Allegro MicroSystems, Inc. (ALGM) | Investment Case

1. Company Snapshot

1.a. Company Description

Allegro MicroSystems, Inc.designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems.Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; power ICs comprising motor driver ICs, and regulator and LED driver ICs; and photonic and 3D sensing components, including photodiodes, eye-safe lasers, and readout ICs for LiDAR applications.

The company sells its products to original equipment manufacturers and suppliers primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment.It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets.The company was founded in 1990 and is headquartered in Manchester, New Hampshire.

Allegro MicroSystems, Inc.is a subsidiary of Sanken Electric Co., Ltd.

Show Full description

1.b. Last Insights on ALGM

Allegro MicroSystems' recent performance was negatively impacted by various factors. Despite beating Q2 earnings estimates with $0.13 per share, compared to $0.12 per share expected, the company's growth prospects face challenges. The appointment of Troy Coleman as Senior Vice President, General Manager, Products, may help drive innovation. Additionally, the company's presentation at the 53rd Annual Nasdaq Investor Conference and its featured status as a lesser-known semiconductor stock to watch may boost investor confidence. Analysts forecast a 33.9% upside in the stock.

1.c. Company Highlights

Last Price	29.32
Change Percentage	1.72%
Open	29.4
Previous Close	28.82
Market Cap ( Millions)	5424
Volume	1071616
Year High	38.45
Year Low	16.38
M A 50	27.76
M A 200	28.04

FCF Yield	1.07%
Dividend Yield	0.00%
ROE	-3.04%
Debt / Equity	30.42%
Net Debt / EBIDTA	303.49%
Price To Book	5.74
Price Earnings Ratio	-191.54
Price To FCF	93.5
Price To sales	6.89
EV / EBITDA	99.9

2. Allegro MicroSystems Beats Expectations with Strong Q2 Results

Allegro MicroSystems delivered a strong second quarter with sales, gross margin, and EPS above the midpoint of their guidance ranges at $214 million, 49.6%, and $0.13, respectively. The EPS beat analysts' estimates of $0.12. The company's automotive sensor business grew through increased adoption of their ICs and xEV powertrain systems, while their data center sales grew, establishing a new quarterly record. The company expects third quarter sales to be in the range of $215 million to $225 million, representing a 24% year-over-year increase.

Publication Date: Nov -09

                                    📋 Highlights
                                    Q2 Sales & Profitability::
                                                Revenue reached $214 million, gross margin hit 49.6%, and EPS was $0.13, all above guidance midpoints.
Automotive Growth Drivers::
                                                E-mobility up 21% YoY, non-e-mobility up 12% YoY, with 8% QoQ growth in automotive sales overall.
Data Center Expansion::
                                                Record sales in data center segment, with new high-voltage gate drivers for silicon carbide power supplies being sampled by leaders.
Q3 Guidance::
                                                Revenue projected at $215–$225 million (24% YoY growth), EPS expected at $0.12–$0.16, exceeding seasonal trends.
Gross Margin Target::
                                                60–65% gross margin drop-through maintained, with long-term goal of 58% and near-term focus on returning to 50%.

                                

Revenue Growth Drivers

The company's automotive business grew 8% quarter-over-quarter and 12% year-over-year, with e-mobility being a significant contributor, growing 21% year-over-year. According to Michael Doogue, "we are seeing growth in the e-mobility space as we would expect based on the strong activity we have through design wins in the e-mobility space." The data center business is also a growth driver, with the company sampling new high-voltage gate drivers for silicon carbide with market leaders in the data center power supply space.

Gross Margin Expansion

The company's gross margin expanded 60 basis points above expectations, driven by revenue growth and favorable product mix. Derek D'Antilio mentioned that the company is working to get back to their long-term gross margin target of 58%. The current gross margin is 49.6%, and the company expects to drive leverage, product mix, and efficiency improvements to achieve their target.

Valuation Metrics

Allegro MicroSystems' current valuation metrics indicate a P/E Ratio of -176.02, P/B Ratio of 5.28, and P/S Ratio of 6.33. Analysts estimate next year's revenue growth at 20.9%. The company's EV/EBITDA is 92.05, indicating a relatively high valuation. The ROE is -3.04%, and the ROIC is -0.56%, indicating room for improvement in profitability.

Outlook

The company is optimistic about their growth prospects, driven by the increasing adoption of their products in the automotive and data center markets. Michael Doogue mentioned that the company is seeing positive trends in data center architectures and is gaining market share. The company's guidance for the third quarter is above seasonal, indicating a strong growth trajectory. With a growing backlog and a book-to-bill ratio above 1, the company is well-positioned for future growth.

3. NewsRoom

Allegro MicroSystems (NASDAQ:ALGM) versus POET Technologies (NASDAQ:POET) Head-To-Head Survey

Dec -02

Source: defenseworld.net

Macquarie Small Cap Value Fund Q3 2025 Portfolio Performance

Nov -30

Source: seekingalpha.com

Allegro MicroSystems to Present at the 53rd Annual Nasdaq Investor Conference held in Association with Morgan Stanley Wednesday, December 10, 2025

Nov -25

Source: globenewswire.com

3 Lesser-Known Semiconductor Stocks To Watch

Nov -17

Source: seekingalpha.com

Shares Down, Price Targets Up: 3 Stocks Upgraded After +10% Drops

Nov -10

Source: marketbeat.com

Wall Street Analysts See a 33.9% Upside in Allegro MicroSystems (ALGM): Can the Stock Really Move This High?

