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NASDAQ:ALGM—Positioned as a High-Growth Stock, Ready for a Potential Breakout.

By Mill Chart

Last update: Dec 1, 2023

For growth-minded investors, high revenue and EPS growth are key criteria. Today, we'll examine whether ALLEGRO MICROSYSTEMS INC (NASDAQ:ALGM) fits the bill for growth investing, particularly as it forms a base and hints at a potential breakout. Remember, due diligence is essential, but ALLEGRO MICROSYSTEMS INC has caught our attention on our screen for growth with base formation. It may warrant additional investigation.

Assessing Growth for NASDAQ:ALGM

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NASDAQ:ALGM was assigned a score of 8 for growth:

  • 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 69.27% on average per year.
  • The Revenue has grown by 27.26% in the past year. This is a very strong growth!
  • ALGM shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.41% yearly.
  • The Earnings Per Share is expected to grow by 14.03% on average over the next years. This is quite good.
  • 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.

Deciphering NASDAQ:ALGM's Health Rating

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NASDAQ:ALGM, the assigned 8 for health provides valuable insights:

  • An Altman-Z score of 19.28 indicates that ALGM is not in any danger for bankruptcy at the moment.
  • ALGM's Altman-Z score of 19.28 is amongst the best of the industry. ALGM outperforms 90.48% 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 81.90% 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.
  • Looking at the Debt to Equity ratio, with a value of 0.02, ALGM is in the better half of the industry, outperforming 68.57% of the companies in the same industry.
  • A Current Ratio of 5.33 indicates that ALGM has no problem at all paying its short term obligations.
  • With a decent Current ratio value of 5.33, ALGM is doing good in the industry, outperforming 75.24% of the companies in the same industry.
  • ALGM has a Quick Ratio of 4.04. This indicates that ALGM is financially healthy and has no problem in meeting its short term obligations.
  • ALGM's Quick ratio of 4.04 is fine compared to the rest of the industry. ALGM outperforms 73.33% of its industry peers.

How do we evaluate the Profitability for NASDAQ:ALGM?

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NASDAQ:ALGM scores a 8 out of 10:

  • The Return On Assets of ALGM (19.69%) is better than 90.48% of its industry peers.
  • ALGM has a Return On Equity of 23.06%. This is in the better half of the industry: ALGM outperforms 79.05% of its industry peers.
  • Looking at the Return On Invested Capital, with a value of 20.54%, ALGM belongs to the top of the industry, outperforming 86.67% of the companies in the same industry.
  • The last Return On Invested Capital (20.54%) for ALGM is above the 3 year average (11.69%), which is a sign of increasing profitability.
  • The Profit Margin of ALGM (23.60%) is better than 79.05% of its industry peers.
  • ALGM's Profit Margin has improved in the last couple of years.
  • ALGM has a better Operating Margin (25.40%) than 81.90% of its industry peers.
  • ALGM's Operating Margin has improved in the last couple of years.
  • Looking at the Gross Margin, with a value of 57.20%, ALGM is in the better half of the industry, outperforming 76.19% of the companies in the same industry.
  • In the last couple of years the Gross Margin of ALGM has grown nicely.

How do we evaluate the setup for NASDAQ:ALGM?

Next to the Technical Rating, the Setup Rating of a stock determines to which extend the stock is consolidating. This score also ranges from 0 to 10 and is updated daily. The setup score evaluates various short term technical indicators. For NASDAQ:ALGM this score is currently 7:

ALGM has a bad technical rating, but it does show a decent setup pattern. Prices have been consolidating lately. There is a support zone below the current price at 26.12, a Stop Loss order could be placed below this zone.

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

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

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

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.

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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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