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Alight (ALIT)
NYSE:ALIT
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Alight
(NYSE:ALIT)
Rating:59Neutral
Price Target:
$5.50
▲( 2.04% Upside)
Positive Factors
Contractual Revenue
Approximately 92% of revenue is already under contract, helping ALIT hold the outlook steady.
Financial Performance
ALIT posted healthy results, beating estimates on both the top and bottom line due to better recurring revenue growth and good expense discipline.
Shareholder Value
ALIT announced an increase to its buyback program and multiple leadership changes at the Board level, which are expected to further maximize shareholder value.
Negative Factors
Employment Levels
Employment levels are pretty full which could limit volume growth to some extent.
Project Revenue
Project revenue continues to face some headwinds.
Sector-wide Challenges
Some renewal losses and what is a sector-wide lull in project-based revenue are headwinds to the top line.
Alight (ALIT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.90B
Dividend Yield1.48%
Average Volume (3M)9.79M
Price to Earnings (P/E)―
Beta (1Y)1.26
Revenue Growth-26.04%
EPS Growth85.84%
CountryUS
Employees9,500
SectorTechnology
Sector Strength76
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.10
Shares Outstanding527,834,530
10 Day Avg. Volume8,679,048
30 Day Avg. Volume9,791,825
Financial Highlights & Ratios
PEG Ratio-0.50
Price to Book (P/B)0.75
Price to Sales (P/S)0.00
P/FCF Ratio43.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$8.50Price Target Upside57.70% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Alight Business Overview & Revenue Model
Company DescriptionAlight, Inc. operates as a cloud-based provider of integrated digital human capital and business solutions worldwide. It operates through three segments: Employer Solutions, Professional Services, and Hosted Business. The company's solutions enable employees to enrich their health, wealth, and wellbeing, which helps organizations achieve a high-performance culture. It offers employer solutions comprising integrated benefits administration, healthcare navigation, financial health, employee wellbeing, and payroll; and professional services, including cloud deployment and consulting offerings that provides human capital and financial platforms, as well as cloud advisory and deployment, and optimization services for cloud platforms, such as Workday, SAP SuccessFactors, Oracle, and Cornerstone OnDemand. Alight, Inc. was founded in 2017 and is headquartered in Lincolnshire, Illinois.
How the Company Makes MoneyAlight makes money primarily through subscription and service fees charged for its cloud-based human capital management solutions. The company's revenue streams include fees for technology platforms, consulting services, and outsourcing solutions. Alight partners with organizations to manage their HR functions, providing tools for benefits administration, payroll processing, and talent management. Significant factors contributing to its earnings include long-term contracts with large enterprises, cross-selling opportunities across its suite of services, and its ability to attract and retain a diverse client base across different industries.
Alight Financial Statement Overview
Summary
Alight's financial performance is mixed. The income statement reveals challenges with profitability and revenue consistency, reflected in a low score of 45. The balance sheet is stronger, with a score of 60, indicating a healthy equity ratio despite operational challenges. Cash flow issues are notable, with a score of 50, due to declining free cash flow affecting growth potential.Income Statement
Alight's revenue has shown inconsistencies, with a significant drop in the latest year. The gross profit margin has been relatively stable, but the company has consistently reported net losses. Negative EBIT and EBITDA margins in recent years highlight operational challenges.45
Neutral
Balance Sheet
Alight has a strong equity position, with stockholders' equity exceeding total liabilities, indicating a healthy equity ratio. However, the debt-to-equity ratio improved significantly in the latest year due to reduced total debt, suggesting better leverage management.60
Neutral
Cash Flow
