Altus Group Limited (AIF) AI Stock Analysis

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Altus Group Limited

(TSX:AIF)

58Neutral

Altus Group Limited's overall stock score is weighed down by weak technical analysis and high valuation concerns, despite a stable balance sheet and strong cash flow management. The earnings call provided some optimism with positive EBITDA growth and recurring revenue, but macroeconomic uncertainties and revenue challenges temper the outlook.

Positive Factors

Customer Feedback

Customers we spoke to had positive feedback. Several are long-standing ARGUS customers, and spoke highly of it being the industry standard.

Technological Advancements

Altus Intelligence is leveraging AI to deliver predictive analytics capabilities, which provides a compelling use case for adoption.

Negative Factors

Earnings Visibility

New Bookings are expected to remain under pressure absent a recovery in CRE transaction activity which reduces earnings visibility.

Altus Group Limited (AIF) vs. S&P 500 (SPY)

Market Cap

C$2.26B

Dividend Yield1.24%

Average Volume (3M)111.01K

Price to Earnings (P/E)167.6

Beta (1Y)1.07

Revenue Growth-13.29%

EPS Growth29.94%

CountryCA

Employees1,900

SectorReal Estate

Sector Strength68

IndustryReal Estate - Services

Share Statistics

EPS (TTM)0.29

Shares Outstanding46,029,408

10 Day Avg. Volume90,891

30 Day Avg. Volume111,009

Financial Highlights & Ratios

PEG Ratio5.60

Price to Book (P/B)N/A

Price to Sales (P/S)4.57

Price to Cash Flow (P/CF)24.00

P/FCF Ratio20.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$59.67

Price Target Upside23.29% Upside

Rating ConsensusHold

Number of Analyst Covering3

Altus Group Limited Business Overview & Revenue Model

Company DescriptionAltus Group Limited is a leading provider of software, data solutions, and advisory services to the global commercial real estate industry. The company operates across several sectors, including property tax, valuation and cost consulting, and asset and investment management. Altus Group's core offerings include its proprietary software platforms and expert advisory services designed to enhance the performance and efficiency of real estate assets and portfolios.

How the Company Makes MoneyAltus Group Limited generates revenue primarily through a combination of software sales, subscription services, and advisory fees. The company's key revenue streams include its Altus Analytics segment, which offers software solutions and data analytics platforms on a subscription basis, and its Commercial Real Estate Consulting segment, which provides valuation, cost consulting, and property tax advisory services. Significant partnerships with real estate firms and continued demand for data-driven insights in property investment and management contribute to its earnings. Additionally, Altus Group benefits from long-term client relationships and recurring revenue models associated with its software and consulting services.

Altus Group Limited Financial Statement Overview

Summary

Altus Group Limited shows stability in its balance sheet and strong cash flow management, but faces challenges with revenue contraction and limited profitability. The income statement highlights a significant revenue decrease and low net profit margin, indicating a need for operational cost management and improved revenue growth.

Income Statement

Positive

Altus Group Limited experienced a decrease in total revenue from $772.8M in 2023 to $519.7M in 2024, indicating significant revenue contraction. The gross profit margin for 2024 was 100% due to the matching revenue and gross profit figures, but the net profit margin was only 2.58%, showing limited profitability. The lack of EBIT in 2024 also suggests challenges in operational efficiency. While EBITDA margin was 11.47%, the overall income statement reflects a need for improved revenue growth and operational cost management.

Balance Sheet

Positive

The company maintained a stable equity base with stockholders' equity at $617.2M in 2024, up from $602.5M in 2023. The debt-to-equity ratio was 0.52, indicating moderate leverage, which is manageable. The equity ratio was 49.35%, reflecting a balanced capital structure. However, the increase in total debt from $355.6M in 2023 to $319.6M in 2024, while slightly reduced, remains a focus area for financial risk management. Overall, the balance sheet is relatively stable with room for optimizing debt levels.

Cash Flow

Positive

Free cash flow improved from $58.9M in 2023 to $72.5M in 2024, reflecting positive cash generation. The operating cash flow to net income ratio was robust at 5.95, indicating strong cash conversion from earnings. The free cash flow to net income ratio was also strong at 5.4, suggesting efficient cash management. Despite challenges in revenue, the cash flow statement shows good liquidity management and potential for strategic investments.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
519.73M	772.84M	735.45M	625.39M	561.16M
	Gross Profit
519.73M	291.08M	271.50M	223.93M	206.21M
	EBIT
0.00	48.81M	55.57M	48.02M	55.24M
	EBITDA
59.58M	99.36M	74.95M	86.07M	85.15M
	Net Income Common Stockholders
13.42M	10.23M	-889.00K	25.69M	21.43M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
41.88M	41.89M	55.27M	51.27M	69.64M
	Total Assets
1.25B	1.21B	1.26B	1.20B	735.40M
	Total Debt
319.65M	355.55M	378.14M	358.06M	186.01M
	Net Debt
277.77M	313.66M	322.88M	306.79M	116.38M
	Total Liabilities
633.74M	612.16M	664.02M	609.84M	351.95M
	Stockholders Equity
617.22M	602.54M	599.87M	589.48M	383.45M
Cash Flow		Free Cash Flow
72.47M	58.94M	52.60M	45.68M	67.95M
	Operating Cash Flow
79.92M	71.43M	77.08M	56.31M	72.30M
	Investing Cash Flow
2.77M	-34.92M	-54.06M	-373.31M	-20.90M
	Financing Cash Flow
-75.62M	-51.78M	-18.66M	300.43M	-41.30M

