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Alithya Group (TSE:ALYA)
TSX:ALYA

Alithya Group (ALYA) AI Stock Analysis

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Alithya Group

(TSX:ALYA)

Rating:53Neutral
Price Target:
Alithya Group's overall stock score reflects a balanced view of its financial performance challenges and operational strengths. Persistent net losses and valuation issues weigh heavily, while technical indicators suggest a stable, albeit neutral, market position. The earnings call highlights positive strategic execution, providing some optimism for future improvements. However, significant hurdles remain, particularly in achieving profitability, impacting the stock's attractiveness.
Positive Factors
Bookings Growth
The company experienced strong bookings growth in all geographies, with a notable increase in the backlog.
Earnings
Alithya reported fiscal Q3/25 adjusted EPS of C$0.06, which exceeded the forecast and the FactSet consensus forecast.
Financial Performance
Adjusted EBITDA for fiscal Q3/25 was significantly higher than both internal and FactSet consensus forecasts.
Negative Factors
Price Target
The 12-month price target was reduced due to multiple contraction in the peer group average.

Alithya Group (ALYA) vs. iShares MSCI Canada ETF (EWC)

Alithya Group Business Overview & Revenue Model

Company DescriptionAlithya Group (ALYA) is a North American leader in strategy and digital transformation, specializing in the design and implementation of innovative solutions for complex business challenges. Operating primarily in Canada, the United States, and Europe, Alithya offers a comprehensive range of services across sectors such as finance, manufacturing, energy, telecommunications, and healthcare. The company's core offerings include digital transformation consulting, application services, enterprise solutions, and data and analytics.
How the Company Makes MoneyAlithya Group generates revenue through a diverse array of IT and business consulting services, which are tailored to meet the specific needs of its clients across various industries. The company's primary revenue streams include fees from digital transformation consulting, which helps businesses modernize their operations and improve efficiency; application services, encompassing the development, implementation, and maintenance of software applications; and enterprise solutions, which involve deploying and optimizing large-scale ERP systems. Alithya also capitalizes on data and analytics services, providing businesses with insights to drive decision-making. The company's revenue is further bolstered by strategic partnerships with leading technology providers such as Microsoft and Oracle, enabling it to offer comprehensive solutions that leverage cutting-edge technologies.

Alithya Group Earnings Call Summary

Earnings Call Date:Jun 12, 2025
(Q3-2025)
|
% Change Since: 10.40%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
Alithya's earnings call presented a strong quarter with record adjusted EBITDA margins and significant bookings, especially in financial services. However, challenges such as revenue decline in Canada and lower gross margins in the U.S. and international segments present areas for improvement.
Q3-2025 Updates
Positive Updates
Record Adjusted EBITDA Margin
Alithya delivered the highest adjusted EBITDA margin since going public, a key milestone in their three-year strategic plan.
Strong Q3 Bookings
Q3 bookings reached $138.4 million with a book-to-bill ratio of 1.2x revenue, highlighting significant growth in financial services and insurance.
Sequential Organic Growth
Sequential organic growth was achieved in all geographies, contributing to improved financial performance.
Successful Integration of XRM Vision
The acquisition of XRM Vision is contributing to scaling Microsoft's smart shoring capabilities and creating cross-selling opportunities.
Gross Margin Achievement
Gross margin reached a record level of 32.3%, reflecting increased efficiencies and a higher value business mix.
Negative Updates
Revenue Decline in Canada
Canadian revenues decreased by 9.3% year-over-year due to a major client's project reaching maturity and reduced revenues from government contracts.
Lower Gross Margin in the U.S.
The U.S. experienced a decrease in gross margin percentage due to digital adoption subscription revenue declines.
Slight Decrease in International Revenues
International revenues were slightly down due to the end of a project in the UK, contributing to a lower gross margin.
Company Guidance
In the recent conference call, Alithya reported significant achievements for the third quarter of fiscal year 2025. The company posted its highest adjusted EBITDA margin since going public, reaching 8.9%, and also recorded a peak gross margin as a percentage of revenue at 32.3%. Bookings for the quarter were notably strong, amounting to $138.4 million, representing a book-to-bill ratio of 1.2x. The backlog now stands at approximately 17 months of revenue based on trailing 12 months. Additionally, Alithya experienced sequential organic growth across all geographies. The recent acquisition of XRM Vision has already shown promising contributions, enhancing their Microsoft and smart-shoring capabilities. Despite some industry headwinds, particularly in government contracts, the company maintained its focus on high-value services, which bolstered gross margin performance. Overall, Alithya continues to execute its strategic plan, targeting a gross margin of 33% to 35% over the next three years, while also maintaining strong cash flow and a healthy financial position with a leverage ratio of 2.6x net debt to trailing 12-month adjusted EBITDA.

