Does Allegro MicroSystems Inc. (ALGM) offer a good opportunity for investors?

Allegro MicroSystems Inc. (NASDAQ: ALGM) stock fell -4.50% on Tuesday to $37.56 against a previous-day closing price of $39.33. With 1.09 million shares changed hands, the volume of the stock remained lighter than its average volume of 1.59 million shares. During the session, the Semiconductors company that operates in wider Technology sector, reached to the highest price of $39.44 whereas the lowest price it dropped to was $37.40. The 52-week range on ALGM shows that it touched its highest point at $48.72 and its lowest point at $19.20 during that stretch. It currently has a 1-year price target of $48.57.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of ALGM was down-trending over the past week, with a drop of -1.52%, but this was down by -8.68% over a month. Three-month performance dropped to -12.73% while six-month performance rose 27.28%. The stock gained 58.95% in the past year, while it has gained 25.12% so far this year. A look at the trailing 12-month EPS for ALGM yields 0.97 with Next year EPS estimates of 1.63. For the next quarter, that number is 0.37. This implies an EPS growth rate of 557.40% for this year and 13.06% for next year. EPS is expected to grow by 18.00% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 7.10%.

Float and Shares Shorts:

At present, 191.33 million ALGM shares are outstanding with a float of 87.51 million shares on hand for trading. On Apr 27, 2023, short shares totaled 5.5 million, which was 2.87% higher than short shares on Mar 30, 2023. In addition to Mr. Derek P. D’Antilio as the firm’s Sr. VP, CFO & Treasurer, Mr. Michael C. Doogue serves as its Sr. VP & CTO.

Institutional Ownership:

Through their ownership of 49.46% of ALGM’s outstanding shares, institutional investors have minority control over the company. Other institutions hold 27.74% of ALGM, in contrast to 12.93% held by mutual funds. Shares owned by individuals account for 12.53%. As the largest shareholder in ALGM with 4.20% of the stake, Fidelity Management & Research Co holds 8,045,881 shares worth 8,045,881. A second-largest stockholder of ALGM, The Vanguard Group, Inc., holds 6,450,600 shares, controlling over 3.37% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in ALGM, holding 5,440,503 shares or 2.84% stake. With a 1.42% stake in ALGM, the Fidelity Select Port. – Semicondu is the largest stakeholder. A total of 2,709,700 shares are owned by the mutual fund manager. The ClearBridge Small Cap Growth Fund, which owns about 1.30% of ALGM stock, is the second-largest Mutual Fund holder. It holds 2,492,347 shares valued at 89.15 million. Vanguard Total Stock Market ETF holds 1.28% of the stake in ALGM, owning 2,450,605 shares worth 87.66 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Mar 30, 2023, ALGM reported revenue of $217.75M and operating income of $14.54M. The EBITDA in the recently reported quarter was $22.16M and diluted EPS was $0.05.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for ALGM since 0 analysts follow the stock currently. In the same way, a target price assigned to a stock can also reveal much about its potential. With ALGM analysts setting a high price target of $54.00 and a low target of $50.00, the average target price over the next 12 months is $51.33. Based on these targets, ALGM could surge 43.77% to reach the target high and rise by 33.12% to reach the target low. Reaching the average price target will result in a growth of 36.66% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy.

Summary of Insider Activity:

Insiders traded ALGM stock several times over the past three months with 0 Buys and 0 Sells. In these transactions, 0 shares were bought while 0 shares were sold. The number of buy transactions has increased to 18 while that of sell transactions has risen to 24 over the past year. The total number of shares bought during that period was 1,470,723 while 5,604,578 shares were sold.

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