Nov -04

Source: zacks.com

Sumitomo Mitsui Trust Group Inc. Buys 961 Shares of Allegro MicroSystems, Inc. $ALGM

Nov -01

Source: defenseworld.net

Allegro MicroSystems, Inc. (ALGM) Q2 2026 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.50%)

6. Segments

Magnetic Sensors Integrated Circuits

Expected Growth: 8.5%

Growing demand for navigation and positioning systems in automotive and industrial applications, increasing adoption of IoT devices, and rising need for accurate and reliable sensing solutions drive the growth of Magnetic Sensors Integrated Circuits market.

Power Integrated Circuits

Expected Growth: 8.5%

Growing demand for energy-efficient solutions in automotive, industrial, and consumer applications drives the growth of Power Integrated Circuits. Increasing adoption of electric vehicles, renewable energy systems, and IoT devices fuels the market growth.

7. Detailed Products

Magnetic Sensors

Allegro MicroSystems' magnetic sensors are designed to detect changes in magnetic fields, providing accurate and reliable measurements for a wide range of applications.

Power ICs

Allegro MicroSystems' power ICs are designed to provide efficient power management and conversion for a variety of applications.

LED Drivers

Allegro MicroSystems' LED drivers are designed to provide efficient and reliable power management for LED lighting systems.

Motor Drivers

Allegro MicroSystems' motor drivers are designed to provide efficient and reliable control of DC and stepper motors.

Regulators

Allegro MicroSystems' regulators are designed to provide efficient and reliable voltage regulation for a variety of applications.

Switches and Multiplexers

Allegro MicroSystems' switches and multiplexers are designed to provide efficient and reliable signal switching and routing.

Current Sensors

Allegro MicroSystems' current sensors are designed to detect and measure current flow in a variety of applications.

8. Allegro MicroSystems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Allegro MicroSystems, Inc. has a moderate threat of substitutes due to the availability of alternative products from competitors.

Bargaining Power Of Customers

Allegro MicroSystems, Inc. has a low bargaining power of customers due to its strong brand reputation and limited customer concentration.

Bargaining Power Of Suppliers

Allegro MicroSystems, Inc. has a moderate bargaining power of suppliers due to the presence of multiple suppliers and moderate switching costs.

Threat Of New Entrants

Allegro MicroSystems, Inc. has a high threat of new entrants due to the attractiveness of the industry and low barriers to entry.

Intensity Of Rivalry

Allegro MicroSystems, Inc. operates in a highly competitive industry with many established players, leading to a high intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	18.63%
Debt Cost	4.98%
Equity Weight	81.37%
Equity Cost	12.57%
WACC	11.15%
Leverage	22.89%

11. Quality Control: Allegro MicroSystems, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

SiTime

A-Score: 3.7/10

Value: 6.2

Growth: 2.4

Quality: 3.2

Yield: 0.0

Momentum: 8.5

Volatility: 2.0

1-Year Total Return ->

IPG Photonics

A-Score: 3.4/10

Value: 3.6

Growth: 2.1

Quality: 3.9

Yield: 0.0

Momentum: 6.0

Volatility: 5.0

1-Year Total Return ->

Silicon Labs

A-Score: 3.4/10

Value: 4.6

Growth: 1.9

Quality: 3.0

Yield: 0.0

Momentum: 6.5

Volatility: 4.3

1-Year Total Return ->

Qorvo

A-Score: 3.3/10

Value: 2.8

Growth: 3.9

Quality: 5.1

Yield: 0.0

Momentum: 3.0

Volatility: 5.3

1-Year Total Return ->

Allegro MicroSystems

A-Score: 3.2/10

Value: 2.4

Growth: 1.7

Quality: 3.7

Yield: 0.0

Momentum: 7.5

Volatility: 3.7

1-Year Total Return ->

Power Integrations

A-Score: 2.8/10

Value: 1.6

Growth: 2.0

Quality: 5.8

Yield: 3.0

Momentum: 1.0

Volatility: 3.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

38.05%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

11.15%

Allegro MicroSystems, Inc. - US01749D1054

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ALGM

1.c. Company Highlights

Expensive

Better Quality

Stable Momentum

Earnings Beats

Revenues Beats

Average Quality

Weak Momentum

Fairly Valued

Revenues Miss

Lower Quality

Average Growth

Medium Volatility

Lower Growth

2. Allegro MicroSystems Beats Expectations with Strong Q2 Results

Revenue Growth Drivers

Gross Margin Expansion

Valuation Metrics

Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.50%)

6. Segments

Magnetic Sensors Integrated Circuits

Expected Growth: 8.5%

Power Integrated Circuits

Expected Growth: 8.5%

7. Detailed Products

Magnetic Sensors

Power ICs

LED Drivers

Motor Drivers

Regulators

Switches and Multiplexers

Current Sensors

8. Allegro MicroSystems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Allegro MicroSystems, 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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

29.31$

Current Price

29.32$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA