Investment Thesis
Allegro Microsystems demonstrates solid cash generation and strong balance sheet fundamentals with 16.4% free cash flow margin and healthy liquidity ratios, but profitability has severely deteriorated with net margin of only 0.2% and operating margin of 2.0%, indicating operational challenges despite 46% gross margins. The company requires improved operational efficiency and margin expansion to justify investment confidence.
ALGM Strengths
- Strong free cash flow generation of $106.2M with 16.4% FCF margin demonstrates quality earnings
- Healthy balance sheet with $155.2M cash, conservative 0.29x debt-to-equity, and 3.65x current ratio
- Solid gross margin of 46% indicates pricing power and efficient manufacturing despite semiconductor sector challenges
ALGM Risks
- Severe profitability compression with net margin of only 0.2% and operating margin of 2.0% despite healthy gross margins suggests high operating expenses or other operational issues
- Extremely weak returns on equity (0.2%) and assets (0.1%) indicate capital is not being deployed efficiently
- Interest coverage ratio of 0.8x is concerning and suggests operating income insufficient to cover debt service obligations
Key Metrics to Watch
- Operating margin trend - need to see expansion from 2.0% current level
- Interest coverage ratio improvement - currently below 1.0x raises sustainability concerns
- Net margin progression - 0.2% is unsustainably low and must improve for long-term viability
ALGM Financial Metrics
ALGM Profitability Ratios
ALGM Balance Sheet & Liquidity
ALGM 5-Year Financial Trend
5-Year Trend Summary: ALLEGRO MICROSYSTEMS, INC.'s revenue has grown significantly by 61% over the 5-year period, indicating strong business expansion. The most recent EPS of $0.97 reflects profitable operations.
ALGM Growth Metrics (YoY)
ALGM Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2026 | $177.9M | $1.6M | $0.01 |
| Q3 2025 | $177.9M | -$6.9M | $-0.04 |
| Q2 2025 | $187.4M | $6.5M | $0.03 |
| Q1 2025 | $166.9M | -$13.2M | $-0.07 |
| Q3 2024 | $186.6M | $33.3M | $0.17 |
| Q2 2024 | $237.7M | $50.6M | $0.26 |
| Q1 2024 | $217.8M | $10.2M | $0.05 |
| Q3 2023 | $186.6M | $32.9M | $0.17 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
ALGM Capital Allocation
ALGM SEC Filings
Access official SEC EDGAR filings for ALLEGRO MICROSYSTEMS, INC. (CIK: 0000866291)