Latest news with #AlamoGroup
Yahoo
26-05-2025
- Business
- Yahoo
Calculating The Intrinsic Value Of Alamo Group Inc. (NYSE:ALG)
The projected fair value for Alamo Group is US$238 based on 2 Stage Free Cash Flow to Equity With US$197 share price, Alamo Group appears to be trading close to its estimated fair value The US$218 analyst price target for ALG is 8.7% less than our estimate of fair value How far off is Alamo Group Inc. (NYSE:ALG) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to today's value. This will be done using the Discounted Cash Flow (DCF) model. Believe it or not, it's not too difficult to follow, as you'll see from our example! We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. We've discovered 1 warning sign about Alamo Group. View them for free. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$118.9m US$135.1m US$140.5m US$145.7m US$150.7m US$155.7m US$160.7m US$165.7m US$170.8m US$175.9m Growth Rate Estimate Source Analyst x1 Analyst x1 Est @ 4.00% Est @ 3.68% Est @ 3.46% Est @ 3.30% Est @ 3.20% Est @ 3.12% Est @ 3.07% Est @ 3.03% Present Value ($, Millions) Discounted @ 7.6% US$110 US$117 US$113 US$109 US$104 US$100 US$96.2 US$92.2 US$88.3 US$84.5 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$1.0b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.9%. We discount the terminal cash flows to today's value at a cost of equity of 7.6%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$176m× (1 + 2.9%) ÷ (7.6%– 2.9%) = US$3.9b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$3.9b÷ ( 1 + 7.6%)10= US$1.9b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$2.9b. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of US$197, the company appears about fair value at a 17% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Alamo Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.6%, which is based on a levered beta of 1.078. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Alamo Group Strength Debt is not viewed as a risk. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Machinery market. Opportunity Annual earnings are forecast to grow for the next 2 years. Current share price is below our estimate of fair value. Threat Annual earnings are forecast to grow slower than the American market. Whilst important, the DCF calculation shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Alamo Group, there are three pertinent items you should further research: Risks: We feel that you should assess the 1 warning sign for Alamo Group we've flagged before making an investment in the company. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for ALG's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Washington Post
08-05-2025
- Business
- Washington Post
Alamo Group: Q1 Earnings Snapshot
SEGUIN, Texas — SEGUIN, Texas — Alamo Group Inc. (ALG) on Thursday reported first-quarter profit of $31.8 million. The Seguin, Texas-based company said it had net income of $2.64 per share. Earnings, adjusted for non-recurring costs, were $2.65 per share. The maker of road maintenance, industrial and farm equipment posted revenue of $391 million in the period.
Yahoo
28-02-2025
- Business
- Yahoo
Alamo (NYSE:ALG) Misses Q4 Revenue Estimates
Specialized equipment manufacturer for infrastructure and vegetation management Alamo Group (NYSE:ALG) fell short of the market's revenue expectations in Q4 CY2024, with sales falling 7.7% year on year to $385.3 million. Its non-GAAP profit of $2.39 per share was 4.9% above analysts' consensus estimates. Is now the time to buy Alamo? Find out in our full research report. Revenue: $385.3 million vs analyst estimates of $396.9 million (7.7% year-on-year decline, 2.9% miss) Adjusted EPS: $2.39 vs analyst estimates of $2.28 (4.9% beat) Operating Margin: 8.9%, down from 10.7% in the same quarter last year Market Capitalization: $2.23 billion Expanding its markets through acquisitions since its founding, Alamo (NSYE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use. Agricultural machinery companies are investing to develop and produce more precise machinery, automated systems, and connected equipment that collects analyzable data to help farmers and other customers improve yields and increase efficiency. On the other hand, agriculture is seasonal and natural disasters or bad weather can impact the entire industry. Additionally, macroeconomic factors such as commodity prices or changes in interest rates–which dictate the willingness of these companies or their customers to invest–can impact demand for agricultural machinery. A company's long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Over the last five years, Alamo grew its sales at a decent 7.8% compounded annual growth rate. Its growth was slightly above the average industrials company and shows its offerings resonate with customers. Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Alamo's recent history shows its demand slowed as its annualized revenue growth of 3.7% over the last two years is below its five-year trend. This quarter, Alamo missed Wall Street's estimates and reported a rather uninspiring 7.7% year-on-year revenue decline, generating $385.3 million of revenue. Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a slight deceleration versus the last two years. This projection is underwhelming and suggests its products and services will face some demand challenges. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals. Alamo has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 9.9%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it's a show of well-managed operations if they're high when gross margins are low. Looking at the trend in its profitability, Alamo's operating margin rose by 1.6 percentage points over the last five years, as its sales growth gave it operating leverage. In Q4, Alamo generated an operating profit margin of 8.9%, down 1.8 percentage points year on year. Since Alamo's gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses. We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable. Alamo's EPS grew at a solid 10.7% compounded annual growth rate over the last five years, higher than its 7.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded. Diving into the nuances of Alamo's earnings can give us a better understanding of its performance. As we mentioned earlier, Alamo's operating margin declined this quarter but expanded by 1.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don't tell us as much about a company's fundamentals. Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business. For Alamo, its two-year annual EPS growth of 6.6% was lower than its five-year trend. We hope its growth can accelerate in the future. In Q4, Alamo reported EPS at $2.39, down from $2.63 in the same quarter last year. Despite falling year on year, this print beat analysts' estimates by 4.9%. Over the next 12 months, Wall Street expects Alamo's full-year EPS of $9.79 to grow 10.4%. It was encouraging to see Alamo beat analysts' EPS expectations this quarter. On the other hand, its revenue missed significantly, making this a weaker quarter. The stock remained flat at $184.26 immediately after reporting. Should you buy the stock or not? If you're making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it's free. Sign in to access your portfolio
Yahoo
10-02-2025
- Business
- Yahoo
2025 St. Patrick's Day Grand Marshal named
SIOUX FALLS, SD (KELO) — Shawn Cleary has been named the 2025 Grand Marshal of this year's Saint Patrick's Day parade in Sioux Falls. Mom of Emily Eirinberg reflects on community support Cleary was nominated for grand marshal by a group of former grand marshals. A release from parade organizers says Cleary was born in Dixon, Illinois, into a large Irish Catholic family of 11 children, and grew up steeped in Irish traditions. He met his wife, Julie, through mutual friends at a pub while playing pool. An early career opportunity brought them to Sioux Falls in 1998 when Cleary began working as the Operations Manager for Dual Equipment. He later joined Alamo Group as the President of SMC Corporation and Tiger Mowers, retiring in November 2024 after 23 years. Cleary has visited Ireland multiple times with his family, including for a family friend's wedding and general sightseeing The 45th annual St. Patrick's Day Parade will take place on Saturday, March 15, in downtown Sioux Falls. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
