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NASDAQ:ALGM is not too expensive for the growth it is showing.

By Mill Chart

Last update: Oct 26, 2023

Uncover the potential of ALLEGRO MICROSYSTEMS INC (NASDAQ:ALGM), a growth stock that our stock screener found to be reasonably priced. NASDAQ:ALGM is excelling in growth aspects, maintaining a healthy financial position, and still offers an attractive valuation. We'll examine each aspect in detail.

Understanding NASDAQ:ALGM's Growth Score

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NASDAQ:ALGM has received a 8 out of 10:

  • The Earnings Per Share has grown by an impressive 69.05% over the past year.
  • ALGM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 69.11% yearly.
  • Looking at the last year, ALGM shows a very strong growth in Revenue. The Revenue has grown by 29.55%.
  • Measured over the past years, ALGM shows a quite strong growth in Revenue. The Revenue has been growing by 14.41% on average per year.
  • Based on estimates for the next years, ALGM will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.03% on average per year.
  • Based on estimates for the next years, ALGM will show a quite strong growth in Revenue. The Revenue will grow by 10.75% on average per year.

Looking at the Valuation

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NASDAQ:ALGM has achieved a 5 out of 10:

  • Compared to the rest of the industry, the Price/Earnings ratio of ALGM indicates a somewhat cheap valuation: ALGM is cheaper than 60.38% of the companies listed in the same industry.
  • ALGM's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.74.
  • Compared to the rest of the industry, the Price/Forward Earnings ratio of ALGM indicates a somewhat cheap valuation: ALGM is cheaper than 70.75% of the companies listed in the same industry.
  • Based on the Enterprise Value to EBITDA ratio, ALGM is valued a bit cheaper than 60.38% of the companies in the same industry.
  • The excellent profitability rating of ALGM may justify a higher PE ratio.
  • A more expensive valuation may be justified as ALGM's earnings are expected to grow with 14.93% in the coming years.

A Closer Look at Health for NASDAQ:ALGM

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NASDAQ:ALGM has earned a 8 out of 10:

  • An Altman-Z score of 17.88 indicates that ALGM is not in any danger for bankruptcy at the moment.
  • ALGM's Altman-Z score of 17.88 is amongst the best of the industry. ALGM outperforms 88.68% of its industry peers.
  • ALGM has a debt to FCF ratio of 0.26. This is a very positive value and a sign of high solvency as it would only need 0.26 years to pay back of all of its debts.
  • With an excellent Debt to FCF ratio value of 0.26, ALGM belongs to the best of the industry, outperforming 83.02% of the companies in the same industry.
  • A Debt/Equity ratio of 0.02 indicates that ALGM is not too dependend on debt financing.
  • ALGM has a Debt to Equity ratio of 0.02. This is in the better half of the industry: ALGM outperforms 68.87% of its industry peers.
  • A Current Ratio of 4.56 indicates that ALGM has no problem at all paying its short term obligations.
  • ALGM's Current ratio of 4.56 is fine compared to the rest of the industry. ALGM outperforms 70.75% of its industry peers.
  • ALGM has a Quick Ratio of 3.43. This indicates that ALGM is financially healthy and has no problem in meeting its short term obligations.
  • Looking at the Quick ratio, with a value of 3.43, ALGM is in the better half of the industry, outperforming 68.87% of the companies in the same industry.

Looking at the Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:ALGM has achieved a 8:

  • The Return On Assets of ALGM (19.28%) is better than 88.68% of its industry peers.
  • ALGM's Return On Equity of 23.18% is fine compared to the rest of the industry. ALGM outperforms 78.30% of its industry peers.
  • ALGM's Return On Invested Capital of 20.84% is amongst the best of the industry. ALGM outperforms 84.91% of its industry peers.
  • The last Return On Invested Capital (20.84%) for ALGM is above the 3 year average (11.69%), which is a sign of increasing profitability.
  • ALGM has a Profit Margin of 23.01%. This is in the better half of the industry: ALGM outperforms 78.30% of its industry peers.
  • In the last couple of years the Profit Margin of ALGM has grown nicely.
  • ALGM has a better Operating Margin (25.07%) than 75.47% of its industry peers.
  • ALGM's Operating Margin has improved in the last couple of years.
  • ALGM has a better Gross Margin (56.63%) than 71.70% of its industry peers.
  • ALGM's Gross Margin has improved in the last couple of years.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

Check the latest full fundamental report of ALGM for a complete fundamental analysis.

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.

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ALLEGRO MICROSYSTEMS INC

NASDAQ:ALGM (4/24/2024, 7:00:00 PM)

After market: 28.5001 -0.27 (-0.94%)

28.77

+2.2 (+8.28%)

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