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While growth is established for NASDAQ:ALGM, the stock's valuation remains reasonable.

By Mill Chart

Last update: Nov 16, 2023

ALLEGRO MICROSYSTEMS INC (NASDAQ:ALGM) has caught the eye of our stock screener as an affordable growth stock. NASDAQ:ALGM is displaying robust growth metrics and also excels in terms of profitability, solvency, and liquidity. Additionally, it appears to be reasonably priced. Let's delve into the details.

Assessing Growth for NASDAQ:ALGM

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NASDAQ:ALGM scores a 8 out of 10:

  • The Earnings Per Share has grown by an impressive 58.95% over the past year.
  • Measured over the past years, ALGM shows a very strong growth in Earnings Per Share. The EPS has been growing by 69.11% on average per year.
  • Looking at the last year, ALGM shows a very strong growth in Revenue. The Revenue has grown by 27.27%.
  • 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.
  • ALGM is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 14.03% yearly.
  • The Revenue is expected to grow by 10.75% on average over the next years. This is quite good.

Understanding NASDAQ:ALGM's Valuation Score

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NASDAQ:ALGM scores a 5 out of 10:

  • ALGM's Price/Earnings ratio is a bit cheaper when compared to the industry. ALGM is cheaper than 73.08% of the companies in the same industry.
  • The average S&P500 Price/Earnings ratio is at 24.77. ALGM is valued slightly cheaper when compared to this.
  • Compared to the rest of the industry, the Price/Forward Earnings ratio of ALGM indicates a somewhat cheap valuation: ALGM is cheaper than 71.15% of the companies listed in the same industry.
  • Based on the Enterprise Value to EBITDA ratio, ALGM is valued a bit cheaper than 70.19% of the companies in the same industry.
  • Based on the Price/Free Cash Flow ratio, ALGM is valued a bit cheaper than 60.58% 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.

Looking at the Health

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:ALGM was assigned a score of 8 for health:

  • An Altman-Z score of 20.15 indicates that ALGM is not in any danger for bankruptcy at the moment.
  • ALGM's Altman-Z score of 20.15 is amongst the best of the industry. ALGM outperforms 90.38% of its industry peers.
  • ALGM has a debt to FCF ratio of 0.32. This is a very positive value and a sign of high solvency as it would only need 0.32 years to pay back of all of its debts.
  • ALGM has a better Debt to FCF ratio (0.32) than 82.69% of its industry peers.
  • ALGM has a Debt/Equity ratio of 0.02. This is a healthy value indicating a solid balance between debt and equity.
  • The Debt to Equity ratio of ALGM (0.02) is better than 69.23% of its industry peers.
  • A Current Ratio of 5.33 indicates that ALGM has no problem at all paying its short term obligations.
  • ALGM has a Current ratio of 5.33. This is in the better half of the industry: ALGM outperforms 76.92% of its industry peers.
  • A Quick Ratio of 4.04 indicates that ALGM has no problem at all paying its short term obligations.
  • ALGM has a Quick ratio of 4.04. This is in the better half of the industry: ALGM outperforms 75.96% of its industry peers.

Evaluating Profitability: NASDAQ:ALGM

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 9:

  • ALGM has a Return On Assets of 19.69%. This is amongst the best in the industry. ALGM outperforms 90.38% of its industry peers.
  • ALGM has a better Return On Equity (23.06%) than 80.77% of its industry peers.
  • ALGM has a better Return On Invested Capital (20.55%) than 86.54% of its industry peers.
  • The last Return On Invested Capital (20.55%) for ALGM is above the 3 year average (11.69%), which is a sign of increasing profitability.
  • ALGM has a Profit Margin of 23.60%. This is in the better half of the industry: ALGM outperforms 79.81% of its industry peers.
  • In the last couple of years the Profit Margin of ALGM has grown nicely.
  • Looking at the Operating Margin, with a value of 25.41%, ALGM belongs to the top of the industry, outperforming 81.73% of the companies in the same industry.
  • ALGM's Operating Margin has improved in the last couple of years.
  • ALGM's Gross Margin of 57.19% is fine compared to the rest of the industry. ALGM outperforms 74.04% of its industry peers.
  • ALGM's Gross Margin has improved in the last couple of years.

More Affordable Growth stocks can be found in our Affordable Growth screener.

Our latest full fundamental report of ALGM contains the most current fundamental analsysis.

Disclaimer

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 (2/21/2024, 7:25:20 PM)

Premarket: 32.17 +1.12 (+3.61%)

31.05

+0.26 (+0.84%)

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