Alamo Group Inc (ALG) stock analysis

P/E above its 5-year median

Alamo's P/E of 22.1 is above its own 5-year median of 19.0.

P/E below the industry

Alamo's P/E of 22.1 is below the Industrial and Commercial Machinery and Computer Equipment median of 27.1.

EV/EBITDA above its 5-year median

Alamo's EV/EBITDA of 15.2 is above its 5-year median of 13.9.

P/B below the industry

Alamo's price-to-book of 1.45 is below the Industrial and Commercial Machinery and Computer Equipment median of 2.71.

Trading below fair value

The share price of $141.71 is below our fair value estimate of $151.21.

Margin of safety under 20%

The price is 6.3% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 1.9% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 0.2% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -33.3% over the last twelve months, against a 5-year average of 12.4% a year.

Growing slower than the industry

Revenue grew 1.8% over the last twelve months; the Industrial and Commercial Machinery and Computer Equipment median is 10.1%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 22.9% over the last twelve months, against 25.0% a year earlier.

Return on equity under 15%

Return on equity was 6.7% over the last twelve months and averaged 12.6% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 7.3%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Alamo's return on equity of 6.7% is below the Industrial and Commercial Machinery and Computer Equipment median of 7.0%.

Earnings grew over 5 years

Net income grew 12.4% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 4.7% over the last twelve months, against a 5-year average of 6.9%.

Net margin below the industry

Alamo's net margin of 4.7% is below the Industrial and Commercial Machinery and Computer Equipment median of 4.8%.

Low debt

Debt is 19.6% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 44.9% five years ago to 19.6%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 68.2% of total debt.

Interest well covered

Operating income covers interest expense 6.6 times.

Short-term assets cover short-term debts

Current assets are 4.19 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.64; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Alamo paid dividends worth 1.0% of the share price over the last twelve months.

Yield below Treasuries

The 1.0% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Alamo yields 1.0%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 20.5% of net income.

Covered by free cash flow

Dividends take 11.6% of free cash flow.