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Alithya Group (TSE:ALYA)
TSX:ALYA
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Alithya Group
(TSX:ALYA)
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Rating:49Neutral
Price Target:
C$1.50
▼(-12.28% Downside)
Alithya Group's overall stock score reflects a combination of mixed financial performance and valuation challenges. The positive momentum from U.S. market growth and acquisition integration is offset by profitability issues and technical indicators suggesting limited upward momentum.
Positive Factors
U.S. Market Growth
Strong U.S. market growth driven by key partnerships with Oracle and Microsoft highlights Alithya's competitive advantage and market expansion potential.
Successful Integration of Acquisitions
Effective integration of acquisitions enhances Alithya's service offerings and operational capabilities, supporting long-term growth and innovation.
Smart Shore Capabilities Expansion
Expanding smart shore capabilities improves cost efficiency and service delivery, strengthening Alithya's competitive position in the industry.
Negative Factors
Canadian Revenue Decline
Declining Canadian revenues indicate challenges in maintaining market share and client retention, potentially impacting overall growth.
Increased Net Debt
Rising net debt levels can limit financial flexibility and increase risk, potentially affecting Alithya's ability to invest in growth opportunities.
Lower Utilization and Margins in Canada
Reduced utilization and margins in Canada suggest operational inefficiencies, which could hinder profitability and competitive positioning.
Alithya Group (ALYA) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$170.25M
Dividend YieldN/A
Average Volume (3M)108.37K
Price to Earnings (P/E)―
Beta (1Y)0.88
Revenue Growth3.40%
EPS Growth-691.81%
CountryCA
Employees3,000
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)-0.32
Shares Outstanding92,235,280
10 Day Avg. Volume57,819
30 Day Avg. Volume108,369
Financial Highlights & Ratios
PEG Ratio0.25
Price to Book (P/B)1.11
Price to Sales (P/S)0.39
P/FCF Ratio13.03
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$3.05Price Target Upside78.24% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Alithya Group Business Overview & Revenue Model
Company DescriptionAlithya Group Inc. provides strategy and digital technology services in Canada, the United States, and Europe. The company's business strategy services include strategic consulting, digital transformation, organizational performance, and enterprise architecture services. It also provides application services, such as digital applications DevOps, legacy systems modernization, control and software engineering, cloud infrastructure, quality assurance, and automated testing; enterprise solutions comprising enterprise resource planning, corporate performance management, customer relationship management, and human capital management; and data and analytics solutions, including business intelligence, data management, artificial intelligence (AI), and machine learning, as well as internet of things. In addition, the company provides AI-FI, an integrated artificial intelligence and fidelity solution; Alithya GoTest, solution allows clients to test the functionality of applications on various platforms; CASSI analytics for online weekly maintenance, outage management, petrochemical turnarounds, and maintenance and reliability; and SIDER, a secure solution that facilitates distribution of medical results to healthcare sectors and to centralized electronic medical records. It serves financial services, energy, manufacturing, telecommunications, transportation and logistics, professional services, healthcare, and government sectors. Alithya Group Inc. was founded in 1992 and is headquartered in Montreal, Canada.
How the Company Makes MoneyAlithya generates revenue primarily through its consulting and professional services, which include technology implementation, project management, and ongoing support. The company operates on a time-and-materials basis for many of its consulting services, charging clients based on the hours worked and the expertise provided. Additionally, Alithya earns revenue from fixed-price contracts for specific projects, particularly in software development and system integration. Key revenue streams also include maintenance and support services for custom applications and software solutions. The company has established significant partnerships with major technology providers, such as Microsoft and Oracle, which can contribute to revenue through joint offerings and integrated solutions. Furthermore, Alithya benefits from long-term client relationships, allowing for recurring revenue through ongoing contracts and repeat business.
Alithya Group Earnings Call Summary
Earnings Call Date:Aug 13, 2025
(Q1-2026)
| % Change Since: |
Next Earnings Date:Feb 12, 2026
Earnings Call Sentiment Neutral
The earnings call reflected strong growth and performance in the U.S. market, bolstered by successful integration of acquisitions and increased operational efficiency. However, challenges in the Canadian segment, including revenue decline and lower utilization, as well as an increased net debt, balanced the overall sentiment.Q1-2026 Updates
Positive Updates
U.S. Market Growth
Achieved double-digit profitable growth of 17.3% in the U.S. market, driven primarily by Oracle and Microsoft practices.
Revenue and Adjusted EBITDA Growth
Consolidated revenues increased by 2.7% year-over-year to $124.2 million, and adjusted EBITDA grew by 15.6% to $11.6 million.
Successful Integration of Acquisitions
Integrated eVerge and XRM Vision acquisitions, contributing to growth and new opportunities, with a significant impact on smart shore centers.
High Gross Margin
Gross margin improved to 32.1%, up from 31.9% last year, due to increased efficiencies and a focus on higher-value business mix.
Strong Performance in Healthcare Sector
Completed significant projects for healthcare clients like Virtua Health and Cigna using Oracle solutions, enhancing operational efficiency and financial insights.
Smart Shore Capabilities Expansion
Reached a new high of 13% of employees in smart shore locations, significantly contributing to the company's operational efficiency.
Positive Cash Position
Executed the eVerge acquisition with a 100% cash approach, maintaining a good cash position for future acquisition opportunities.
Negative Updates
Canadian Revenue Decline
Revenues in Canada decreased by 8.5%, primarily due to reduced government contracts and the maturity of a major transformation project.
