Stock Analysis

Is There Now An Opportunity In Alamo Group Inc. (NYSE:ALG)?

NYSE:ALG
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While Alamo Group Inc. (NYSE:ALG) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NYSE, rising to highs of US$186 and falling to the lows of US$159. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Alamo Group's current trading price of US$169 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Alamo Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Alamo Group

Is Alamo Group Still Cheap?

According to my valuation model, Alamo Group seems to be fairly priced at around 6.5% below my intrinsic value, which means if you buy Alamo Group today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $180.93, then there’s not much of an upside to gain from mispricing. In addition to this, Alamo Group has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Alamo Group look like?

earnings-and-revenue-growth
NYSE:ALG Earnings and Revenue Growth May 31st 2023

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 16% in the upcoming year, the short-term outlook is positive for Alamo Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in ALG’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on ALG, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for Alamo Group from their most recent forecasts. Luckily, you can check out what analysts are forecasting by clicking here.

If you are no longer interested in Alamo Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

About NYSE:ALG

Alamo Group

Designs, manufactures, distributes, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural uses worldwide.

Flawless balance sheet and good value.

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