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Allegro MicroSystems (ALGM)
NASDAQ:ALGM
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Allegro MicroSystems
(NASDAQ:ALGM)
70Outperform
Positive Factors
Bookings and Inventory
Management noted lower channel inventory, low cancellations, and improved bookings (+50% Y/Y), with gaps now emerging in downstream inventory.
Growth Potential
There is a strong potential for growth in China's electric vehicle market, with expected improvements in the second half of 2025.
Industrial Growth
Industrial is showing increased activities and orders, with datacenter sales beginning to grow again.
Negative Factors
Auto Sector Decline
Auto declined 8% Q/Q, due to expected declines and inventory digestion by North American OEMs.
Electric Vehicle Market
A broader electric vehicle slowdown is seen as a headwind, particularly in the US and EU markets.
Guidance and Challenges
The company reported a slightly weaker guidance for the upcoming quarter, which could indicate short-term challenges.
Allegro MicroSystems (ALGM) vs. S&P 500 (SPY)
Market Cap
$5.01B
Dividend YieldN/A
Average Volume (3M)3.71M
Price to Earnings (P/E)―
Beta (1Y)1.50
Revenue Growth-28.33%
EPS Growth-129.75%
CountryUS
Employees4,593
SectorTechnology
Sector Strength46
IndustrySemiconductors and Equipment
Share Statistics
EPS (TTM)-0.34
Shares Outstanding184,125,030
10 Day Avg. Volume2,758,432
30 Day Avg. Volume3,705,405
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)6.33
Price to Cash Flow (P/CF)-149.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$29.50Price Target Upside9.87% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
Allegro MicroSystems Business Overview & Revenue Model
Company DescriptionAllegro MicroSystems, Inc. designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; power ICs comprising motor driver ICs, and regulator and LED driver ICs; and photonic and 3D sensing components, including photodiodes, eye-safe lasers, and readout ICs for LiDAR applications. The company sells its products to original equipment manufacturers and suppliers primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.
How the Company Makes MoneyAllegro MicroSystems generates revenue through the design, production, and sale of its semiconductor products. The company's primary revenue streams include sales of its magnetic sensor ICs and power ICs, which are widely used in automotive and industrial applications. Allegro's strong market position is supported by its long-term relationships with key customers and strategic partnerships that enhance its product offerings and expand its market reach. Additionally, the company's focus on innovation and development of next-generation technologies enables it to capture emerging opportunities in sectors such as electric vehicles and renewable energy, further driving its earnings.
Allegro MicroSystems Financial Statement Overview
Summary
Allegro MicroSystems presents a strong historical revenue growth and a stable balance sheet. However, recent profitability challenges, operational inefficiencies, and decreasing free cash flow suggest potential risks. The company needs to address net income declines and improve cash flow generation for future stability.Income Statement
Allegro MicroSystems displayed a mixed financial performance in the TTM. The gross profit margin for TTM stands at 47.23%, which is robust within the semiconductor industry. However, the net profit margin for TTM is negative at -8.45%, indicating a current profitability challenge. Historical revenue growth is strong, with a notable increase from 2021 to 2023. EBIT and EBITDA margins are low, suggesting operational inefficiencies.75
Positive
Balance Sheet
The balance sheet is stable with a debt-to-equity ratio of 0.40 in TTM, indicating conservative leverage. However, total debt has increased significantly over the years. The equity ratio remains strong at 64.81%, and return on equity was high in 2023 but turned negative in TTM due to net losses.80
Positive
Cash Flow
Cash flow performance is mixed. The operating cash flow to net income ratio is strong, indicating cash generation capability. However, free cash flow has decreased notably in TTM. The free cash flow to net income ratio is low, reflecting challenges in converting earnings to cash.70