Alithya Group Financial Statement Overview

Summary
Alithya Group's financial performance shows mixed results. The company has persistent net losses and negative net profit margins, despite revenue growth and positive cash flow trends. The balance sheet reveals a moderate debt-to-equity ratio and stable capital structure, yet the ongoing lack of profitability is a significant concern that impacts overall financial health.
Income Statement
45
Neutral
Alithya Group's income statement reveals challenges in profitability despite growth in total revenue over the years. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 29.2%. However, the company has been consistently recording negative net income, indicating persistent net losses, which result in a negative net profit margin. EBIT margin is low, and despite a positive EBITDA margin, the lack of net income profitability remains a key concern.
Balance Sheet
60
Neutral
The balance sheet of Alithya Group shows a moderate debt-to-equity ratio of approximately 0.75 for TTM, indicating a balanced approach to leverage. The equity ratio is around 41.4%, reflecting a stable capital structure with a reasonable proportion of equity financing. However, the return on equity (ROE) remains negative due to ongoing net losses, highlighting challenges in generating returns for shareholders.
Cash Flow
55
Neutral
Cash flow analysis indicates a positive trend with growing free cash flow, notably a TTM free cash flow of approximately $35.5 million. The operating cash flow to net income ratio is favorable, suggesting effective cash generation relative to net losses. However, the free cash flow to net income ratio reflects the ongoing net losses, which could impact long-term financial health if not addressed.
Breakdown
TTMMar 2024Mar 2023Mar 2022Mar 2021Mar 2020
Income StatementTotal Revenue
468.69M491.13M522.70M437.88M287.64M279.01M
Gross Profit
136.95M140.84M151.77M116.15M83.02M82.97M
EBIT
4.50M-4.74M-27.02M-14.00M-17.01M-40.97M
EBITDA
28.05M24.93M7.36M5.80M-809.00K-25.60M
Net Income Common Stockholders
-4.45M-16.66M-30.10M-15.55M-17.34M-39.67M
Balance SheetCash, Cash Equivalents and Short-Term Investments
21.12M8.86M22.58M17.66M6.90M8.81M
Total Assets
266.59M416.50M464.10M447.72M243.26M257.82M
Total Debt
59.43M128.90M145.71M127.94M70.41M66.46M
Net Debt
39.64M120.04M123.12M110.28M63.51M57.65M
Total Liabilities
116.14M241.29M277.03M247.97M135.25M130.45M
Stockholders Equity
150.45M175.20M187.07M199.75M108.01M127.37M
Cash FlowFree Cash Flow
35.53M14.88M26.30M-4.71M-2.73M4.16M
Operating Cash Flow
36.82M15.67M28.88M-1.63M-456.00K8.69M
Investing Cash Flow
-7.67M-787.00K-13.73M-18.94M-4.57M-18.20M
Financing Cash Flow
-28.54M-28.58M-11.33M31.40M3.42M4.94M

Alithya Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price1.91
Price Trends
50DMA
1.74
Positive
100DMA
1.80
Positive
200DMA
1.76
Positive
Market Momentum
MACD
0.03
Negative
RSI
63.89
Neutral
STOCH
87.30
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ALYA, the sentiment is Positive. The current price of 1.91 is above the 20-day moving average (MA) of 1.80, above the 50-day MA of 1.74, and above the 200-day MA of 1.76, indicating a bullish trend. The MACD of 0.03 indicates Negative momentum. The RSI at 63.89 is Neutral, neither overbought nor oversold. The STOCH value of 87.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ALYA.

Alithya Group Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSCSU
74
Outperform
C$103.59B100.5027.41%0.12%20.99%33.05%
TSKXS
73
Outperform
C$5.55B399.072.32%15.14%-31.45%
TSTCS
71
Outperform
C$611.54M202.464.56%0.82%2.61%46.26%
68
Neutral
C$1.27B16.2313.26%4.59%5.12%-2.77%
TSSYZ
68
Neutral
C$210.51M-3.13%0.44%-13.99%-421.95%
62
Neutral
$11.90B10.64-7.50%2.90%7.41%-8.19%
53
Neutral
$185.70M-2.51%-7.52%88.69%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:ALYA
Alithya Group
1.91
-0.34
-15.11%
TSE:ENGH
Enghouse Systems
22.98
-6.62
-22.37%
TSE:KXS
Kinaxis Inc
196.46
46.21
30.76%
TSE:TCS
TECSYS Inc. J
40.79
4.32
11.85%
TSE:SYZ
Sylogist
9.20
-1.37
-12.96%
TSE:CSU
Constellation Software
4,904.26
1,052.30
27.32%
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.