Altair Engineering (ALTR) AI Stock Analysis

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Altair Engineering

(NASDAQ:ALTR)

67Neutral

Altair Engineering benefits from strong financial performance and effective cash management, which supports a stable outlook. However, technical indicators suggest the stock is overbought, posing a risk of short-term correction. Furthermore, the valuation is unattractive with a very high P/E ratio, indicating potential overvaluation.

Positive Factors

Acquisition

The announced acquisition by Siemens for $113 per share in an all-cash deal is a good outcome for shareholders.

Financial Performance

Altair reported fourth-quarter results with software revenue reaching $179 million and total revenue reaching $193 million reflecting 17% and 14% growth, respectively, on a constant currency basis.

Regulatory Approval

The company announced it expects the transaction to complete earlier than previously expected, indicating the regulatory approval process is going smoothly.

Negative Factors

Guidance Suspension

Due to the pending acquisition with Siemens, the company had suspended guidance and will not host an earnings call to discuss results.

Licensing Model

Altair's units licensing model could pose some problem with most acquirers utilizing a subscription or traditional license + support scheme.

Market Rating

The analyst downgraded Altair Engineering's rating to Peer Perform following the acquisition announcement.

Altair Engineering (ALTR) vs. S&P 500 (SPY)

Market Cap

$9.60B

Dividend YieldN/A

Average Volume (3M)772.68K

Price to Earnings (P/E)675.0

Beta (1Y)1.25

Revenue Growth8.66%

EPS GrowthN/A

CountryUS

Employees3,500

SectorTechnology

Sector Strength40

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.17

Shares Outstanding40,473,000

10 Day Avg. Volume828,834

30 Day Avg. Volume772,680

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)14.40

Price to Cash Flow (P/CF)63.90

P/FCF Ratio63.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$113.00

Price Target Upside1.03% Upside

Rating ConsensusHold

Number of Analyst Covering2

Altair Engineering Business Overview & Revenue Model

Company DescriptionAltair Engineering Inc. (ALTR) is a global technology company that provides software and cloud solutions in the areas of product development, high performance computing (HPC), and data analytics. The company operates primarily in the engineering, automotive, aerospace, and manufacturing sectors, offering a wide range of simulation technology and engineering services that empower client innovation and decision-making. Altair's core products include simulation-driven design software, data analytics platforms, and enterprise-class HPC solutions.

How the Company Makes MoneyAltair Engineering generates revenue through the sale of software licenses, subscriptions, and related services. The company's primary revenue streams include the licensing of its suite of simulation and data analytics software, which is used by engineers and designers across various industries to optimize product performance and efficiency. Altair also offers cloud-based HPC solutions that allow organizations to run complex simulations and analyses at scale. Additionally, the company earns revenue from consulting services, training, and technical support, which provide clients with customized solutions and enhanced product utilization. Strategic partnerships with hardware vendors and cloud service providers further contribute to Altair's revenue by expanding the reach and capabilities of its offerings.

Altair Engineering Financial Statement Overview

Summary

Altair Engineering is in a solid financial position with strong revenue growth, efficient cost management, and robust cash flow generation. The company shows stability with low leverage and a strong equity base, although there is room for improvement in profitability metrics such as Net Profit Margin and Return on Equity.

Income Statement

Very Positive

Altair Engineering demonstrates strong revenue growth, showing a consistent upward trend with a remarkable Revenue Growth Rate of 8.67% from 2023 to 2024. The company maintains a robust Gross Profit Margin of 81.27% in 2024, indicating efficient cost management. However, the Net Profit Margin is modest at 2.13% due to lower net income relative to revenue, though improved from the negative margin in 2023. EBIT and EBITDA Margins have also improved, reflecting better operational efficiency.

Balance Sheet

Positive

The company maintains a healthy Debt-to-Equity ratio of 0.30, reflecting low financial leverage. The Return on Equity is sound at 1.65%, showing modest profits relative to equity. The Equity Ratio stands at 59.31%, suggesting a strong equity base. These factors indicate financial stability, although the ROE could be enhanced further to indicate better profitability.

Cash Flow

Very Positive

Altair Engineering shows a strong Free Cash Flow Growth Rate of 19.51% from 2023 to 2024, demonstrating effective cash generation. The Operating Cash Flow to Net Income Ratio is high at 10.87, indicating strong cash flow relative to net income. The Free Cash Flow to Net Income Ratio is also favorable at 9.87, underscoring robust cash generation capabilities.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
665.79M	612.70M	572.22M	532.18M	469.92M
	Gross Profit
540.99M	490.91M	449.33M	402.51M	348.62M
	EBIT
17.68M	243.00K	-23.84M	12.34M	11.71M
	EBITDA
80.63M	57.86M	11.67M	37.42M	37.44M
	Net Income Common Stockholders
14.18M	-8.93M	-43.43M	-8.79M	-10.50M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
561.90M	467.46M	316.15M	413.74M	241.22M
	Total Assets
1.45B	1.36B	1.20B	1.16B	829.90M
	Total Debt
259.12M	338.83M	340.06M	229.19M	253.69M
	Net Debt
-302.77M	-128.63M	23.92M	-184.56M	12.47M
	Total Liabilities
588.46M	652.16M	635.00M	549.29M	450.53M
	Stockholders Equity
857.19M	711.33M	569.74M	613.98M	379.37M
Cash Flow		Free Cash Flow
140.00M	117.11M	29.92M	53.43M	24.66M
	Operating Cash Flow
154.08M	127.31M	39.57M	61.62M	32.88M
	Investing Cash Flow
-46.13M	-15.85M	-154.51M	-62.48M	-49.09M
	Financing Cash Flow
-7.04M	37.77M	22.98M	175.95M	31.25M

Altair Engineering Technical Analysis

Technical Analysis Sentiment

Positive

Last Price111.85

Price Trends

50DMA

110.96

Positive

100DMA

108.69

Positive

200DMA

100.74

Positive

Market Momentum

MACD

0.24

Positive

RSI

65.72

Neutral

STOCH

55.78

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALTR, the sentiment is Positive. The current price of 111.85 is above the 20-day moving average (MA) of 111.43, above the 50-day MA of 110.96, and above the 200-day MA of 100.74, indicating a bullish trend. The MACD of 0.24 indicates Positive momentum. The RSI at 65.72 is Neutral, neither overbought nor oversold. The STOCH value of 55.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALTR.