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 772.76M | 1.05B | 973.65M | 768.67M | 591.21M | 650.09M | Gross Profit |
| 364.92M | 574.53M | 546.08M | 407.46M | 278.90M | 261.28M | EBIT |
| 32.10M | 209.46M | 203.31M | 136.65M | 17.71M | 52.83M | EBITDA |
| 43.80M | 276.94M | 264.49M | 190.33M | 49.46M | 117.44M | Net Income Common Stockholders |
| -65.33M | 152.70M | 187.36M | 119.41M | 17.95M | 36.97M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 138.45M | 212.14M | 351.58M | 282.38M | 197.21M | 214.49M | Total Assets |
| 1.44B | 1.53B | 1.18B | 892.62M | 747.68M | 817.82M | Total Debt |
| 398.10M | 275.21M | 42.54M | 41.45M | 25.00M | 85.70M | Net Debt |
| 259.65M | 63.06M | -309.04M | -240.93M | -172.21M | -128.79M | Total Liabilities |
| 507.31M | 398.89M | 214.34M | 157.26M | 160.81M | 183.69M | Stockholders Equity |
| 934.43M | 1.13B | 965.63M | 734.21M | 585.75M | 633.18M |
| Cash Flow | Free Cash Flow | ||||
| 6.94M | 56.94M | 113.43M | 86.19M | 79.90M | 35.80M | Operating Cash Flow |
| 55.77M | 181.72M | 193.21M | 156.13M | 120.57M | 81.42M | Investing Cash Flow |
| -48.52M | -516.72M | -99.70M | -66.27M | -68.25M | -41.68M | Financing Cash Flow |
| -79.93M | 198.88M | -20.00M | -5.31M | -72.19M | 82.50M |
Allegro MicroSystems Technical Analysis
Neutral
26.85
Price Trends
25.18
Positive
23.41
Positive
24.09
Positive
Market Momentum
0.46
Positive
47.53
Neutral
41.70
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALGM, the sentiment is Neutral. The current price of 26.85 is above the 20-day moving average (MA) of 26.30, above the 50-day MA of 25.18, and above the 200-day MA of 24.09, indicating a neutral trend. The MACD of 0.46 indicates Positive momentum. The RSI at 47.53 is Neutral, neither overbought nor oversold. The STOCH value of 41.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ALGM.
Allegro MicroSystems Risk Analysis
Allegro MicroSystems disclosed 44 risk factors in its most recent earnings report. Allegro MicroSystems reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Allegro MicroSystems Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $104.42B | 68.11 | 4.43% | 1.72% | -19.28% | -44.00% | |
70 Outperform | $5.01B | ― | -6.32% | ― | -28.33% | -129.75% | |
68 Neutral | $28.06B | 92.33 | 4.71% | 3.48% | -44.31% | -86.74% | |
67 Neutral | $52.18B | 21.49 | 28.16% | 1.97% | -4.99% | -9.18% | |
67 Neutral | $18.98B | 12.40 | 18.97% | ― | -14.19% | -27.42% | |
65 Neutral | $167.87B | 35.41 | 28.25% | 2.88% | -10.72% | -26.60% | |
58 Neutral | $21.67B | 10.60 | -18.43% | 2.42% | 4.66% | -24.45% |
* Technology Sector Average
Performance Comparison
ALGM
Allegro MicroSystems
25.53
-1.43
-5.30%
ADI
Analog Devices
208.94
14.38
7.39%
MCHP
Microchip
50.79
-36.75
-41.98%
NXPI
NXP Semiconductors
200.06
-43.42
-17.83%
ON
ON Semiconductor
43.76
-29.79
-40.50%
TXN
Texas Instruments
180.76
11.29
6.66%
Allegro MicroSystems Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 17.51% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with strong advancements in product innovation, supply chain localization, and financial management contrasted by significant declines in sales and margins. While leading indicators like increased bookings and reduced cancellations are positive, the year-over-year sales and margin declines indicate ongoing challenges.Highlights
Strong Q3 Bookings and Indicators
Bookings for the quarter were the highest in the past eight quarters, up 50% year-over-year, indicating strong demand and lower channel inventory. Cancellations have largely abated, suggesting a stabilization in demand.
Product Innovation and Expansion
Allegro introduced a range of new products, including inductive position sensors, micropower magnetic switches, and the industry's fastest current sensor IC. These innovations address various sectors like xEV, robotics, and data centers.
Progress in Localization and Supply Chain in China
Significant progress was made in localizing the supply chain in China with shipments from local OSAT partners already underway, expected to expand throughout the year.
