Latest news with #ALGM
Yahoo
6 days ago
- Business
- Yahoo
3 High-Flying Stocks in Hot Water
Expensive stocks typically earn their valuations through superior growth rates that other companies simply can't match. The flip side though is that these lofty expectations make them particularly susceptible to drawdowns when market sentiment shifts. Finding the right balance between price and quality can challenge even the most skilled investors. Luckily for you, we started StockStory to help you identify the real opportunities. That said, here are three high-flying stocks where the price is not right and some other investments you should look into instead. Forward P/E Ratio: 51.2x The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ:ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers. Why Do We Steer Clear of ALGM? Annual sales declines of 13.7% for the past two years show its products and services struggled to connect with the market during this cycle Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term Free cash flow margin dropped by 10.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up Allegro MicroSystems is trading at $25.05 per share, or 51.2x forward P/E. To fully understand why you should be careful with ALGM, check out our full research report (it's free). Forward P/E Ratio: 40.1x Focused on the future of autonomous military combat, AeroVironment (NASDAQ:AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions. Why Are We Cautious About AVAV? Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 7.5 percentage points Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 24.6 percentage points Waning returns on capital from an already weak starting point displays the inefficacy of management's past and current investment decisions AeroVironment's stock price of $181.01 implies a valuation ratio of 40.1x forward P/E. Check out our free in-depth research report to learn more about why AVAV doesn't pass our bar. Forward P/E Ratio: 41.1x Founded in 1894 as a response to the growing dangers of electricity in American homes and businesses, UL Solutions (NYSE:ULS) provides testing, inspection, and certification services that help companies ensure their products meet safety, security, and sustainability standards. Why Do We Think Twice About ULS? 4.3% annual revenue growth over the last three years was slower than its business services peers At $71.82 per share, UL Solutions trades at 41.1x forward P/E. Read our free research report to see why you should think twice about including ULS in your portfolio, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
Yahoo
09-04-2025
- Business
- Yahoo
1 Small-Cap Stock to Own for Decades and 2 to Be Wary Of
Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors. Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here is one small-cap stock that could be the next big thing and two that may have trouble. Market Cap: $1.07 billion Originally created to process international tuition payments for universities, Flywire (NASDAQ:FLYW) is a cross border payments processor and software platform focusing on complex, high-value transactions like education, healthcare and B2B payments. Why Are We Wary of FLYW? Gross margin of 63.7% reflects its relatively high servicing costs Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue Rapid expansion strategy came at the expense of operating profitability At $8.57 per share, Flywire trades at 1.9x forward price-to-sales. To fully understand why you should be careful with FLYW, check out our full research report (it's free). Market Cap: $3.49 billion The result of a spinoff from Sanken in Japan, Allegro MicroSystems (NASDAQ:ALGM) is a designer of power management chips and distance sensors used in electric vehicles and data centers. Why Are We Out on ALGM? Customers postponed purchases of its products and services this cycle as its revenue declined by 7.6% annually over the last two years Incremental sales over the last five years were much less profitable as its earnings per share fell by 19.8% annually while its revenue grew Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 9.4 percentage points Allegro MicroSystems is trading at $18.84 per share, or 37.7x forward price-to-earnings. If you're considering ALGM for your portfolio, see our FREE research report to learn more. Market Cap: $5.94 billion Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings. Why Will AAON Beat the Market? Market share has increased this cycle as its 16.2% annual revenue growth over the last two years was exceptional Earnings per share have massively outperformed its peers over the last two years, increasing by 27.7% annually Stellar returns on capital showcase management's ability to surface highly profitable business ventures AAON's stock price of $71.47 implies a valuation ratio of 24.9x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
Yahoo
31-01-2025
- Business
- Yahoo
Allegro Microsystems Inc (ALGM) Q3 2025 Earnings Call Highlights: Navigating Challenges with ...
