Alithya Group (ALYA) AI Stock Analysis

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Alithya Group

(TSX:ALYA)

53Neutral

Alithya Group's key strengths lie in its strategic execution, with record EBITDA margins and strong bookings. However, persistent net losses and valuation concerns weigh down the overall score. The technical indicators suggest caution in the short term, while the earnings call provides a positive outlook with notable achievements. Strategic improvements are needed to address profitability challenges and enhance shareholder value.

Positive Factors

Earnings

Alithya Group, Inc. reported fiscal Q1/25 adjusted EPS of C$0.05, which beat the forecast and was in line with the FactSet consensus forecast.

Financial Performance

Alithya reported fiscal Q1/25 adjusted EBITDA of C$10.1 million, which was 8% better than the forecast and 3% better than the FactSet consensus forecast.

Negative Factors

Revenue Decline

Total revenue declined 6% year-over-year on a reported basis, declined 7% YOY on a constant currency basis and declined 8% sequentially on a reported basis.

Alithya Group (ALYA) vs. S&P 500 (SPY)

Market Cap

$153.92M

Dividend YieldN/A

Average Volume (3M)24.08K

Price to Earnings (P/E)―

Beta (1Y)0.96

Revenue Growth-7.52%

EPS Growth88.69%

CountryCA

Employees3,000

SectorTechnology

Sector Strength40

IndustryInformation Technology Services

Share Statistics

EPS (TTM)-0.05

Shares Outstanding92,030,850

10 Day Avg. Volume21,659

30 Day Avg. Volume24,076

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.40

Price to Cash Flow (P/CF)4.00

P/FCF Ratio3.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$3.50

Price Target Upside124.67% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering0

Alithya Group Business Overview & Revenue Model

Company DescriptionAlithya Group Inc. (ALYA) is a leading North American digital strategy and technology consulting firm. The company operates in diverse sectors, including financial services, energy, manufacturing, telecommunications, and healthcare. Alithya provides a wide range of services such as business strategy, application services, enterprise solutions, and data and analytics, focusing on delivering tailored digital transformation solutions to its clients.

How the Company Makes MoneyAlithya Group Inc. generates revenue primarily through its consulting services and solutions delivery. The company's revenue streams include fees from consulting engagements, implementation of enterprise resource planning (ERP) systems, and ongoing support services. Alithya partners with major technology providers like Microsoft, Oracle, and SAP, enhancing its service offerings and enabling it to serve a broad client base. These partnerships are significant as they allow Alithya to leverage cutting-edge technologies and expand its market reach, thereby driving revenue growth. Additionally, Alithya's strategic acquisitions have helped broaden its capabilities and geographical presence, contributing to its overall earnings.

Alithya Group Financial Statement Overview

Summary

Alithya Group shows resilience in revenue growth and cash flow generation. However, persistent net losses and negative net profit margins are significant concerns. The balance sheet reveals a stable capital structure, but profitability challenges necessitate strategic improvements to enhance financial performance and shareholder value.

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	24.29M	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
14.46M	8.86M	22.58M	17.66M	6.90M	8.81M
	Total Assets
115.88M	416.50M	464.10M	447.72M	243.26M	257.82M
	Total Debt
42.64M	128.90M	145.71M	127.94M	70.41M	66.46M
	Net Debt
28.18M	120.04M	123.12M	110.28M	63.51M	57.65M
	Total Liabilities
83.85M	241.29M	277.03M	247.97M	135.25M	130.45M
	Stockholders Equity
32.03M	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

Negative

Last Price1.56

Price Trends

50DMA

1.85

Negative

100DMA

1.75

Negative

200DMA

1.81

Negative

Market Momentum

MACD

-0.02

Positive

RSI

36.34

Neutral

STOCH

13.20

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ALYA, the sentiment is Negative. The current price of 1.56 is below the 20-day moving average (MA) of 1.82, below the 50-day MA of 1.85, and below the 200-day MA of 1.81, indicating a bearish trend. The MACD of -0.02 indicates Positive momentum. The RSI at 36.34 is Neutral, neither overbought nor oversold. The STOCH value of 13.20 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ALYA.

Alithya Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ENGH	76 Outperform	$1.28B	15.08	14.76%	4.76%	8.11%	15.83%
TCS	73 Outperform	C$587.71M	194.50	4.56%	0.89%	2.61%	46.26%
KXS	68 Neutral	C$4.38B	157.81	-0.10%	―	14.85%	-105.25%
SYZ	68 Neutral	C$165.36M	―	-1.93%	0.56%	-13.99%	-421.95%
CSU	63 Neutral	C$92.08B	91.94	30.90%	0.13%	21.56%	31.90%
Sector *	57 Neutral	$18.45B	9.41	-13.97%	2.74%	5.04%	-23.56%
ALYA	53 Neutral	$153.92M	―	-2.51%	―	-7.52%	88.69%

* Technology Sector Average

Performance Comparison

TSE:ALYA

Alithya Group

1.56

-0.46

-22.77%

TSE:ENGH

Enghouse Systems

23.08

-5.82

-20.14%

TSE:KXS

Kinaxis Inc

160.54

9.15

6.04%

TSE:TCS

TECSYS Inc. J

37.26

-1.76

-4.51%

TSE:SYZ

Sylogist

7.23

-2.21

-23.41%

TSE:CSU

Constellation Software

4,284.13

658.87

18.17%

Alithya Group Earnings Call Summary

Earnings Call Date: Feb 13, 2025 | % Change Since: -9.83% | Next Earnings Date: Jun 19, 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.

Highlights

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.

Lowlights

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.

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.