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Allegro MicroSystems (ALGM)
NASDAQ:ALGM
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Allegro MicroSystems
(NASDAQ:ALGM)
Rating:57Neutral
Price Target:
$32.00
▼(-6.10%Downside)
Positive Factors
Earnings
Revenue for the March quarter came in ahead of the Street at $192.8 million.
Market Opportunity
Allegro Microsystems is well positioned in the growing market of vehicle electrification, with increasing demand for applications like steering and braking systems, enhancing its market potential.
Product Portfolio
Allegro Microsystems has a broad and advanced magnetic sensing product portfolio, which provides competitive advantages over larger competitors with fewer offerings.
Negative Factors
Competition
Increased competition is expected, with competitors being more aggressive on pricing.
Shareholder Activity
Sanken Electric owns 32% of the company and could sell shares after its lock-up period ends, potentially affecting stock prices.
Valuation
The stock's current valuation is considered quite high, trading above high-margin analog peers, indicating that a cyclical recovery might already be priced in.
Allegro MicroSystems (ALGM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.70B
Dividend YieldN/A
Average Volume (3M)2.16M
Price to Earnings (P/E)―
Beta (1Y)1.71
Revenue Growth-30.91%
EPS Growth-148.73%
CountryUS
Employees4,593
SectorTechnology
Sector Strength91
IndustrySemiconductors
Share Statistics
EPS (TTM)0.06
Shares Outstanding184,925,400
10 Day Avg. Volume2,421,950
30 Day Avg. Volume2,162,174
Financial Highlights & Ratios
PEG Ratio8.11
Price to Book (P/B)7.27
Price to Sales (P/S)0.00
P/FCF Ratio309.58
Enterprise Value/Market Cap1.04
Enterprise Value/Revenue2.12
Enterprise Value/Gross Profit21.67
Enterprise Value/Ebitda21.99
Forecast
1Y Price Target
$36.50Price Target Upside7.10% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Allegro MicroSystems Business Overview & Revenue Model
Company DescriptionAllegro MicroSystems (ALGM) is a leading global provider of high-performance power and sensor semiconductor solutions. The company focuses on the automotive and industrial sectors, offering products that are crucial for motion control and energy-efficient systems. Allegro's core products include magnetic sensors, power integrated circuits (ICs), and photonics components, which are designed to enhance the efficiency and reliability of electronic systems.
How the Company Makes MoneyAllegro MicroSystems generates revenue primarily through the sale of its semiconductor products to original equipment manufacturers (OEMs) and distributors in the automotive and industrial markets. The company's key revenue streams include magnetic sensors and power ICs, which are integrated into a wide range of applications such as electric vehicles, industrial automation, and renewable energy systems. Allegro's strategic partnerships with major automotive companies and its focus on innovation in sensor technology contribute significantly to its earnings. Additionally, the company's investment in research and development to create cutting-edge semiconductor solutions plays a crucial role in maintaining its competitive edge and driving revenue growth.
Allegro MicroSystems Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q4-2025)
| % Change Since: 82.34%|
Next Earnings Date:Jul 31, 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 Financial Statement Overview
Summary
Allegro MicroSystems faces profitability challenges with a recent net loss and declining revenue. The balance sheet remains strong with a high equity ratio, though increased debt levels warrant caution. Cash flow generation is positive, but declining operating cash flow could affect future operations. Strategic improvements in revenue growth and cost management are essential to enhance financial performance.Income Statement
Allegro MicroSystems experienced a decline in total revenue from the previous year, leading to a negative revenue growth rate. The company reported a negative gross profit margin and a net loss for the most recent year, indicating profitability challenges. Despite this, historical data shows previous profitability, suggesting potential for recovery.45
Neutral
Balance Sheet
The company's balance sheet shows a strong equity position with a high equity ratio, indicating financial stability. However, the increase in total debt raises concerns about leverage. The debt-to-equity ratio is moderate, suggesting manageable risk but needing careful monitoring.60
Neutral
Cash Flow
Operating cash flow has decreased significantly, impacting the free cash flow growth rate. The free cash flow to net income ratio is positive, indicating that the company is generating cash despite the net loss, which is a positive sign. However, the declining operating cash flow may pose future liquidity risks.55
Neutral
| Breakdown | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 725.01M | 1.05B | 973.65M | 768.67M | 591.21M |
| Gross Profit | 321.53M | 574.53M | 546.08M | 407.46M | 278.90M |
| EBITDA | -19.80M | 276.94M | 264.49M | 190.33M | 49.46M |
| Net Income | -73.01M | 152.70M | 187.36M | 119.41M | 17.95M |
Balance Sheet | |||||
| Total Assets | 1.42B | 1.53B | 1.18B | 892.62M | 747.68M |
| Cash, Cash Equivalents and Short-Term Investments | 121.33M | 212.14M | 351.58M | 282.38M | 197.21M |
| Total Debt | 368.49M | 275.21M | 42.54M | 41.45M | 25.00M |
| Total Liabilities | 489.86M | 398.89M | 214.34M | 157.26M | 160.81M |
| Stockholders Equity | 931.10M | 1.13B | 965.63M | 734.21M | 585.75M |
Cash Flow | |||||
| Free Cash Flow | 21.96M | 56.94M | 113.43M | 86.19M | 79.90M |
| Operating Cash Flow | 61.91M | 181.72M | 193.21M | 156.13M | 120.57M |
| Investing Cash Flow | -40.82M | -516.72M | -99.70M | -66.27M | -68.25M |
| Financing Cash Flow | -112.06M | 198.88M | -20.00M | -5.31M | -72.19M |
Allegro MicroSystems Technical Analysis
Neutral
34.08
Price Trends
31.09
Positive
26.97
Positive
24.69
Positive
Market Momentum
1.44
Positive
49.77
Neutral
30.16
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALGM, the sentiment is Neutral. The current price of 34.08 is below the 20-day moving average (MA) of 35.60, above the 50-day MA of 31.09, and above the 200-day MA of 24.69, indicating a neutral trend. The MACD of 1.44 indicates Positive momentum. The RSI at 49.77 is Neutral, neither overbought nor oversold. The STOCH value of 30.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $5.28B | 17.14 | 17.60% | ― | 5.99% | 23.09% | |
74 Outperform | $5.32B | 16.87 | 7.76% | 3.40% | -1.93% | -15.55% | |
64 Neutral | $4.55B | ― | -14.77% | ― | 2.16% | -55.38% | |
60 Neutral | $4.47B | ― | -93.41% | ― | 13.83% | 88.14% | |
57 Neutral | $6.70B | ― | -7.09% | ― | -30.91% | -148.73% | |
55 Neutral | $3.04B | 83.13 | 5.03% | 1.94% | -5.75% | -41.75% | |
51 Neutral | AU$1.67B | 2.47 | -31.66% | 3.57% | 16.42% | -7.36% |
* Technology Sector Average
Performance Comparison
ALGM
Allegro MicroSystems
34.08
9.77
40.19%
AMKR
Amkor
21.52
-15.56
-41.96%
CRUS
Cirrus Logic
102.93
-23.88
-18.83%
POWI
Power Integrations
53.00
-17.24
-24.54%
SMTC
Semtech
51.65
22.74
78.66%
SLAB
Silicon Laboratories
139.75
23.14
19.84%
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.
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.