Revenue: $178 million for Q3, a decline of 5% sequentially and 30% year-over-year. Non-GAAP EPS: $0.07, at the high end of guidance. Gross Margin: 49.1% for Q3. Operating Margin: 10.8% for Q3. Adjusted EBITDA: 17% of sales. Automotive Sales: $130 million, a decline of 8% sequentially and 33% year-over-year. Industrial and Other Sales: $48 million, increased 5% sequentially, declined 21% year-over-year. Magnetic Sensor Sales: $114 million, declining 12% sequentially. Power Products Sales: $64 million, increasing 9% sequentially. Cash: $149 million at the end of Q3. Term Loan Balance: $375 million after a $25 million principal payment. Cash Flow from Operations: Outflow of $8 million. CapEx: $14 million in Q3, expected to be approximately 6% of sales for FY25. DSO: 43 days. Inventory Days: 182 days. Q4 Sales Outlook: $180 million to $190 million. Q4 Gross Margin Outlook: 46% to 48%. Q4 Non-GAAP EPS Outlook: $0.03 to $0.07 per share. Warning! GuruFocus has detected 5 Warning Signs with ALGM. Release Date: January 30, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Allegro Microsystems Inc (NASDAQ:ALGM) reported third-quarter sales of $178 million and non-GAAP EPS of $0.07, both above the midpoint of their guidance. The company saw a significant increase in bookings, the highest in the past eight quarters, up 50% year-over-year. Allegro Microsystems Inc (NASDAQ:ALGM) introduced several innovative products, including new inductive position sensors and micro power magnetic switches, expanding their market reach. The company is making progress in localizing its supply chain in China, with shipments from local OSAT partners already underway. Allegro Microsystems Inc (NASDAQ:ALGM) continues to secure multiple design wins across key markets, including automotive and industrial applications, indicating strong future growth potential. Total Q3 sales declined 5% sequentially and 30% year-over-year, indicating a challenging market environment. Automotive sales, which make up a significant portion of revenue, declined 33% year-over-year. Gross margin decreased to 49.1%, with operating margin also declining compared to the previous year. The company is facing headwinds in Q4 gross margins due to annual pricing agreements and excess inventory charges. Allegro Microsystems Inc (NASDAQ:ALGM) continues to experience challenges in the solar segment of its industrial business, with ongoing inventory issues. Q: Can you unpack the gross margin guidance for the March quarter and discuss the impact of underutilization costs and pricing agreements? Do you expect the March quarter to be the bottom for gross margins this year? A: Derek D'Antilio, CFO, explained that the 200 basis points headwind expected in Q4 includes pricing resets ahead of cost reductions, minor excess inventory charges, and capacity charges due to reduced production. He noted that similar dynamics occurred in 2022. While not providing guidance for the June quarter, he expressed confidence that the March quarter would likely be the trough for gross margins. Q: How do you view demand shaping up for the calendar year, especially with projections for double-digit growth in ADAS and EV production? A: CEO Vineet Nargolwala stated that they are focused on leading indicators, such as increased in-quarter orders and low cancellations, which suggest inventory gaps are emerging. Bookings are at an eight-quarter high, up 50% year-over-year. While not providing specific guidance, these indicators are encouraging for future demand. Q: Could you provide the split between Auto and Industrial expectations for the March quarter? A: Derek D'Antilio, CFO, did not provide a market-specific split but mentioned regional expectations. China is expected to be down single digits due to the Lunar New Year, but overall guidance is up 4% at the midpoint, with North America expected to rebound after inventory declines in Q3. Q: With xEV business at 48% of revenue, do you expect more growth on the xEV side over the next four quarters? A: CEO Vineet Nargolwala clarified that their e-mobility business, which includes xEV and ADAS products, was down due to inventory management. However, with over 70% of automotive design wins in e-mobility, they expect this trend to continue, viewing the current situation as a temporary blip. Q: Do you believe in S&P Mobility's forecast of flat light vehicle production in 2025, and can you grow in line with or better than this forecast? A: CEO Vineet Nargolwala noted that while they consider S&P's forecast, they rely on direct conversations with OEMs and tiers. Allegro doesn't need auto production growth to grow due to content growth in xEVs and ADAS. They expect to outgrow the market with a model projecting SAR plus 7% to 10% growth. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
