Allegro MicroSystems, Inc. (ALGM)
Valuation Overview•Is Allegro MicroSystems, Inc. Overvalued or Undervalued?
Priced at a premium to peer multiples and intrinsic cash flows, demanding strong execution to justify current levels.
Moderate quality score of 56/100, reflecting stable operating margins and manageable leverage.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: Average quality business weighed down by significant profitability concerns.
Wall Street is cautious, forecasting potential downside alongside robust expected earnings growth. However, capital return yields remain modest, driven predominantly by aggressive share repurchases.
ALGM struggles with subpar profitability and pressured margins. This is paired with a moderately leveraged but stable balance sheet.
The company is facing top-line contraction (-2.9% 3Y CAGR) paired with stable bottom-line earnings. However, profitability remains a major concern with severely compressed operating margins (3.4%).
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $243.2M | +22.8% | -2.9% | +8.5% | — | |
| EBITDA | $35.3M | — | -24.3% | — | — | |
| Net Income | -$16.5M | +79.6% | — | — | — | |
| EPS (Diluted) | $-0.09 | +79.4% | — | — | — | |
| Free Cash Flow | $18.7M | +468.8% | +3.3% | +9.3% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 46.3% | 48.5% | 50.9% | 48.3% |
| Operating Margin | 3.4% | 6.9% | 11.9% | 10.4% |
| Net Margin | -1.7% | 0.9% | 7.5% | 7.3% |
| FCF Margin | 14.0% | 7.5% | 9.1% | 8.4% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.16 | $0.17 | +4.2% | ||
| Q1'26 | $0.14 | $0.15 | +7.1% | ||
| Q4'25 | $0.12 | $0.13 | +8.3% | ||
| Q3'25 | $0.09 | $0.09 | +0.0% | ||
| Q2'25 | $0.05 | $0.06 | +20.0% | ||
| Q1'25 | $0.06 | $0.07 | +16.7% | ||
| Q4'24 | $0.06 | $0.08 | +33.3% | ||
| Q3'24 | $0.02 | $0.03 | +47.9% |
Total return is +89.9% (1Y), outperforming the benchmark by +64.9%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +119.2% | +109.9% | — |
| 1Y | +89.9% | +64.9% | — |
| 3YCAGR | +12.2% | -10.6% | — |
| 5YCAGR | +17.3% | +2.2% | — |
| 10YCAGR | +12.8% | -1.8% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Allegro MicroSystems, Inc. (ALGM) valuation, health, and returns.
Allegro MicroSystems, Inc. is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Expensive versus peers compared to industry peers. overvalued (implying -42.4% downside from DCF intrinsic value of $33.97)
Allegro MicroSystems, Inc. has multiple valuation anchors: DCF Intrinsic Value: $33.97 | Peer Relative Fair Value: $40.78 | Wall Street Analyst Target: $52.57 (implying -10.9% upside). A convergence of these signals offers higher conviction.
Allegro MicroSystems, Inc. displays fair financial health with a composite quality score of 56/100, supported by a Altman Z-Score of 15.0 (safe zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 2.8%.
Allegro MicroSystems, Inc. does not return material capital to shareholders via dividends or share repurchases, electing to retain earnings to fund internal growth.
Allegro MicroSystems, Inc.'s current growth trajectory is Accelerating. The company achieved +22.8% 1Y revenue growth and +79.4% 1Y EPS growth, compared to its 3Y revenue CAGR of -2.9%.
Wall Street consensus is Buy based on 13 analysts, beating EPS expectations in 92% of recent quarters with a 3-quarter streak. The consensus price target represents a -10.9% change from current levels.
Investment risks for Allegro MicroSystems, Inc. include: -39.2% 1-year max drawdown, high beta (2.58x market volatility). Volatility risk is characterized by a beta of 2.58x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.