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Allegro MicroSystems (ALGM)
NASDAQ:ALGM
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Allegro MicroSystems
(NASDAQ:ALGM)
Rating:60Neutral
Price Target:―
Positive Factors
Financial Performance
Revenue for the March quarter came in ahead of the Street at $192.8 million.
Leadership and Strategy
New CEO Mike Doogue's commitment to tech innovation and focus on financial targets is seen as a positive move for the company.
Market Diversification
The company has a robust portfolio and is executing well in diversifying its end-markets, including solar, data center, and medical sectors.
Negative Factors
Competition
Increased competition is expected, with competitors being more aggressive on pricing.
Gross Margin Performance
Gross margin is facing challenges and is expected to reach a low point at a lower level before any recovery.
Market Conditions
A broader electric vehicle slowdown is seen as a headwind, particularly in the US and EU markets.
Allegro MicroSystems (ALGM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.02B
Dividend YieldN/A
Average Volume (3M)3.73M
Price to Earnings (P/E)―
Beta (1Y)1.69
Revenue Growth-30.91%
EPS Growth-148.73%
CountryUS
Employees4,593
SectorTechnology
Sector Strength75
IndustrySemiconductors
Share Statistics
EPS (TTM)0.06
Shares Outstanding184,125,030
10 Day Avg. Volume3,824,806
30 Day Avg. Volume3,729,250
Financial Highlights & Ratios
PEG Ratio0.42
Price to Book (P/B)4.40
Price to Sales (P/S)0.00
P/FCF Ratio592.61
Enterprise Value/Market Cap0.87
Enterprise Value/Revenue1.21
Enterprise Value/Gross Profit11.98
Enterprise Value/Ebitda7.32
Forecast
1Y Price Target
$26.11Price Target Upside-0.65% Downside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Allegro MicroSystems Business Overview & Revenue Model
Company DescriptionAllegro 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 position, speed, and current sensor ICs; power ICs comprising motor driver ICs, and regulator and LED driver ICs; and photonic and 3D sensing components, including photodiodes, eye-safe lasers, and readout ICs for LiDAR applications. The company sells its products to original equipment manufacturers and suppliers primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.
How the Company Makes MoneyAllegro MicroSystems generates revenue through the design, production, and sale of its semiconductor products. The company's primary revenue streams include sales of its magnetic sensor ICs and power ICs, which are widely used in automotive and industrial applications. Allegro's strong market position is supported by its long-term relationships with key customers and strategic partnerships that enhance its product offerings and expand its market reach. Additionally, the company's focus on innovation and development of next-generation technologies enables it to capture emerging opportunities in sectors such as electric vehicles and renewable energy, further driving its earnings.
Allegro MicroSystems Financial Statement Overview
Summary
Allegro MicroSystems shows strong historical revenue growth and a solid balance sheet, with a debt-to-equity ratio of 0.40. However, recent profitability challenges, a negative net profit margin, and decreasing free cash flow indicate potential operational and financial risks.Income Statement
Allegro MicroSystems displayed a mixed financial performance in the TTM. The gross profit margin for TTM stands at 47.23%, which is robust within the semiconductor industry. However, the net profit margin for TTM is negative at -8.45%, indicating a current profitability challenge. Historical revenue growth is strong, with a notable increase from 2021 to 2023. EBIT and EBITDA margins are low, suggesting operational inefficiencies.75
Positive
Balance Sheet
The balance sheet is stable with a debt-to-equity ratio of 0.40 in TTM, indicating conservative leverage. However, total debt has increased significantly over the years. The equity ratio remains strong at 64.81%, and return on equity was high in 2023 but turned negative in TTM due to net losses.80
Positive
Cash Flow
Cash flow performance is mixed. The operating cash flow to net income ratio is strong, indicating cash generation capability. However, free cash flow has decreased notably in TTM. The free cash flow to net income ratio is low, reflecting challenges in converting earnings to cash.70
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 772.76M | 1.05B | 973.65M | 768.67M | 591.21M | 650.09M | Gross Profit |
| 364.92M | 574.53M | 546.08M | 407.46M | 278.90M | 261.28M | EBIT |
| 32.10M | 209.46M | 203.31M | 136.65M | 17.71M | 52.83M | EBITDA |
| 43.80M | 276.94M | 264.49M | 190.33M | 49.46M | 117.44M | Net Income Common Stockholders |
| -65.33M | 152.70M | 187.36M | 119.41M | 17.95M | 36.97M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 138.45M | 212.14M | 351.58M | 282.38M | 197.21M | 214.49M | Total Assets |
| 1.44B | 1.53B | 1.18B | 892.62M | 747.68M | 817.82M | Total Debt |
| 398.10M | 275.21M | 42.54M | 41.45M | 25.00M | 85.70M | Net Debt |
| 259.65M | 63.06M | -309.04M | -240.93M | -172.21M | -128.79M | Total Liabilities |
| 507.31M | 398.89M | 214.34M | 157.26M | 160.81M | 183.69M | Stockholders Equity |
| 934.43M | 1.13B | 965.63M | 734.21M | 585.75M | 633.18M |
| Cash Flow | Free Cash Flow | ||||
| 6.94M | 56.94M | 113.43M | 86.19M | 79.90M | 35.80M | Operating Cash Flow |
| 55.77M | 181.72M | 193.21M | 156.13M | 120.57M | 81.42M | Investing Cash Flow |
| -48.52M | -516.72M | -99.70M | -66.27M | -68.25M | -41.68M | Financing Cash Flow |
| -79.93M | 198.88M | -20.00M | -5.31M | -72.19M | 82.50M |
Allegro MicroSystems Technical Analysis
Positive
26.28
Price Trends
23.01
Positive
23.69
Positive
22.87
Positive
Market Momentum
1.57
Negative
61.82
Neutral
76.46