Altair Engineering Risk Analysis

Altair Engineering disclosed 76 risk factors in its most recent earnings report. Altair Engineering 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

Altair Engineering Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADSK	70 Outperform	$52.29B	47.91	49.69%	―	12.35%	22.28%
ALTR	67 Neutral	$9.60B	675.02	1.81%	―	8.66%	―
CDNS	66 Neutral	$63.88B	60.43	26.13%	―	13.48%	0.66%
ANSS	66 Neutral	$25.14B	43.84	10.03%	―	12.11%	14.35%
PTC	61 Neutral	$16.82B	43.11	12.99%	―	6.05%	63.78%
Sector *	57 Neutral	$18.54B	9.84	-14.39%	2.71%	5.07%	-23.64%
SSYS	47 Neutral	$647.48M	―	-14.34%	―	-8.79%	5.32%

* Technology Sector Average

Performance Comparison

ALTR

Altair Engineering

111.85

25.92

30.16%

ANSS

Ansys

286.85

-57.25

-16.64%

ADSK

Autodesk

245.51

-0.38

-0.15%

CDNS

Cadence Design

232.88

-78.21

-25.14%

SSYS

Stratasys

9.02

-1.82

-16.79%

PTC

139.77

-46.64

-25.02%

Altair Engineering Earnings Call Summary

Earnings Call Date: Feb 20, 2025 | % Change Since: 0.06% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Positive

The earnings call highlighted Altair's strong revenue performance, especially in the software segment, driven by large contracts in aerospace and defense. The company is recognized for its leadership in data science and machine learning, evidenced by its position in the Gartner Magic Quadrant. Despite some foreign exchange impacts on margins, the overall trajectory appears positive with strategic acquisitions and partnerships poised to drive future growth.

Highlights

Exceeding Revenue Guidance

Altair's total quarterly revenue was $148.8 million, with software revenue accounting for $135.4 million, both surpassing the high end of their guidance for the quarter.

Strong Software Revenue Growth

Software revenue grew 10.6% year-over-year in constant currency, and software revenue as a percentage of total revenue increased to 91% from 88.8% in the same quarter last year.

Record-Breaking Aerospace and Defense Contracts

Altair signed an 8-figure, 3-year contract with a multinational aerospace company, their largest deal ever, and a 7-figure agreement with a European aerospace, defense, and security company, marking a 49% year-on-year expansion.

Recognition in Data Science and Machine Learning

Altair was named a leader in the Gartner Magic Quadrant for data science and machine learning platforms for their Altair RapidMiner offering.

Strategic Acquisitions and Partnerships

Acquired Metrics Design Automation to enhance semiconductor simulation capabilities and partnered with Hewlett Packard to enrich the Altair Material Data Center.

Expanding Indirect Sales Channel

Added three new channel partners to extend the reach of Altair's data analytics and AI solutions across new regions.

Lowlights

Impact of Foreign Exchange Rates

Changes in foreign exchange rates impacted Altair's full-year adjusted EBITDA guidance and cash flow expectations.

Slight Decline in Adjusted EBITDA Margin

Adjusted EBITDA margin was 11.7% compared to 12.1% in the prior year, reflecting planned investments in product development and sales capacity.

Company Guidance

During the Q2 2024 earnings call for Altair Engineering, a detailed guidance was provided for the upcoming quarters and full year. For Q3, Altair expects software revenue to be in the range of $130 million to $133 million, marking a year-over-year increase of 9.2% to 11.7% in reported currency. Total revenue for Q3 is forecasted between $145 million and $148 million, reflecting an increase of 8.2% to 10.4% year-over-year. Full-year 2024 projections include software revenue ranging from $590 million to $600 million, translating to a 7.3% to 9.1% increase over 2023, and total revenue between $648 million and $658 million, which is a 5.8% to 7.4% rise. Furthermore, adjusted EBITDA for the full year is expected to be between $136 million to $144 million, accounting for 21.0% to 21.9% of total revenue, with free cash flow anticipated to be in the range of $122 million to $130 million. These projections take into account the impact of foreign exchange rate changes, which have also influenced the margin expectations.

Altair Engineering Corporate Events

Delistings and Listing ChangesExecutive/Board ChangesM&A Transactions

Altair Engineering Merges and Delists from NASDAQ

Neutral

Mar 28, 2025

Altair Engineering has undergone a significant corporate restructuring as a result of a merger, effective March 26, 2025. The merger has led to Altair becoming a wholly owned subsidiary of a parent company, with a total consideration of approximately $9.7 billion paid to Altair’s stockholders. This corporate change has resulted in the termination of Altair’s existing credit agreements and the delisting of its Class A Common Shares from NASDAQ. Additionally, there have been changes in the executive leadership, with new appointments for the roles of CEO and CFO.

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.