# Allegro Microsystems (ALGM.US)

Canonical: https://gigainvestors.com/s/ALGM

Analysis as of: 2026-10-16T07:26:22.156Z. Financial observations: FY2019–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $32.36 per share; close as of 2026-10-15.

Estimated value: low $7.41 per share, central $8.33 per share, high $9.55 per share. Buy at or below the central value $8.33 per share. Valuation as of 2026-10-16T07:26:22.156Z; scenarios are not confidence intervals.

Expected annual return: 4.6% at the stated quote. About 4.6% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 3 revenue declines in the last 10 years (informational)

- operating margin variation exceeds 0.35

- Financial history: 8 years

- Years with declining revenue: 3

- Years with a net loss: 2

- Operating margin variation: 0.78×

Chart: Operating margin; fiscal year observations.

- FY2019: 0.14×

- FY2020: 0.08×

- FY2021: 0.02×

- FY2022: 0.18×

- FY2023: 0.21×

- FY2024: 0.19×

- FY2025: -0.03×

- FY2026: 0.05×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 11.4%

- ROIC, second-lowest year: 2.4%

- Typical minus recent gross margin: 0.4 pp

- Typical gross margin (annual median): 46.8%

- Recent gross margin (lower of latest and 3-year median): 46.4%

- Years with nonpositive capital: 0

- Capital spending / revenue: 7.6%

- ROIC including acquisitions, ten-year median: 9.4%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2019: 16.1%

- FY2020: 7.3%

- FY2021: 2.4%

- FY2022: 24.5%

- FY2023: 28.7%

- FY2024: 15.5%

- FY2025: -1.6%

- FY2026: 3.9%

### economics: fail

- incremental invested capital return below threshold

- Owner earnings / net income, 5-yr: 1.07×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $399M

- Net income, five-year total: $372M

- Return on incremental invested capital: -88.5%

- Working capital / revenue, annual change: -0.0 pp

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.00×

- FY2023: 1.00×

- FY2024: 0.82×

- FY2025: 0.66×

- FY2026: -0.97×

### management: fail

- potential debt-funded buybacks (informational)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 7.3% vs 3.9%

- Per-share earnings: 0.19 to -0.08 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 5-year annual growth: 1.0%

- Diluted shares, 5-year annual growth: 1.0%

- Per-share value change: -$0.27

- Per-share value, starting three-year median: $0.19

- Per-share value, ending three-year median: -$0.08

- Buybacks concentrated in cheaper years (correlation): -0.80

- Average buyback yield: 4.7%

- Buyback history: 4 years

- Debt-funded buybacks: Yes

- ROIC, first three-year median: 7.3%

- ROIC, last three-year median: 3.9%

Chart: Earnings per share; fiscal year observations.

- FY2019: $0.45

- FY2020: $0.19

- FY2021: $0.10

- FY2022: $0.62

- FY2023: $0.97

- FY2024: $0.78

- FY2025: -$0.39

- FY2026: -$0.08

### accounting: pass

- stock compensation exceeds 15% of operating cash flow

- Sloan accruals: -12.6%

- Receivables to sales index (DSRI): 1.07×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 29.4%

- Earnings backed by cash: Yes

- Accounting red flags: 1

- Goodwill and intangibles / equity: 0.46×

Chart: Sloan accruals; fiscal year observations.

- FY2019: -4.8%

- FY2020: -5.4%

- FY2021: -13.7%

- FY2022: -4.1%

- FY2023: -0.5%

- FY2024: -1.9%

- FY2025: -9.5%

- FY2026: -12.6%

## Holders

- [Lee Ainslie](https://gigainvestors.com/mc): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 54% since Jun 2026 · sales +22.8%

Story as of 2026-10-16T09:58:16.243Z; price observation 2026-10-15.

Price needs cash profits to grow 19.1% a year for ten years

- 2025-06-09: ALGM Q1 Earnings Call: Guidance Improves as Inventory and New Products Drive Outlook ([finance.yahoo.com](https://finance.yahoo.com/news/algm-q1-earnings-call-guidance-131507596.html))

- 2026-01-30: Allegro Microsystems (ALGM) Jumps to 2-Year High on Swing to Profitability, Strong Sales Outlook ([finance.yahoo.com](https://finance.yahoo.com/news/allegro-microsystems-algm-jumps-2-042907782.html))

### Sales · FY2025–2026

sales +22.8%; source https://www.sec.gov/Archives/edgar/data/866291/000119312526233537/algm-20260327.htm; observed 2026-05-21.