Altus Group Limited Technical Analysis

Technical Analysis Sentiment

Negative

Last Price48.40

Price Trends

50DMA

54.14

Negative

100DMA

55.43

Negative

200DMA

54.52

Negative

Market Momentum

MACD

-1.03

Negative

RSI

33.27

Neutral

STOCH

43.11

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:AIF, the sentiment is Negative. The current price of 48.4 is below the 20-day moving average (MA) of 50.92, below the 50-day MA of 54.14, and below the 200-day MA of 54.52, indicating a bearish trend. The MACD of -1.03 indicates Negative momentum. The RSI at 33.27 is Neutral, neither overbought nor oversold. The STOCH value of 43.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:AIF.

Altus Group Limited Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FVI	80 Outperform	$2.34B	13.00	9.74%	―	28.18%	―
MRC	78 Outperform	$1.20B	4.63	6.46%	0.63%	-7.92%	256.12%
CIGI	68 Neutral	$8.10B	36.24	14.89%	0.27%	13.08%	146.40%
GDI	68 Neutral	C$736.62M	22.77	6.73%	―	4.84%	67.68%
Sector *	61 Neutral	$4.26B	15.61	-3.60%	11.29%	6.17%	-21.11%
CFP	58 Neutral	$1.58B	―	-18.83%	―	-3.20%	-107.88%
AIF	58 Neutral	C$2.26B	167.56	3.63%	1.24%	-13.29%	29.94%

* Real Estate Sector Average

Performance Comparison

TSE:AIF

Altus Group Limited

47.35

-6.21

-11.59%

TSE:MRC

Morguard (OTC)

107.77

-3.94

-3.53%

TSE:FVI

Fortuna Silver Mines

7.40

0.90

13.85%

TSE:CIGI

Colliers International Group

157.17

-5.10

-3.14%

TSE:CFP

Canfor

12.97

-3.04

-18.99%

TSE:GDI

GDI Integrated

30.99

-8.44

-21.41%

Altus Group Limited Earnings Call Summary

Earnings Call Date: Feb 20, 2025 | % Change Since: -13.06% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mix of significant achievements such as strong adjusted EBITDA growth, high recurring revenue, and a robust balance sheet. However, these were tempered by challenges like declining cash generation, slow data solutions performance, and macroeconomic uncertainties impacting future growth.

Highlights

Strong Adjusted EBITDA Growth

Adjusted EBITDA increased by 51.8% in Q4, leading to an 800 basis point improvement in margin.

Record Cash Flow Growth

Free cash flow for the full year increased by 23%, driven by strong adjusted EBITDA growth and improved working capital processes.

High Recurring Revenue

Recurring revenue constituted 94% of analytics revenues in Q4, making up 75% of the consolidated revenue base, and was up 5.8%.

Appraisals and Development Advisory Profitability

Despite revenue headwinds, adjusted EBITDA in appraisals and development advisory improved by $2.1 million in Q4, up 93.4% year-over-year.

ARGUS Cloud Adoption

82% of ARGUS users were contracted on the cloud by the end of the quarter.

Strong Balance Sheet

The company ended the quarter with $41.9 million in cash and $282.9 million in bank debt, with a funded debt to EBITDA leverage ratio of 2.01 times.

Lowlights

Cash Generation Decline

Cash generation from continuing and discontinued operations was down year-over-year, due to higher cash taxes and transitional costs.

Soft Data Solutions Performance

There was a decline in non-recurring revenue within data solutions, impacting overall revenue growth.

VMS Growth Slowdown

VMS growth is expected to be lower in Q1 due to clients rebalancing portfolios, temporarily reducing asset counts.

Non-Core Services Wind Down

The company is winding down some non-core services, which is expected to impact revenue growth negatively.

Market Uncertainty

Continued choppy macroeconomic conditions and concerns over geopolitical and fiscal policy impacts on cost of capital.

Company Guidance

During the Altus Group's fourth quarter and fiscal year 2024 financial results conference call, the company provided guidance for fiscal 2025 and highlighted several key metrics. The company expects analytics segment revenue growth in the range of 4% to 7%, with recurring revenue growth projected at 6% to 9%. Adjusted EBITDA margin expansion is anticipated to be between 250 to 350 basis points. For the full year, Altus Group aims for single-digit revenue growth of 3% to 5% and a 300 to 400 basis point improvement in margins. In Q1, total analytics revenue growth is forecasted at 0% to 2%, with recurring revenue growth between 2% to 3%. The company continues to focus on high-margin recurring business, with 94% of analytics revenues being recurring in Q4 2024. For fiscal 2026, Altus Group maintains its medium-term target of achieving 35% margins in the analytics segment. The guidance also includes the context of improving market conditions and continued cost optimization efforts.

Altus Group Limited Corporate Events

Altus Group Sells Property Tax Unit to Ryan

Jan 2, 2025

Altus Group Limited has successfully sold its global Property Tax business to Ryan, LLC for C$700 million, marking a significant move towards becoming a pure-play software, data, and analytics platform in the commercial real estate sector. This strategic transaction will allow Altus to reduce debt, invest in innovation, and focus on high-quality acquisitions while enhancing 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.