Operating cash flow has been positive but declining. Free cash flow has decreased notably, impacting growth potential. The free cash flow to net income ratio indicates reliance on cash flow rather than profitability to sustain operations.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.33B | 3.41B | 3.13B | 2.92B | 2.73B | Gross Profit |
| 794.00M | 1.14B | 996.00M | 693.00M | 834.00M | EBIT |
| -90.00M | -101.00M | 43.00M | 194.00M | 147.00M | EBITDA |
| 34.00M | 186.00M | 381.00M | 481.00M | 1.97B | Net Income Common Stockholders |
| -157.00M | -345.00M | -72.00M | -60.00M | -103.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 343.00M | 358.00M | 250.00M | 372.00M | 506.00M | Total Assets |
| 8.19B | 10.78B | 11.23B | 10.99B | 6.96B | Total Debt |
| 2.16B | 2.92B | 2.82B | 2.87B | 4.36B | Net Debt |
| 1.81B | 2.56B | 2.57B | 2.50B | 3.85B | Total Liabilities |
| 3.88B | 6.04B | 6.15B | 6.06B | 6.27B | Stockholders Equity |
| 4.31B | 4.46B | 4.44B | 4.14B | 683.00M |
| Cash Flow | Free Cash Flow | |||
| 131.00M | 226.00M | 138.00M | 1.00M | 143.00M | Operating Cash Flow |
| 252.00M | 386.00M | 286.00M | 115.00M | 233.00M | Investing Cash Flow |
| 836.00M | -159.00M | -235.00M | -1.91B | -142.00M | Financing Cash Flow |
| -1.07B | -231.00M | 54.00M | 2.34B | 463.00M |
Alight Technical Analysis
Negative
5.39
Price Trends
5.51
Negative
6.09
Negative
6.65
Negative
Market Momentum
0.05
Positive
45.82
Neutral
10.04
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALIT, the sentiment is Negative. The current price of 5.39 is below the 20-day moving average (MA) of 5.49, below the 50-day MA of 5.51, and below the 200-day MA of 6.65, indicating a bearish trend. The MACD of 0.05 indicates Positive momentum. The RSI at 45.82 is Neutral, neither overbought nor oversold. The STOCH value of 10.04 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALIT.
Alight Risk Analysis
Alight disclosed 43 risk factors in its most recent earnings report. Alight 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 3 New Risks
1.
The Company's decision to maintain, reduce or discontinue paying cash dividends to our stockholders or repurchasing our Class A Common Stock could cause the market price for our Class A Common Stock to decline. Q4, 2024
2.
We rely on assumptions and estimates to calculate certain of our reported measures, and real or perceived inaccuracies in such measures may harm our reputation and negatively affect our business. Q4, 2024
3.
If we are unable to successfully execute the next phase of our strategic transformation, including our ability to effectively and appropriately separate the Divested Business, we may experience operational disruptions, which could negatively affect our business, financial condition and results of operations. Q4, 2024
Alight Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $4.09B | ― | -1.66% | ― | 15.72% | 74.59% | |
74 Outperform | $3.56B | 13.95 | 6.34% | 2.33% | 21.67% | -17.91% | |
73 Outperform | $4.65B | 93.81 | 10.80% | ― | 47.78% | 74.61% | |
71 Outperform | $3.38B | 24.95 | 44.83% | ― | 8.93% | 102.77% | |
61 Neutral | $11.29B | 10.07 | -7.05% | 2.96% | 7.47% | -10.75% | |
59 Neutral | $2.90B | ― | -0.82% | 1.48% | -26.04% | 85.84% | |
52 Neutral | $2.84B | ― | -32.09% | ― | ― | ― |
* Technology Sector Average
Performance Comparison
ALIT
Alight
5.39
-2.42
-30.99%
BL
BlackLine
54.16
5.44
11.17%
CNXC
Concentrix
55.71
-5.09
-8.37%
PAY
Paymentus Holdings
37.16
18.05
94.45%
PYCR
Paycor HCM
22.49
9.32
70.77%
BTDR
Bitdeer Technologies
14.46
8.35
136.66%
Alight Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: 3.06%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
The earnings call presented a predominantly positive outlook with strong starts in revenue and EBITDA, successful renewals, technological advancements, and improved customer care. However, the company faced challenges with declining nonrecurring project revenues and market volatility concerns. Overall, the positive highlights significantly outweighed the lowlights.Q1-2025 Updates
Positive Updates
Strong Start to 2025
Alight began 2025 with first quarter results reflecting continued progress, achieving total revenue of $548 million and adjusted EBITDA of $118 million. The company reaffirmed its financial outlook for the year.
