Alithya Group (ALYA) AI Stock Analysis

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Alithya Group

(OTC: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)

Market Cap

C$183.71M

Dividend YieldN/A

Average Volume (3M)18.13K

Price to Earnings (P/E)―

Beta (1Y)1.00

Revenue Growth-7.52%

EPS Growth88.69%

CountryCA

Employees3,000

SectorTechnology

Sector Strength84

IndustryInformation Technology Services

Share Statistics

EPS (TTM)-0.04

Shares Outstanding92,030,850

10 Day Avg. Volume18,983

30 Day Avg. Volume18,133

Financial Highlights & Ratios

PEG Ratio-0.03

Price to Book (P/B)1.09

Price to Sales (P/S)0.00

P/FCF Ratio33.39

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$2.33

Price Target Upside26.00% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

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:Feb 13, 2025

(Q3-2025)

% Change Since: 6.94%|

Next Earnings Date:Jun 12, 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

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

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

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.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
468.69M	491.13M	522.70M	437.88M	287.64M	279.01M
	Gross Profit
136.95M	140.84M	151.77M	116.15M	83.02M	82.97M
	EBIT
4.50M	-4.74M	-27.02M	-14.00M	-17.01M	-40.97M
	EBITDA
28.05M	24.93M	7.36M	5.80M	-809.00K	-25.60M
	Net Income Common Stockholders
-4.45M	-16.66M	-30.10M	-15.55M	-17.34M	-39.67M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
21.12M	8.86M	22.58M	17.66M	6.90M	8.81M
	Total Assets
266.59M	416.50M	464.10M	447.72M	243.26M	257.82M
	Total Debt
59.43M	128.90M	145.71M	127.94M	70.41M	66.46M
	Net Debt
39.64M	120.04M	123.12M	110.28M	63.51M	57.65M
	Total Liabilities
116.14M	241.29M	277.03M	247.97M	135.25M	130.45M
	Stockholders Equity
150.45M	175.20M	187.07M	199.75M	108.01M	127.37M
Cash Flow		Free Cash Flow
35.53M	14.88M	26.30M	-4.71M	-2.73M	4.16M
	Operating Cash Flow
36.82M	15.67M	28.88M	-1.63M	-456.00K	8.69M
	Investing Cash Flow
-7.67M	-787.00K	-13.73M	-18.94M	-4.57M	-18.20M
	Financing Cash Flow
-28.54M	-28.58M	-11.33M	31.40M	3.42M	4.94M

Alithya Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price1.85

Price Trends

50DMA

1.73

Positive

100DMA

1.79

Positive

200DMA

1.76

Positive

Market Momentum

MACD

0.02

Negative

RSI

58.13

Neutral

STOCH

70.37

Neutral

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 1.85 is above the 20-day moving average (MA) of 1.79, above the 50-day MA of 1.73, and above the 200-day MA of 1.76, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 58.13 is Neutral, neither overbought nor oversold. The STOCH value of 70.37 is Neutral, 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
CSU	74 Outperform	C$104.07B	100.97	27.41%	0.11%	20.99%	33.05%
KXS	73 Outperform	C$5.60B	402.42	2.32%	―	15.14%	-31.45%
TCS	71 Outperform	C$598.64M	198.18	4.56%	0.82%	2.61%	46.26%
ENGH	68 Neutral	$1.32B	16.80	13.26%	4.49%	5.12%	-2.77%
SYZ	68 Neutral	C$216.59M	―	-3.13%	0.43%	-13.99%	-421.95%
Sector *	62 Neutral	$11.80B	10.31	-7.45%	2.91%	7.43%	-7.78%
ALYA	53 Neutral	C$183.71M	―	-2.51%	―	-7.52%	88.69%

* Technology Sector Average

Performance Comparison

TSE:ALYA

Alithya Group

1.85

-0.39

-17.41%

TSE:ENGH

Enghouse Systems

23.18

-6.21

-21.13%

TSE:KXS

Kinaxis Inc

199.51

50.79

34.15%

TSE:TCS

TECSYS Inc. J

40.98

7.36

21.89%

TSE:SYZ

Sylogist

9.10

-0.87

-8.73%

TSE:CSU

Constellation Software

4,881.20

1,069.39

28.05%

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.