Is Albany International’s 30% Share Price Drop in 2025 a Sign of Opportunity?

• Wondering if Albany International is a hidden gem or a value trap? Let's dig into the real story behind its share price and what that could mean for you.
• The stock has taken a tumble recently, dropping 7.1% over the past week and down 30.5% year-to-date. This signals a shift in investor sentiment.
• Industry commentary has highlighted changes in market demand, company leadership, and sector headwinds as factors shaping Albany International's recent price movements. Notably, analysts and commentators have discussed the impact of shifting manufacturing trends on the company's long-term prospects and risk profile.
• When we look at valuation, Albany International scores a 3 out of 6 on our undervaluation checks. This mixed result leaves room for nuance. We'll compare different valuation methods next, so stick around for an even smarter way to think about value by the end of this article.

Find out why Albany International's -23.8% return over the last year is lagging behind its peers.

Approach 1: Albany International Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the true value of a company by projecting its future cash flows and discounting them back to today's dollars. This approach relies on understanding how much cash Albany International is expected to generate over time and adjusts those values to account for the time value of money.

For Albany International, the latest reported Free Cash Flow sits at $73.6 million. Analyst estimates predict free cash flow will grow steadily, reaching $154.6 million by 2035. Projections beyond 2027 are based on extrapolations by Simply Wall St rather than official analyst guidance. The DCF model in this case uses a 2 Stage Free Cash Flow to Equity approach to calculate the company’s fair value.

The calculation results in an estimated intrinsic value of $67.50 per share. Compared to recent share prices, this points to an 18.4% discount, which indicates the stock is currently undervalued according to this model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Albany International is undervalued by 18.4%. Track this in your watchlist or portfolio, or discover 840 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Albany International.

Approach 2: Albany International Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular way to value profitable companies like Albany International because it ties a company's share price to its actual earnings. This makes it easier to understand how much investors are willing to pay for each dollar of profit. In general, a higher PE ratio can reflect expectations for stronger future growth or a lower risk profile. A lower PE ratio may signal slower growth or higher perceived risk.

Currently, Albany International trades on a PE ratio of 26.1x. This is above the average for the Machinery industry, which sits at 23.5x, but a bit below its peer average of 28.6x. These comparisons hint that the stock is valued slightly above the broader industry but is in line with companies considered its closest rivals.

Instead of just looking at simple averages, Simply Wall St calculates a proprietary "Fair Ratio" for each company. For Albany International, the Fair PE Ratio is 28.2x. This metric considers factors such as expected earnings growth, profit margins, risks, market cap, and sector trends. By taking all these factors into account, the Fair Ratio gives a more rounded perspective than simply using industry or peer averages.

With Albany International's current PE (26.1x) just under its Fair Ratio (28.2x), the valuation appears to be about right based on this approach.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1411 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Albany International Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story about a company—your perspective on where it is heading, based on your own assumptions for its fair value, expected revenues, earnings, and margins. Narratives take you beyond just numbers by connecting the company's real-world story and outlook with a financial forecast, turning your view into an estimated fair value you can compare with the current share price.

Narratives are an easy, accessible decision tool available right on Simply Wall St’s Community page, used by millions of investors to shape their ideas and track their reasoning. They help you decide when to buy or sell by showing the gap between your Fair Value and the actual Price, and they update dynamically as soon as new information, such as earnings or news, arrives. For example, Albany International currently has analyst price targets ranging from $55.00 to $79.00, reflecting the reality that different investors, with different expectations about e-commerce growth or aerospace investment, will each have their own Narrative and thus a different fair value for the same company.

Do you think there's more to the story for Albany International? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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