Renewal Success
Alight successfully renewed several top clients, including Starbucks, Baxter, US Foods, and Otis Elevator Company, indicating strong client confidence in their services and vision.
Technological Advancements
Launched self-service leaves administration reporting platform coupled with AI insights, significantly simplifying absence management. 80% of clients are leveraging AI in some capacity.
Improved Customer Care
Service levels improved with an increase in the Net Promoter Score (NPS) by 12 points related to annual enrollment.
Strong Recurring Revenue
Recurring revenue comprised nearly 95% of total revenue in the quarter, showing stability and predictability in earnings.
Pipeline Growth
Strong pipeline up roughly 30%, particularly in core admin space, leaves solution, and navigation solution, indicating potential future growth.
Debt Management and Share Buybacks
Repriced term loan lowering interest rate by 50 basis points, saving $10 million annually, and returned $41 million to shareholders through buybacks and dividends.
Negative Updates
Decline in Nonrecurring Project Revenues
Nonrecurring project revenues were down $10 million or 26%, which aligned with expectations but indicates softness in discretionary projects.
Caution Due to Market Volatility
Company expressed caution due to increasing market volatility, which may elongate client decision-making processes for project and ARR deals.
Exposure to Market Downturns
Assets managed through financial advisers generate fees that vary with financial market performance, potentially impacting revenue if a protracted market downturn occurs.
Company Guidance
During the Alight First Quarter 2025 Earnings Conference Call, the company provided financial guidance and updates on strategic initiatives. Alight reported total revenue of $548 million and adjusted EBITDA of $118 million for the first quarter, aligning with their expectations. They reaffirmed their financial outlook for 2025, projecting full-year revenue between $2.32 billion and $2.39 billion, adjusted EBITDA of $620 million to $645 million, adjusted EPS of $0.58 to $0.64, and free cash flow of $250 million to $285 million. The company highlighted a strong pipeline, with a 30% increase, and noted that they have 92% of projected 2025 revenue under contract. Alight emphasized their focus on technology transformation and service excellence, launching initiatives like a self-service leaves administration platform. Despite economic uncertainties, the company remains committed to executing its strategy and supporting its clients.Alight Corporate Events
M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Alight Announces New Restructuring Program Post-Divestiture
Neutral
May 8, 2025
On May 6, 2025, Alight‘s Audit Committee approved a fifteen-month restructuring program, the Post-Separation Plan (PSP), aimed at optimizing operations after divesting its Payroll and Professional Services business in July 2024. The PSP involves simplifying operations, rationalizing technology spending, and expanding AI and automation, with expected restructuring costs of $65 million and annual savings of over $75 million. In its first quarter 2025 results, Alight reported a 2.0% revenue decrease to $548 million, improved net loss, and reaffirmed its full-year financial outlook, highlighting strong client relationships and a resilient business model with 92% of projected revenue under contract.
Business Operations and StrategyFinancial Disclosures
Alight Unveils Growth Strategy at Investor Day
Positive
Mar 20, 2025
On March 20, 2025, Alight, Inc. hosted an investor day at its headquarters, unveiling mid-term financial targets and presenting its strategy for long-term growth. The event included panels with clients and third-party evaluators discussing market trends and client needs. Alight aims for a total annual revenue growth rate of 4-6% and an adjusted EBITDA margin of approximately 30% by 2027, with a cumulative free cash flow of around $1 billion between 2025 and 2027. This strategic direction underscores Alight’s positioning within the benefits industry and its commitment to leveraging technology for innovation and shareholder value.
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.