Stock Analysis

Allegro MicroSystems (ALGM) Is Up 5.5% After Strong Revenue Beat but EPS Misses Expectations - Has The Bull Case Changed?

  • Allegro MicroSystems recently reported quarterly revenues of US$203.4 million, representing a 21.9% year-over-year increase and surpassing analysts’ forecasts, largely driven by e-Mobility and Industrial segment growth.
  • Despite the strong top-line performance, the company’s earnings per share missed expectations, highlighting a contrast between revenue momentum and bottom-line delivery.
  • We'll explore how this disconnect between robust sales growth and weaker earnings may influence Allegro MicroSystems' overall investment narrative.

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Allegro MicroSystems Investment Narrative Recap

To believe in Allegro MicroSystems as a shareholder, you need confidence that the long-term story of vehicle electrification and industrial automation will keep fueling demand for Allegro’s specialized chips, even as the company occasionally faces earnings volatility. The latest quarterly revenue surge, driven by e-Mobility and Industrial segments, reinforces near-term optimism about sustained top-line growth, but the disconnect with weaker earnings and a recent stock drop does bring margin pressures and operational challenges into sharp focus; the immediate risk from persistently narrowing margins, especially amid ongoing price pressures, has become more pronounced and is something of material relevance in the investment case.

Within recent news, Allegro’s July earnings announcement not only confirmed the robust revenue growth outpacing guidance, but also extended the company’s trend of missing profitability targets, with quarterly net loss improvement not enough to offset investor disappointment in earnings per share. This is particularly relevant as it highlights the importance of margin expansion and cost control as key short-term catalysts for confidence in Allegro’s path to sustained profitability and greater shareholder returns.

In contrast, even with strong revenue execution, investors should stay alert to ongoing margin compression as the company battles pricing pressure from major customers…

Read the full narrative on Allegro MicroSystems (it's free!)

Allegro MicroSystems' outlook projects $1.2 billion in revenue and $249.0 million in earnings by 2028. This scenario requires 17.3% annual revenue growth and a $317.6 million increase in earnings from the current -$68.6 million.

Uncover how Allegro MicroSystems' forecasts yield a $37.83 fair value, a 20% upside to its current price.

Exploring Other Perspectives

ALGM Earnings & Revenue Growth as at Sep 2025
ALGM Earnings & Revenue Growth as at Sep 2025

Fair value views from the Simply Wall St Community range from US$31.53 to US$37.83, across two contributors. Some see margin volatility as a pivotal challenge for Allegro’s future financial performance, inviting you to consider multiple angles as you assess potential.

Explore 2 other fair value estimates on Allegro MicroSystems - why the stock might be worth just $31.53!

Build Your Own Allegro MicroSystems Narrative

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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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About NasdaqGS:ALGM

Allegro MicroSystems

Designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific power ICs for motion control and energy-efficient systems.

Reasonable growth potential with adequate balance sheet.

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