Allied Motion Technologies (NasdaqGM:AMOT) - Share price, News & Analysis

Q: What is the Fair Price of AMOT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

AMOT ($36.52) is trading above our estimate of [[fair value]] ($1.65)

AMOT fundamental analysis
Snowflake Score
Valuation	0/6
Future Growth	4/6
Past Performance	2/6
Financial Health	2/6
Dividends	0/6

AMOT Stock Overview

Rewards

Earnings are forecast to grow 42.58% per year

Risk Analysis

Debt is not well covered by operating cash flow

Profit margins (3.3%) are lower than last year (6%)

Shareholders have been diluted in the past year

Allied Motion Technologies Competitors

Preformed Line Products

NasdaqGS:PLPC

US$397.0m

Thermon Group Holdings

NYSE:THR

US$633.3m

Powell Industries

NasdaqGS:POWL

US$313.0m

LSI Industries

NasdaqGS:LYTS

US$202.0m

Price History & Performance

Summary of all time highs, changes and price drops for Allied Motion Technologies
Historical stock prices
Current Share Price	US$36.52
52 Week High	US$44.70
52 Week Low	US$21.14
Beta	1.61
1 Month Change	45.04%
3 Month Change	61.52%
1 Year Change	15.72%
3 Year Change	75.30%
5 Year Change	123.96%
Change since IPO	2,091.20%

Recent News & Updates

Aug 17

Capital Allocation Trends At Allied Motion Technologies (NASDAQ:AMOT) Aren't Ideal

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Ideally, a...

Aug 02

Continuing To Avoid Allied Motion Technologies Inc.

In spite of a significant drop in price, the shares remain relatively expensive in my view. This in spite of relatively poor financial results. While sales have continued to grow, net income is significantly lower. Shareholders are compensated with income, not sales. In spite of the drop in price, the puts I wrote previously have done reasonably well. My experience here offers a general lesson for put writers. I have a multiplicity of motivations for writing on this forum. For instance, I like having access to the collective wisdom of the crowd, as expressed in the comments sections of my articles. Nevermind that some of the “wisdom” expressed by people who follow certain stocks serves as great contraindications. At least as important is the fact that sometimes I get to brag. This is important to me because I’m a very small man. With that admission out of the way, it’s time to write again about Allied Motion Technologies Inc. (AMOT). Since I recommended continuing to avoid the shares, they’re down about 10.3% against a loss of 5.2% for the S&P 500. I need to take a moment to let that sink in. Alright, moving on. The company has reported earnings since I wrote the above piece, so I thought I’d review the name yet again. After all, a stock trading at $28 is, by definition, less risky an investment than when the same stock was trading at $31. I’ll decide whether or not it makes sense to buy based on that financial performance and by looking at the stock as a thing distinct from the underlying business. Finally, I wouldn’t be me if I didn’t spend some time to write about, and brag about the short put trade here. Welcome to the “thesis statement” portion of my article. I write this paragraph near the beginning of each of my articles as a public service to all of you. You’re welcome. You see, some people find bragging like the above tiresome for some reason, so they want to get out before being exposed to too much “Doyle mojo.” I write these so such people won’t completely loathe me. I’d characterise the most recent financial performance here onomatopoeically as “meh.” Sales have grown, which is obviously a positive, but net income has fallen as the capital structure has deteriorated substantially. In spite of this, the shares are not particularly cheaply priced. Thus, I’d recommend continuing to avoid the shares. Lastly, my options trade worked out reasonably well, and I will remain short the October puts with a strike of $25 because I’d be comfortable buying at a net price of $23.75. My experience with these options offers a lesson for new options traders. Options can move rapidly in price, especially if they’re thinly traded. For that reason, never write puts on companies unless you’re comfortable being exercised at the strike price. Those are my thoughts in a nutshell. If you continue to read from here, I don’t want to read any complaints in the comments section about my tiresome bragging or the fact that I spell words like “characterise” in the correct, non-American way. If you read on from here, that’s on you. Financial Snapshot I’d characterise the most recent financial performance as “troublesome.” While revenue and gross profit were ~13% and 11.3% higher than the same period a year ago, net income absolutely collapsed, down over 79% from the year ago period. The same dynamic exists when we compare the latest quarter to the same period in 2019, suggesting a (disturbing) trend. Of course, the reason for the collapse in profits mostly relates to the fact that expenses grew at a faster pace than revenue. For instance, engineering and development were up by about 35%, while amortization of intangibles was up 61%. Additionally, business development expenses ballooned from $19 thousand last year to $848 thousand this year. Finally, the company wasn’t helped by the fact that the income tax situation flipped from a $6 million benefit to a $679 thousand outflow. This prompts me to remind investors of a fact that they sometimes seem to forget. We as owners aren’t compensated with sales. When you own a business, you get whatever’s left over after suppliers, employees, the government etc. are paid. Thus, the fact that the acquisitions I wrote about previously might be driving sales is nice, but it’s not relevant unless rising sales can be translated into rising profits. Put another way, if growing sales doesn’t lead to growing profits, what will? In case you were worried that I wasn’t going to write about the capital structure, fret no further. I have to note that long term debt has obviously ballooned by ~$59 million or 49% relative to the same period a year ago. Cash on the books has collapsed. This obviously increases the level of risk, and I’ll need to see that heightened risk reflected in the stock price before I get too excited. All of that written, I’m comfortable owning the shares at the right price as I think the risk of bankruptcy is pretty low, and there’s always the chance that the company will work things out and translate higher sales into higher profits. To paraphrase a game show of my youth, I’ll buy if the price is right. Allied Motion Financials (Allied Motion investor relations) Allied Motion Technologies' Stock If you read my stuff regularly, you know that I am of the view that a great business can be a terrible investment if you overpay for it and a mediocre business can be a great investment if you can get it on sale. This highlights my view that the stock and the company are distinct from one another. The company, for instance, takes various inputs, adds value to them, and then sells the results (hopefully) for a profit. The stock, on the other hand, is a traded instrument that reflects the crowd's aggregate belief about the long-term prospects for the company. The crowd changes its views about the company relatively frequently, which is what drives the share price up and down. Added to that is the volatility induced by the crowd's views about stocks in general. "Stocks" become more or less attractive, and the shares of a given company get taken along for the ride. The fact that I write articles on this topic, and the fact that you read them indicates to me that we sometimes (often) don't trust that the crowd's current view is correct. In my view, the only way to earn a sustainable profit in the stock market is by finding where the market is incorrect about a company's long-term future prospects and exploiting that inaccuracy by buying or selling. I'm also of the view that there's a strong negative correlation between price paid and subsequent returns. The higher the price paid, the lower will be the subsequent returns. In order to buy at these cheap prices, you need to buy when the crowd is feeling particularly down in the dumps about a given name. So, in a nutshell, cheap wins. If you read my stuff regularly, you know that I measure the relative cheapness of a stock in a few ways ranging from the simple to the more complex. On the simple side, I like to look at the ratio of price to some measure of economic value, like earnings, sales, free cash, and the like. To refresh your memory of an idea expressed in the previous paragraph: cheaper wins. I want to see a company trading at a discount to both the overall market, and the company's own history. In case you forget the valuation the stock was trading at in my previous article, I’ll remind you now. I’ll do this for two reasons. First, and most importantly, reminding you of my previous call on this name gives me yet another chance to brag. Second, it allows us to consider the current valuation in context. Previously, I decided to eschew the shares when they were trading at a PE of ~18.5. Fast forward to today and they’re actually more expensive on this basis per the following: AMOT data by YCharts Obviously this is a consequence of the fact that earnings have collapsed, so an argument could be made to suggest that we should "cut the company some slack." The problem with this view is that, again, we're compensated by earnings and not sales. Unless and until the company demonstrates the capacity to turn growing sales into growing profits, I'm of the view that we should not cut any slack. Additionally, while I'll admit that the shares are trading on the low side on a price to sales basis per the following chart, they're certainly not extraordinarily cheap. AMOT data by YCharts

