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1. Company Snapshot

1.a. Company Description

Alamo Group Inc.designs, manufactures, distributes, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural uses worldwide.Its Vegetation Management Division segment offers hydraulically-powered and tractor-mounted mowers, other cutters and replacement parts for heavy-duty and intensive uses and heavy duty applications, tractor- and truck-mounted mowing and vegetation maintenance equipment, and replacement parts.


This segment also provides rotary and finishing mowers, flail and disc mowers, front-end loaders, backhoes, rotary tillers, posthole diggers, scraper blades and replacement parts, zero turn radius mowers, cutting parts, plain and hard-faced replacement tillage tools, disc blades, and fertilizer application components; aftermarket agricultural parts, heavy-duty mechanical rotary mowers, snow blowers, rock removal equipment, replacement parts, tractor attachments, agricultural implements, hydraulic and boom-mounted hedge and grass cutters, tractor attachments and implements, hedgerow cutters, industrial grass mowers, agricultural seedbed preparation cultivators, self-propelled sprayers and multi-drive load-carrying vehicles, cutting blades, and hydraulic and mechanical boom mowers.The company's Industrial Equipment Division segment offers truck-mounted air vacuum, mechanical broom, and regenerative air sweepers, pothole patchers, leaf collection equipment and replacement brooms, parking lot and street sweepers, excavators, catch basin cleaners, and roadway debris vacuum systems, as well as truck-mounted vacuum machines, combination sewer cleaners, and hydro excavators.This segment also offers ice control products, snowplows and heavy duty snow removal equipment, hitches, attachments, and graders; and public works and runway maintenance products, parts, and services, and high pressure cleaning systems and trenchers.


The company was founded in 1955 and is headquartered in Seguin, Texas.

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1.b. Last Insights on ALG

Alamo Group's recent performance was negatively driven by a 7.7% decline in fourth quarter net sales, primarily due to a 25.5% drop in Vegetation Management Division sales. The company's income from operations also decreased to $34.4 million, or 8.9% of net sales, due to separation costs and a labor strike at Gradall Industries. The total impact from cost reduction efforts was approximately $6.1 million, including separation expenses. The company's total debt was $220.5 million, and operating cash flow was $209.8 million, driven by disciplined inventory management and efficient receivables control.

1.c. Company Highlights

2. Mixed Results: Revenue Decline and Margin Compression

The company's financial performance for 2025 was marked by a 3% decline in net sales to $373.7 million, accompanied by a gross margin contraction of 110 basis points to 22.7%. Adjusted earnings per share (EPS) came in at $1.70, below analyst estimates of $2.06. The adjusted EBITDA margin was 12%, reflecting a challenging year. The effective income tax rate was higher than in 2024, at 25.6%. The company's financial results were impacted by the Vegetation Management division, which saw a 13.2% decline in net sales.

Publication Date: Mar -07

📋 Highlights
  • Net sales decline: Total net sales fell to $373.7M in 2025, a 3% decrease from 2024, driven by a 13.2% drop in Vegetation Management division sales ($138.7M vs. 2024).
  • Adjusted EBITDA margin contraction: Adjusted EBITDA was $44.8M (12% of sales), down from $2.39 to $1.70 in adjusted EPS, representing a 28.9% decline year-over-year.
  • Industrial division growth: Industrial Equipment division sales rose 4.2% to $234.9M, with adjusted EBITDA of $41.5M (17.7% margin), offsetting Vegetation’s underperformance.
  • Margin pressures: Gross margin contracted 110 basis points to 22.7%, SG&A expenses increased 9.3% to $58.3M, and the effective tax rate rose to 25.6% in 2025.
  • Strategic initiatives: The company outlined plans to centralize operations, acquire Petersen Industries (margin-accretive), and divest non-core Vegetation product lines, targeting 8% adjusted operating margin recovery by Q2 2025.

Segment Performance

The Industrial Equipment division reported a 4.2% increase in net sales to $234.9 million, driven by a 21% rise in net orders. The division's adjusted EBITDA margin was 17.7%. In contrast, the Vegetation Management division experienced a decline in net sales and adjusted EBITDA margin, primarily due to lower volumes, inventory charges, and consolidation activities. Robert Hureau noted that the margin compression in the fourth quarter was due to these factors, but expects top-line improvement and margin improvement in the first quarter.

Outlook and Strategy

The company's long-term strategy is centered around four pillars: people and culture, commercial excellence, operational excellence, and capital deployment. Initiatives such as the manufacturing facility expansion project in France, consolidation of facilities, and launch of a global procurement and supply chain initiative are underway. The company is also focused on product innovation and has a strong pipeline of new products, which will be showcased at the CONEXPO show. Robert Hureau expects the show to drive positive results.