- FY2019: $724M 

- FY2020: $650M 

- FY2021: $591M 

- FY2022: $769M 

- FY2023: $974M 

- FY2024: $1.0B 

- FY2025: $725M 

- FY2026: $890M 

### Gross margin · FY2026

gross margin 46.4%; source https://www.sec.gov/Archives/edgar/data/866291/000119312526233537/algm-20260327.htm; observed 2026-05-21.

- FY2019: 44.2% 

- FY2020: 40.2% 

- FY2021: 47.2% 

- FY2022: 53.0% 

- FY2023: 56.1% 

- FY2024: 54.8% 

- FY2025: 44.3% 

- FY2026: 46.4% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in semiconductors; annual sales are USD 890.1 million.

- Source: https://www.sec.gov/Archives/edgar/data/866291/000119312526233537/algm-20260327.htm (filed 2026-05-21); FY2026: revenue 890096000; grossProfit 412645000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 44.3% to 54.8% during 2024–26; it earns 11.4% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); FY2024: grossProfit / revenue = 54.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); FY2025: grossProfit / revenue = 44.3%.

- Source: https://www.sec.gov/Archives/edgar/data/866291/000119312526233537/algm-20260327.htm (filed 2026-05-21); FY2026: grossProfit / revenue = 46.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); 8-year return on capital observations [[2019,0.1607950713479887],[2020,0.07312892593502045],[2021,0.024412909981902844],[2022,0.24526369141813292],[2023,0.2867891375091646],[2024,0.15521027217693714],[2025,-0.01605726327372087],[2026,0.038688998333098155]]; median 0.11416959905597879. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 4 of 8 years; bought back USD 1.7 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); FY2019: growth capex 0; upkeep 98297000; owner earnings 46382000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); FY2020: growth capex 0; upkeep 45615000; owner earnings 55404000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); FY2021: growth capex 0; upkeep 40673000; owner earnings 25587000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); FY2022: growth capex 21414000; upkeep 48527000; owner earnings 119407000. Growth capex / owner earnings = 0.17933621981960857.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); FY2023: growth capex 28967000; upkeep 50808000; owner earnings 187357000. Growth capex / owner earnings = 0.15460858147814066.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); FY2024: growth capex 26405496.983005285; upkeep 98366503.01699471; owner earnings 125712496.98300529. Growth capex / owner earnings = 0.210046714660158.

- Source: https://www.sec.gov/Archives/edgar/data/866291/000119312526233537/algm-20260327.htm (filed 2026-05-21); FY2026: growth capex 0; upkeep 38176000; owner earnings 14520000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); Dividend observations: [[2019,400000000],[2020,400000000],[2021,400000000],[2022,0],[2023,42000],[2024,0],[2025,0],[2026,0]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/866291/000119312526233537/algm-20260327.htm (filed 2026-05-21); FY2026: cash repurchases 1713000 USD.

### Are managers owners

Insiders own 32.5% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); ALGM.US SharesStats.PercentInsiders = 32.54 percentage points; cache date 2026-10-16.

### What could break it

A disruption in Taiwan could interrupt chip supplies.

- Source: https://www.sec.gov/Archives/edgar/data/866291/000119312526233537/algm-20260327.htm (filed 2026-05-21);  reducing demand for our solutions.

18

We rely on a limited number of third-party semiconductor wafer fabrication facilities and a limited number of suppliers of other materials, and the failure of any of these suppliers to supply wafers or other materials on a timely basis could harm our business and our financial results.