Shareholder Returns

	AMOT	US Electrical	US Market
7D	3.3%	2.1%	1.4%
1Y	15.7%	-11.5%	-8.4%

Return vs Industry: AMOT exceeded the US Electrical industry which returned -11.5% over the past year.

Return vs Market: AMOT exceeded the US Market which returned -8.4% over the past year.

Price Volatility

Is AMOT's price volatile compared to industry and market?
AMOT volatility
AMOT Average Weekly Movement	6.3%
Electrical Industry Average Movement	11.2%
Market Average Movement	7.6%
10% most volatile stocks in US Market	17.1%
10% least volatile stocks in US Market	3.1%

Stable Share Price: AMOT is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: AMOT's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1962	1,950	Dick Warzala	https://www.alliedmotion.com

Allied Motion Technologies Inc., together with its subsidiaries, designs, manufactures, and sells precision and specialty controlled motion components and systems that are used in a range of industries worldwide. The company offers brush and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, optical encoders, active, and passive filters. It also provides electronic power steering, drive-by-wire applications, drive systems and pumps, automated and remotely guided power steering, and HVAC systems, and construction and agricultural equipment.

Allied Motion Technologies Fundamentals Summary

How do Allied Motion Technologies's earnings and revenue compare to its market cap?
AMOT fundamental statistics
Market Cap	US$583.53m
Earnings (TTM)	US$14.62m
Revenue (TTM)	US$437.81m

39.9x

P/E Ratio

1.3x

P/S Ratio

Is AMOT overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
AMOT income statement (TTM)
Revenue	US$437.81m
Cost of Revenue	US$304.00m
Gross Profit	US$133.81m
Other Expenses	US$119.19m
Earnings	US$14.62m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.91
Gross Margin	30.56%
Net Profit Margin	3.34%
Debt/Equity Ratio	109.1%

How did AMOT perform over the long term?