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 26.28 is above the 20-day moving average (MA) of 22.70, above the 50-day MA of 23.01, and above the 200-day MA of 22.87, indicating a bullish trend. The MACD of 1.57 indicates Negative momentum. The RSI at 61.82 is Neutral, neither overbought nor oversold. The STOCH value of 76.46 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 44 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
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $5.63B | 17.38 | 17.60% | ― | 5.99% | 23.09% | |
72 Outperform | $4.79B | 15.19 | 7.76% | 1.67% | -1.93% | -15.55% | |
66 Neutral | $4.19B | ― | -14.77% | ― | 2.16% | -55.38% | |
61 Neutral | $11.41B | 10.19 | -7.05% | 2.95% | 7.46% | -10.52% | |
60 Neutral | $5.02B | ― | -7.09% | ― | -30.91% | -148.73% | |
55 Neutral | $2.97B | 81.31 | 5.03% | 1.60% | -5.75% | -41.75% | |
49 Neutral | $3.41B | ― | -137.83% | ― | 4.66% | 84.78% |
* Technology Sector Average
Performance Comparison
ALGM
Allegro MicroSystems
25.91
-4.18
-13.89%
AMKR
Amkor
18.71
-13.00
-41.00%
CRUS
Cirrus Logic
102.18
-11.88
-10.42%
POWI
Power Integrations
50.51
-24.78
-32.91%
SMTC
Semtech
37.79
-1.59
-4.04%
SLAB
Silicon Laboratories
122.75
-1.47
-1.18%
Allegro MicroSystems Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q4-2025)
| % Change Since: 40.61%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with strong growth in automotive sales, record-level design wins, and innovative product releases. However, these were countered by significant year-over-year sales declines and margin pressures. Operational efficiency initiatives and growth in strategic focus areas indicate positive future potential, but the current financial performance remains a challenge.Q4-2025 Updates
Positive Updates
Strong Automotive Sales Growth
Automotive sales returned to growth with an 8% sequential increase, led by e-mobility sales which increased 16% sequentially.
Record-Level Design Wins
Achieved record-level design wins in Q4, with over 70% in strategic focus areas such as e-mobility, robotics, automation, data center, clean energy, and medical.
Innovative Product Releases
Released 50% more products compared to the IPO year, contributing to a multibillion-dollar SAM expansion initiative targeting a $12 billion market opportunity.
Data Center and Robotics Growth
Growth observed in data center and robotics and automation revenue, supported by increased activity in industrial markets.
Operational Efficiency Initiatives
Initiated a restructuring program expected to result in annualized cost savings of at least $15 million, enhancing gross margins and profitability.
Negative Updates
Year-Over-Year Sales Decline
Total Q4 sales declined 20% year over year. Automotive sales declined 23% year over year, while industrial and other sales declined 11% year over year.
Gross Margin Pressure
Gross margin was 45.6%, below expectations due to mix and lower absorption, with a year-over-year decline from 48%.
Challenges in the Distribution Channel
Sales throughout the distribution channel increased by only 4% sequentially, with ongoing work needed in regions like Europe and the United States.
Company Guidance
During Allegro Microsystems' earnings call for the fourth quarter and full fiscal year 2025, several key metrics and guidance were provided. The company reported fourth-quarter sales of $193 million, which exceeded the high end of their guidance, and non-GAAP EPS of $0.06, surpassing the midpoint of their expectations. Automotive sales increased by 8% sequentially, with e-mobility leading the growth at 16% sequentially. The company's gross margin was 45.6%, with an operating margin of 9% and adjusted EBITDA at 14.8% of sales. Allegro's management expressed confidence in achieving long-term financial targets, including double-digit sales growth, gross margins of 58% or greater, and operating margins exceeding 32%. For the first quarter of fiscal 2026, Allegro expects sales to be between $192 million to $202 million, with a gross margin of 46-48% and non-GAAP EPS ranging from $0.06 to $0.10 per share. The call highlighted the strategic focus on innovative product development and operational efficiency to drive future growth and profitability.Allegro MicroSystems Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Allegro MicroSystems Announces Leadership Transition
Neutral
Mar 12, 2025
On March 12, 2025, Allegro MicroSystems announced that Max Glover, the Senior Vice President of Worldwide Sales, will transition to a new role as a strategic advisor to the CEO, effective March 29, 2025. This change in leadership is expected to impact the company’s strategic direction and may influence its market positioning and stakeholder relations.
Executive/Board ChangesBusiness Operations and Strategy
Allegro MicroSystems Names Michael C. Doogue as CEO
Positive
Feb 24, 2025
On February 23, 2025, Allegro MicroSystems appointed Michael C. Doogue as President and CEO, succeeding Vineet Nargolwala. Doogue, who has been with the company for 27 years and holds 75 U.S. patents, has played a critical role in developing Allegro’s technology roadmap. This leadership transition is part of a strategic succession plan to extend Allegro’s technology leadership and capitalize on growth opportunities in the auto and industrial markets.
Executive/Board Changes
Allegro MicroSystems Expands Board with New Appointment
Positive
Feb 3, 2025
On January 31, 2025, Allegro MicroSystems appointed Krishna G. Palepu as an independent director to its Board of Directors, effective immediately. Dr. Palepu, a professor at Harvard Business School, brings extensive experience in strategy, governance, and emerging markets, particularly in the technology and semiconductor sectors, which will aid Allegro as it aims for growth in international business.
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.