Lower Utilization and Margins in Canada
Decreased utilization rates and lower tax credits resulted in a drop in gross margin in the Canadian segment.
Book-to-Bill Ratio Challenges
Bookings in the quarter resulted in a book-to-bill ratio of 0.95, indicating slower project conversion compared to previous periods.
Increased Net Debt
Net debt increased by $24.3 million to $118.3 million, with a leverage ratio of 2.4x net debt to trailing 12 months adjusted EBITDA.
Company Guidance
In the recent conference call detailing Alithya's first quarter fiscal 2026 results, the management provided several key financial metrics and strategic insights. The company reported a year-over-year improvement in adjusted EBITDA and gross margin as a percentage of revenue, driven by a focus on high-value services and efficiency gains. Revenue growth was notable, particularly in the U.S. market, with a 17.3% increase in the U.S. operating segment, largely attributed to strong performances in their Oracle and Microsoft practices. The U.S. accounted for a higher proportion of revenue growth compared to Canada, where revenues fell due to strategic exits from lower-margin contracts. The company also highlighted the impacts of recent acquisitions, such as eVerge, which was financed entirely in cash, contributing to new opportunities and enhancing Alithya's smart shore capabilities, now representing 13% of the workforce. Furthermore, the call noted a book-to-bill ratio of 0.95 for the quarter, with bookings at $118.1 million, and emphasized ongoing strategic priorities focused on industry expertise and smart shoring.Alithya Group Financial Statement Overview
Summary
Alithya Group shows strong revenue growth and a healthy gross profit margin, but struggles with profitability and cash flow generation. The balance sheet is stable with moderate leverage, but returns on equity are low. The company should focus on improving operational efficiency and cash flow management to enhance overall financial health.Income Statement
Alithya Group shows a positive trajectory in revenue growth with a TTM growth rate of 69.3%, indicating strong top-line expansion. Gross profit margin is healthy at 31.1%, reflecting efficient cost management. However, net profit margin remains low at 0.89%, suggesting challenges in translating revenue growth into bottom-line profitability. EBIT and EBITDA margins are modest, indicating room for improvement in operational efficiency.Balance Sheet
The company's debt-to-equity ratio of 0.79 indicates moderate leverage, which is manageable but should be monitored. Return on equity is low at 2.36%, suggesting limited returns for shareholders. The equity ratio stands at 41.3%, reflecting a stable capital structure with a reasonable level of equity financing.Cash Flow
Free cash flow has declined significantly by 42.2% in the TTM period, raising concerns about cash generation capabilities. The operating cash flow to net income ratio is 0.25, indicating that cash flows are not fully supporting net income. However, the free cash flow to net income ratio is strong at 0.94, suggesting that the company is generating cash relative to its net income.| Breakdown | TTM | Dec 2024 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 489.54M | 491.13M | 473.48M | 522.70M | 437.88M | 287.64M |
| Gross Profit | 156.93M | 140.84M | 147.01M | 151.77M | 116.15M | 83.02M |
| EBITDA | 5.73M | 24.29M | 36.00M | 6.38M | 5.80M | -809.00K |
| Net Income | -26.45M | -16.66M | 1.29M | -30.10M | -15.55M | -17.34M |
Balance Sheet | ||||||
| Total Assets | 412.26M | 416.50M | 425.98M | 464.10M | 447.72M | 243.26M |
| Cash, Cash Equivalents and Short-Term Investments | 17.81M | 8.86M | 15.96M | 22.58M | 17.66M | 6.90M |
| Total Debt | 146.95M | 128.90M | 118.91M | 145.71M | 127.94M | 70.41M |
| Total Liabilities | 257.51M | 241.29M | 241.42M | 277.03M | 247.97M | 135.25M |
| Stockholders Equity | 154.75M | 175.20M | 184.56M | 187.07M | 199.75M | 108.01M |
Cash Flow | ||||||
| Free Cash Flow | 24.15M | 14.88M | 46.99M | 26.30M | -4.71M | -2.73M |
| Operating Cash Flow | 25.64M | 15.67M | 48.43M | 28.88M | -1.63M | -456.00K |
| Investing Cash Flow | -17.37M | -787.00K | -7.82M | -13.73M | -18.94M | -4.57M |
| Financing Cash Flow | -3.08M | -28.58M | -34.15M | -11.33M | 31.40M | 3.42M |
Alithya Group Technical Analysis
Neutral
1.71
Price Trends
1.71
Positive
1.76
Negative
1.89
Negative
Market Momentum
<0.01
Negative
50.21
Neutral
74.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ALYA, the sentiment is Neutral. The current price of 1.71 is above the 20-day moving average (MA) of 1.70, above the 50-day MA of 1.71, and below the 200-day MA of 1.89, indicating a neutral trend. The MACD of <0.01 indicates Negative momentum. The RSI at 50.21 is Neutral, neither overbought nor oversold. The STOCH value of 74.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:ALYA.
Alithya Group Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | C$27.98B | 17.56 | 16.50% | 0.48% | 8.43% | 0.25% | |
64 Neutral | C$48.70M | 13.96 | 7.17% | ― | -13.43% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
51 Neutral | C$4.47M | -11.36 | ― | ― | 13.01% | 20.00% | |
49 Neutral | C$170.25M | -6.31 | -16.17% | ― | 3.40% | -691.81% | |
44 Neutral | C$104.58M | -3,571.43 | -0.42% | ― | -59.23% | -100.34% | |
41 Neutral | C$8.13M | -0.88 | -58.58% | ― | -56.02% | 91.71% |
* Technology Sector Average
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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.