Valuation and Growth Prospects

With a P/E Ratio of 19.47 and an EV/EBITDA of 7.84, the market appears to be pricing in moderate growth expectations. Analysts estimate revenue growth of 2.6% for the next year. The company's ROIC is 8.0%, and ROE is 9.32%. The Net Debt / EBITDA ratio is -0.36, indicating a net cash position. Given the current valuation multiples and growth prospects, the stock appears to be reasonably priced. The company's focus on tuck-in acquisitions and divestiture of non-core product lines is expected to drive long-term growth.

Dividend and Cash Flow

The company has a Dividend Yield of 0.74%, indicating a relatively modest payout. However, the Free Cash Flow Yield is 7.21%, suggesting a healthy cash generation profile. The company's ability to generate cash and its net cash position provide flexibility for future investments and returns to shareholders.

3. NewsRoom

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Here Are Monday’s Top Wall Street Analyst Research Calls: Alnylam Pharmaceuticals, Circle Internet, Fifth Third Bancorp, Intuit, ServiceNow, Qualcomm, Trade Desk, and More

Mar -16

Source: 247wallst.com

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New Strong Sell Stocks for March 12th

Mar -12

Source: zacks.com

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Allspring Special Small Cap Value Fund Q4 2025 Portfolio Review

Mar -04

Source: seekingalpha.com

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Alamo Group Inc. (ALG) Q4 2025 Earnings Call Transcript

Mar -03

Source: seekingalpha.com

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Alamo Group (ALG) Q4 Earnings and Revenues Miss Estimates

Mar -02

Source: zacks.com

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ALAMO GROUP ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND YEAR END 2025

Mar -02

Source: prnewswire.com

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Rhumbline Advisers Sells 2,620 Shares of Alamo Group, Inc. $ALG

Feb -23

Source: defenseworld.net

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3,172 Shares in Alamo Group, Inc. $ALG Acquired by First National Bank of Omaha

Feb -20

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.92%)

6. Segments

Vegetation Management

Expected Growth: 3.5%

Alamo Group's Vegetation Management segment growth of 3.5% is driven by increasing demand for vegetation maintenance services, government investments in infrastructure development, and adoption of mechanized solutions for vegetation control. Additionally, the segment benefits from a growing focus on environmental sustainability and public safety, leading to increased spending on vegetation management services.

Industrial Equipment

Expected Growth: 4.5%

Alamo Group Inc.'s Industrial Equipment segment growth of 4.5% is driven by increasing demand for infrastructure development, government investments in road construction, and rising adoption of precision agriculture. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to its growth.

7. Detailed Products

Agricultural Equipment

Alamo Group Inc. offers a range of agricultural equipment, including mowers, balers, and hay tools, designed to help farmers and ranchers efficiently manage their land and crops.

Turf and Landscape Equipment

The company provides turf and landscape equipment, such as mowers, trimmers, and edgers, for commercial and residential landscaping, golf courses, and sports turf applications.

Industrial Equipment

Alamo Group Inc. offers industrial equipment, including vacuum trucks, sewer cleaners, and hydro excavators, for municipalities, contractors, and industrial customers.

Truck and Trailer Mounted Equipment

The company provides truck and trailer mounted equipment, such as aerial devices, digger derricks, and cranes, for utility, telecommunications, and construction industries.

8. Alamo Group Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Alamo Group Inc. operates in a niche market with specialized equipment, reducing the threat of substitutes.

Bargaining Power Of Customers

Alamo Group Inc. has a diverse customer base, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

Alamo Group Inc. relies on a few key suppliers, giving them some bargaining power, but the company's size and diversification mitigate this risk.

Threat Of New Entrants

The specialized nature of Alamo Group Inc.'s equipment and the high barriers to entry in the industry reduce the threat of new entrants.

Intensity Of Rivalry

Alamo Group Inc. operates in a competitive industry with several established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 20.50%
Debt Cost 9.31%
Equity Weight 79.50%
Equity Cost 9.31%
WACC 9.31%
Leverage 25.78%

11. Quality Control: Alamo Group Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Lindsay

A-Score: 5.4/10

Value: 5.4

Growth: 6.3

Quality: 6.6

Yield: 2.0

Momentum: 3.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Alamo Group

A-Score: 5.2/10

Value: 5.8

Growth: 7.0

Quality: 6.3

Yield: 1.0

Momentum: 3.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Wabash

A-Score: 5.0/10

Value: 9.8

Growth: 3.3

Quality: 6.5

Yield: 6.0

Momentum: 0.5

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Hyster-Yale

A-Score: 4.8/10

Value: 6.5

Growth: 6.4

Quality: 3.3

Yield: 7.0

Momentum: 1.5

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Gencor

A-Score: 4.0/10

Value: 5.9

Growth: 6.3

Quality: 6.5

Yield: 0.0

Momentum: 0.5

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Columbus McKinnon

A-Score: 3.0/10

Value: 5.7

Growth: 2.1

Quality: 3.5

Yield: 3.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

159.8$

Current Price

159.8$

Potential

-0.00%

Expected Cash-Flows