See historical performance and comparison

Dividends

0.3%

Current Dividend Yield

10%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is AMOT undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

0/6

Valuation Score 0/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for AMOT?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for AMOT. This is calculated by dividing AMOT's market cap by their current preferred multiple.
What is AMOT's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$583.53m

AMOT key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.8x
Enterprise Value/EBITDA	16.4x
PEG Ratio	0.9x

Price to Earnings Ratio vs Peers

How does AMOT's PE Ratio compare to its peers?

AMOT PE Ratio vs Peers

The above table shows the PE ratio for AMOT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	22.5x
PLPC Preformed Line Products	8.7x	n/a	US$397.0m
THR Thermon Group Holdings	23.5x	19.7%	US$633.3m
POWL Powell Industries	37.9x	11.5%	US$313.0m
LYTS LSI Industries	20.1x	24.2%	US$202.0m
AMOT Allied Motion Technologies	39.9x	42.6%	US$583.5m

Price-To-Earnings vs Peers: AMOT is expensive based on its Price-To-Earnings Ratio (39.9x) compared to the peer average (22.5x).

Price to Earnings Ratio vs Industry

How does AMOT's PE Ratio compare vs other companies in the US Electrical Industry?

Price-To-Earnings vs Industry: AMOT is expensive based on its Price-To-Earnings Ratio (39.9x) compared to the US Electrical industry average (22.8x)

Price to Earnings Ratio vs Fair Ratio

What is AMOT's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

AMOT PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	39.9x
Fair PE Ratio	31.8x

Price-To-Earnings vs Fair Ratio: AMOT is expensive based on its Price-To-Earnings Ratio (39.9x) compared to the estimated Fair Price-To-Earnings Ratio (31.8x).

Share Price vs Fair Value

What is the Fair Price of AMOT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: AMOT ($36.52) is trading above our estimate of fair value ($1.65)

Significantly Below Fair Value: AMOT is trading above our estimate of fair value.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is Allied Motion Technologies forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

42.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: AMOT's forecast earnings growth (42.6% per year) is above the savings rate (1.9%).

Earnings vs Market: AMOT's earnings (42.6% per year) are forecast to grow faster than the US market (14.4% per year).

High Growth Earnings: AMOT's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: AMOT's revenue (12.1% per year) is forecast to grow faster than the US market (7.8% per year).

High Growth Revenue: AMOT's revenue (12.1% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if AMOT's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Allied Motion Technologies performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

15.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: AMOT has high quality earnings.

Growing Profit Margin: AMOT's current net profit margins (3.3%) are lower than last year (6%).

Past Earnings Growth Analysis

Earnings Trend: AMOT's earnings have grown by 15.1% per year over the past 5 years.

Accelerating Growth: AMOT's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: AMOT had negative earnings growth (-37.2%) over the past year, making it difficult to compare to the Electrical industry average (24.8%).

Return on Equity

High ROE: AMOT's Return on Equity (7.3%) is considered low.

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Financial Health

How is Allied Motion Technologies's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: AMOT's short term assets ($222.3M) exceed its short term liabilities ($93.4M).

Long Term Liabilities: AMOT's short term assets ($222.3M) do not cover its long term liabilities ($281.4M).

Debt to Equity History and Analysis

Debt Level: AMOT's net debt to equity ratio (94.8%) is considered high.

Reducing Debt: AMOT's debt to equity ratio has increased from 80.8% to 109.1% over the past 5 years.

Debt Coverage: AMOT's debt is not well covered by operating cash flow (3.9%).

Interest Coverage: AMOT's interest payments on its debt are well covered by EBIT (6.7x coverage).

Balance Sheet

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Dividend

What is Allied Motion Technologies's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

0.27%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: AMOT's dividend (0.27%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.47%).

High Dividend: AMOT's dividend (0.27%) is low compared to the top 25% of dividend payers in the US market (3.97%).

Stability and Growth of Payments

Stable Dividend: AMOT is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: AMOT is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.

Earnings Payout to Shareholders

Earnings Coverage: AMOT is not paying a notable dividend for the US market.

Cash Payout to Shareholders

Cash Flow Coverage: AMOT is paying a dividend but the company has no free cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

2.1yrs

Average management tenure

CEO

Dick Warzala (69 yo)

20.25yrs

Tenure

US$3,907,236

Compensation

Mr. Richard S. Warzala, also known as Dick, has been the Chief Executive Officer of Allied Motion Technologies Inc. at Allied Motion Canada Inc. since May 12, 2009 and its President since jointed it in May...

CEO Compensation Analysis

Compensation vs Market: Dick's total compensation ($USD3.91M) is above average for companies of similar size in the US market ($USD2.59M).

Compensation vs Earnings: Dick's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: AMOT's management team is considered experienced (2.1 years average tenure).

Board Members

Experienced Board: AMOT's board of directors are considered experienced (8.1 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 8.6%.

Data	Last Updated (UTC time)
Company Analysis	2022/08/19 00:00
End of Day Share Price	2022/08/19 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31