Debt Management and Interest Savings
Allegro made a voluntary debt payment of $25 million and plans another $30 million payment in Q4, with an expected annual interest saving of $3 million due to a term loan repricing.
Lowlights
Significant Year-over-Year Sales Decline
Total Q3 sales declined 30% year-over-year, with automotive sales dropping 33% and e-mobility sales decreasing 12% sequentially.
Challenges in Gross Margin and Operating Margin
Gross margin was 49.1%, a decrease from 27% a year ago. Operating margin also declined to 10.8% from 11.7% in Q2.
Persisting Inventory Challenges
Inventory days were high at 182 days, and efforts to reduce channel inventory levels are ongoing, reflecting persistent supply chain challenges.
Company Guidance
During the Allegro MicroSystems earnings call for the third fiscal quarter of 2025, the company reported sales of $178 million and a non-GAAP EPS of $0.07, both exceeding the midpoint of their guidance. Despite a 5% sequential and 30% year-over-year decline in total sales, Allegro noted positive trends such as increased within-quarter orders and bookings, which are the highest in eight quarters, up 50% year-over-year. The automotive sector contributed $130 million, representing 73% of total sales, while the Industrial and Other sectors contributed $48 million. Gross margin stood at 49.1%, and operating margin was 10.8%, with an adjusted EBITDA of 17% of sales. Looking ahead, Allegro expects fourth-quarter sales to range between $180 million and $190 million, with a gross margin between 46% and 48%, and non-GAAP EPS between $0.03 and $0.07. The company highlighted its strategic focus on expanding its product portfolio, particularly in the fast-growing xEVs and ADAS markets, and is optimistic about future growth driven by electrification and automation trends.Allegro MicroSystems Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Allegro MicroSystems Announces Leadership Transition
Neutral
Mar 12, 2025
On March 12, 2025, Allegro MicroSystems announced that Max Glover, the Senior Vice President of Worldwide Sales, will transition to a new role as a strategic advisor to the CEO, effective March 29, 2025. This change in leadership is expected to impact the company’s strategic direction and may influence its market positioning and stakeholder relations.
Executive/Board ChangesBusiness Operations and Strategy
Allegro MicroSystems Names Michael C. Doogue as CEO
Positive
Feb 24, 2025
On February 23, 2025, Allegro MicroSystems appointed Michael C. Doogue as President and CEO, succeeding Vineet Nargolwala. Doogue, who has been with the company for 27 years and holds 75 U.S. patents, has played a critical role in developing Allegro’s technology roadmap. This leadership transition is part of a strategic succession plan to extend Allegro’s technology leadership and capitalize on growth opportunities in the auto and industrial markets.
Executive/Board Changes
Allegro MicroSystems Expands Board with New Appointment
Positive
Feb 3, 2025
On January 31, 2025, Allegro MicroSystems appointed Krishna G. Palepu as an independent director to its Board of Directors, effective immediately. Dr. Palepu, a professor at Harvard Business School, brings extensive experience in strategy, governance, and emerging markets, particularly in the technology and semiconductor sectors, which will aid Allegro as it aims for growth in international business.
Private Placements and Financing
Allegro MicroSystems Plans $375M Debt Refinancing by 2025
Neutral
Jan 10, 2025
Allegro MicroSystems, Inc. has allocated a $375 million U.S. dollar-denominated first lien term facility, set to mature in October 2030, with the intention of refinancing its existing term loans. This strategic financial move is expected to close in February 2025 and aims to optimize the company’s debt structure, though it remains subject to customary conditions and uncertainties.
Private Placements and Financing
Allegro MicroSystems Initiates Term Loan Refinancing Strategy
Neutral
Jan 6, 2025
Allegro MicroSystems, Inc. has initiated a process to refinance its existing term loans through a new tranche known as the Refinancing and Repricing Facility, anticipated to include a $375 million U.S. dollar-denominated first lien term facility. This strategic financial move, facilitated by Morgan Stanley Senior Funding, Inc. as administrative agent, suggests a potential impact on the company’s financial structure and market positioning, although its success is contingent upon market conditions and other factors.
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.