We currently rely on a limited number of third-party wafer fabrication facilities for the fabrication of semiconductor wafers used in the manufacture of our IC products, primarily United Microelectronics Corporation (“UMC”), Polar, Tower Semiconductor Ltd. (“Tower”) and Taiwan Semiconductor Manufacturing Company (“TSMC”), and we purchase a number of key manufacturing materials and components from single or limited sources. We depend on these foundries and other sources to meet our production needs. These foundries have limited production capacities with little ability to quickly expand capacity. From time to time, we have encountered shortages and delays in obtaining wafers and other components and materials as well as export restrictions on certain components and materials, and we may encounter additional shortages, delays and restrictions in the future. For example, recent foreign export restrictions from China on certain rare-earth elements, metals and magnets, including samarium, used in our applications and in end-user products have disrupted our ability to reliably source materials, and constrained global supply could restrict our ability to manufacture certain products. Such restrictions may make it difficult or impossible for us to compete with other semiconductor manufacturers that are able to obtain sufficient quantities of such materials from China or other sources. Additionally, two of our third-party wafer fabrication facilities are located in Taiwan, a location where earthquakes are commonplace, and geopolitical changes in China-Taiwan relations could disrupt their operations. If we cannot supply our products due to a lack of components, are unable to source materials, such as samarium or other rare-earth metals, from other suppliers, to redesign products with other components in a timely manner, or OEMs or our other customers are unable to access the materials they need to produce the end products that our applications are used in, our business will be significantly harmed. We do not have long-term contracts with some of our suppliers and third-party manufacturers. As a result, any such supplier or third-party manufacturer can discontinue supplying components or materials to us at any time and without penalty. Moreover, we depend on the quality of the wafers and other components and materials that they supply to us, over which we have limited control. Our suppliers’ abilities to meet our requirements could be impaired or interrupted by factors beyond their control, such as global market conditions, changes in t

### What the price says

The price assumes cash profits grow 19.1% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-05-21); Ten-year compound average after fade. Initial solved rate 0.26469343715529503. Price 32.36; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03.  Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2020-10: $18.30 per share

- 2020-11: $23.95 per share

- 2020-12: $26.66 per share

- 2021-01: $27.92 per share

- 2021-02: $26.14 per share

- 2021-03: $25.35 per share

- 2021-04: $24.68 per share

- 2021-05: $26.21 per share

- 2021-06: $27.70 per share

- 2021-07: $27.41 per share

- 2021-08: $30.05 per share

- 2021-09: $31.96 per share

- 2021-10: $33.36 per share

- 2021-11: $31.23 per share

- 2021-12: $36.18 per share

- 2022-01: $28.38 per share

- 2022-02: $28.67 per share

- 2022-03: $28.40 per share

- 2022-04: $24.31 per share

- 2022-05: $25.75 per share

- 2022-06: $20.69 per share

- 2022-07: $24.83 per share

- 2022-08: $23.32 per share

- 2022-09: $21.85 per share

- 2022-10: $25.41 per share

- 2022-11: $31.14 per share

- 2022-12: $30.02 per share

- 2023-01: $38.17 per share

- 2023-02: $43.68 per share

- 2023-03: $47.99 per share

- 2023-04: $35.77 per share

- 2023-05: $39.33 per share

- 2023-06: $45.14 per share

- 2023-07: $51.61 per share

- 2023-08: $38.25 per share

- 2023-09: $31.94 per share

- 2023-10: $25.96 per share

- 2023-11: $27.22 per share

- 2023-12: $30.27 per share

- 2024-01: $25.94 per share

- 2024-02: $31.49 per share

- 2024-03: $26.96 per share

- 2024-04: $29.69 per share

- 2024-05: $30.14 per share

- 2024-06: $28.24 per share

- 2024-07: $24.04 per share

- 2024-08: $24.53 per share

- 2024-09: $23.30 per share

- 2024-10: $20.84 per share

- 2024-11: $21.73 per share

- 2024-12: $21.86 per share

- 2025-01: $24.09 per share

- 2025-02: $22.30 per share

- 2025-03: $25.13 per share

- 2025-04: $19.07 per share

- 2025-05: $25.35 per share

- 2025-06: $34.19 per share

- 2025-07: $31.41 per share

- 2025-08: $30.85 per share

- 2025-09: $29.20 per share

- 2025-10: $29.92 per share

- 2025-11: $26.69 per share

- 2025-12: $26.38 per share

- 2026-01: $36.91 per share

- 2026-02: $36.47 per share

- 2026-03: $31.53 per share

- 2026-04: $48.50 per share

- 2026-05: $47.87 per share

- 2026-06: $69.62 per share

- 2026-07: $41.50 per share

- 2026-08: $36.25 per share

- 2026-09: $36.35 per share

- 2026-10: $32.36 per share

## Annual estimated value (USD per share)

- FY2023: low $6.40 per share, central $7.04 per share, high $7.90 per share

- FY2024: low $8.04 per share, central $9.01 per share, high $10.31 per share

- FY2025: low $5.63 per share, central $6.32 per share, high $7.25 per share

- FY2026: low $7.11 per share, central $7.98 per share, high $9.14 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/866291/000119312526233537/algm-20260327.htm); period 2026-03-27, filed 2026-05-21.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.