Investment Thesis
Alamo Group demonstrates solid financial health with strong liquidity (4.57x current ratio), exceptional interest coverage (24.9x), and healthy free cash flow generation ($146.9M). However, revenue stagnation (+0.0% YoY) combined with declining net income (-10.5% YoY) and modest profitability margins (6.5% net margin) suggest the company faces growth headwinds in its cyclical farm machinery sector despite operational stability.
ALG Strengths
- Excellent liquidity position with 4.57x current ratio and $309.7M cash reserves
- Strong free cash flow generation of $146.9M ($177.5M operating cash flow minus $30.6M capex)
- Conservative balance sheet with low leverage (0.17x debt-to-equity ratio) and robust interest coverage of 24.9x
- Solid capital efficiency with consistent positive returns (9.0% ROE, 6.5% ROA)
ALG Risks
- Revenue growth stalled at 0.0% YoY indicating market saturation or demand weakness in farm equipment sector
- Net income declining 10.5% YoY while revenue flat suggests margin compression from cost pressures
- Modest net profit margin of 6.5% leaves limited buffer for operational challenges
- High insider activity (19 Form 4 filings in 90 days) warrants monitoring for potential signaling concerns
- Cyclical industry exposure creates vulnerability to agricultural commodity prices and equipment replacement cycles
Key Metrics to Watch
- Revenue growth trajectory - any improvement from 0.0% YoY would indicate demand recovery
- Operating margin trends - need to see stabilization or expansion from 9.5% current level
- Free cash flow sustainability - monitor if the $146.9M annual FCF remains stable
- Gross margin percentage - track if cost inflation continues to pressure profitability
- Debt levels and leverage ratio - ensure conservative financial policy maintains flexibility
ALG Financial Metrics
ALG Profitability Ratios
ALG Balance Sheet & Liquidity
ALG 5-Year Financial Trend
5-Year Trend Summary: ALAMO GROUP INC's revenue has grown significantly by 27% over the 5-year period, indicating strong business expansion. The most recent EPS of $11.36 reflects profitable operations.
ALG Growth Metrics (YoY)
ALG Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $401.3M | $25.4M | $2.10 |
| Q2 2025 | $416.3M | $28.3M | $2.35 |
| Q1 2025 | $391.0M | $31.8M | $2.64 |
| Q3 2024 | $401.3M | $27.4M | $2.28 |
| Q2 2024 | $416.3M | $28.3M | $2.35 |
| Q1 2024 | $411.8M | $32.1M | $2.67 |
| Q3 2023 | $368.8M | $25.8M | $2.16 |
| Q2 2023 | $396.2M | $28.5M | $2.39 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
ALG Capital Allocation
ALG SEC Filings
Access official SEC EDGAR filings for ALAMO GROUP INC (CIK: 0000897077)