.89M | 214.34M | 157.26M |
| Stockholders Equity | 956.45M | 929.55M | 1.13B | 965.63M | 734.21M |
Cash Flow | |||||
| Free Cash Flow | 124.89M | 21.96M | 56.94M | 113.43M | 86.19M |
| Operating Cash Flow | 163.07M | 61.91M | 181.72M | 193.21M | 156.13M |
| Investing Cash Flow | -41.72M | -40.82M | -516.72M | -99.70M | -66.27M |
| Financing Cash Flow | -77.38M | -112.06M | 198.88M | -20.00M | -5.31M |
Allegro MicroSystems Technical Analysis
Positive
40.00
Price Trends
38.89
Positive
36.84
Positive
32.85
Positive
Market Momentum
1.06
Positive
52.47
Neutral
25.63
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALGM, the sentiment is Positive. The current price of 40 is below the 20-day moving average (MA) of 45.85, above the 50-day MA of 38.89, and above the 200-day MA of 32.85, indicating a neutral trend. The MACD of 1.06 indicates Positive momentum. The RSI at 52.47 is Neutral, neither overbought nor oversold. The STOCH value of 25.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALGM.
Allegro MicroSystems Risk Analysis
Allegro MicroSystems disclosed 42 risk factors in its most recent earnings report. Allegro MicroSystems reported the most risks in the "Ability to Sell" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Allegro MicroSystems Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $8.47B | 22.27 | 20.21% | ― | 5.34% | 29.84% | |
74 Outperform | $7.66B | ― | -1.57% | ― | 22.77% | 79.17% | |
73 Outperform | $19.15B | ― | -2.15% | ― | 65.19% | 73.74% | |
67 Neutral | $7.15B | ― | -4.66% | ― | 25.14% | 70.00% | |
64 Neutral | $16.37B | 33.43 | 9.96% | 0.81% | 12.71% | 37.49% | |
64 Neutral | $12.33B | ― | -7.22% | ― | 15.48% | 82.89% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
ALGM
Allegro MicroSystems
44.33
18.05
68.68%
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268.35%
SLAB
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SITM
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697.00
495.88
246.56%
Allegro MicroSystems Corporate Events
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
Allegro MicroSystems Strengthens Board with New Independent Director
Positive
May 13, 2026
On May 11 and May 13, 2026, Allegro MicroSystems directors Susan D. Lynch and Richard R. Lury informed the board that they would not stand for reelection as Class III directors at the August 5, 2026 annual meeting, with their service ending immedi...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.