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In the world of growth stocks, NASDAQ:ALGM shines as a value proposition.

By Mill Chart

Last update: Dec 7, 2023

ALLEGRO MICROSYSTEMS INC (NASDAQ:ALGM) was identified as an affordable growth stock by our stock screener. NASDAQ:ALGM is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

Assessing Growth Metrics for NASDAQ:ALGM

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:ALGM has achieved a 8 out of 10:

  • ALGM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 58.95%, which is quite impressive.
  • The Earnings Per Share has been growing by 69.27% on average over the past years. This is a very strong growth
  • Looking at the last year, ALGM shows a very strong growth in Revenue. The Revenue has grown by 27.26%.
  • ALGM shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.41% yearly.
  • 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.

How do we evaluate the Valuation for NASDAQ:ALGM?

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NASDAQ:ALGM has received 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 75.00% of the companies listed in the same industry.
  • ALGM is valuated rather cheaply when we compare the Price/Earnings ratio to 24.78, which is the current average of the S&P500 Index.
  • Based on the Price/Forward Earnings ratio, ALGM is valued a bit cheaper than the industry average as 70.19% of the companies are valued more expensively.
  • ALGM's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. ALGM is cheaper than 72.12% of the companies in the same industry.
  • ALGM's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
  • ALGM has an outstanding profitability rating, which may justify a higher PE ratio.
  • ALGM's earnings are expected to grow with 14.93% in the coming years. This may justify a more expensive valuation.

Health Analysis for NASDAQ:ALGM

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:ALGM has received a 8 out of 10:

  • An Altman-Z score of 18.73 indicates that ALGM is not in any danger for bankruptcy at the moment.
  • ALGM has a better Altman-Z score (18.73) than 92.31% 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.
  • Looking at the Debt to FCF ratio, with a value of 0.32, ALGM belongs to the top of the industry, outperforming 81.73% of the companies in the same industry.
  • A Debt/Equity ratio of 0.02 indicates that ALGM is not too dependend on debt financing.
  • With a decent Debt to Equity ratio value of 0.02, ALGM is doing good in the industry, outperforming 69.23% of the companies in the same industry.
  • ALGM has a Current Ratio of 5.33. This indicates that ALGM is financially healthy and has no problem in meeting its short term obligations.
  • ALGM has a Current ratio of 5.33. This is in the better half of the industry: ALGM outperforms 75.96% 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 better Quick ratio (4.04) than 74.04% of its industry peers.

Evaluating Profitability: NASDAQ:ALGM

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:ALGM, the assigned 8 is noteworthy for profitability:

  • 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.
  • Looking at the Return On Equity, with a value of 23.06%, ALGM is in the better half of the industry, outperforming 78.85% of the companies in the same industry.
  • With an excellent Return On Invested Capital value of 20.54%, ALGM belongs to the best of the industry, outperforming 86.54% of the companies in the same industry.
  • The 3 year average ROIC (11.69%) for ALGM is below the current ROIC(20.54%), indicating increased profibility in the last year.
  • ALGM's Profit Margin of 23.60% is fine compared to the rest of the industry. ALGM outperforms 77.88% 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 25.40%, ALGM belongs to the top of the industry, outperforming 80.77% of the companies in the same industry.
  • In the last couple of years the Operating Margin of ALGM has grown nicely.
  • ALGM has a Gross Margin of 57.20%. This is in the better half of the industry: ALGM outperforms 75.96% of its industry peers.
  • In the last couple of years the Gross Margin of ALGM has grown nicely.

Every day, new Affordable Growth stocks can be found on ChartMill in our Affordable Growth screener.

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

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.

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ALLEGRO MICROSYSTEMS INC

NASDAQ:ALGM (5/24/2024, 7:13:29 PM)

After market: 30.61 0 (0%)

30.61

+0.52 (+1.73%)

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