Alamo Group Inc

ALG

Farm Machinery & Equipment

Mkt Cap

$2.284B

PE

16.93

Debt

$336.5M

Cash

$121.8M

EV

$2.499B

FCF

$95.67M

Market Cap

$2.284B

P/E Ratio

16.93

Debt

$336.5M

Cash

$121.8M

EV

$2.499B

FCF

$95.67M

Charts data: {"Earnings":[{"time":"2014-12-30","value":41151000},{"time":"2015-12-30","value":43209000},{"time":"2016-12-30","value":40045000},{"time":"2017-12-30","value":44315000},{"time":"2018-12-30","value":73486000},{"time":"2019-12-30","value":62906000},{"time":"2020-12-30","value":56630000},{"time":"2021-12-30","value":80245000},{"time":"2022-12-30","value":101928000},{"time":"2023-12-30","value":136161000}],"Sales":[{"time":"2014-12-30","value":839055000},{"time":"2015-12-30","value":879577000},{"time":"2016-12-30","value":844748000},{"time":"2017-12-30","value":912380000},{"time":"2018-12-30","value":1008822000},{"time":"2019-12-30","value":1119138000},{"time":"2020-12-30","value":1163466000},{"time":"2021-12-30","value":1334223000},{"time":"2022-12-30","value":1513616000},{"time":"2023-12-30","value":1689651000}],"Net Margins":[{"time":"2014-12-30","value":0.0490444607326099},{"time":"2015-12-30","value":0.049124749737657986},{"time":"2016-12-30","value":0.04740466979501579},{"time":"2017-12-30","value":0.048570770950700365},{"time":"2018-12-30","value":0.07284337573922853},{"time":"2019-12-30","value":0.0562093325398655},{"time":"2020-12-30","value":0.04867353235934699},{"time":"2021-12-30","value":0.06014361917010874},{"time":"2022-12-30","value":0.0673407257851397},{"time":"2023-12-30","value":0.08058528062895828}],"Assets":[{"time":"2014-12-30","value":629602000},{"time":"2015-12-30","value":603503000},{"time":"2016-12-30","value":552776000},{"time":"2017-12-30","value":639671000},{"time":"2018-12-30","value":721633000},{"time":"2019-12-30","value":1212763000},{"time":"2020-12-30","value":1109329000},{"time":"2021-12-30","value":1205742000},{"time":"2022-12-30","value":1308508000},{"time":"2023-12-30","value":1409386000}],"Stockholders Equity":[{"time":"2014-12-30","value":337670000},{"time":"2015-12-30","value":360469000},{"time":"2016-12-30","value":387717000},{"time":"2017-12-30","value":449108000},{"time":"2018-12-30","value":507371000},{"time":"2019-12-30","value":569757000},{"time":"2020-12-30","value":625643000},{"time":"2021-12-30","value":705663000},{"time":"2022-12-30","value":785360000},{"time":"2023-12-30","value":932763000}],"ROE":[{"time":"2014-12-30","value":0.12186750377587585},{"time":"2015-12-30","value":0.11986883754220197},{"time":"2016-12-30","value":0.10328409638989262},{"time":"2017-12-30","value":0.09867337032517791},{"time":"2018-12-30","value":0.14483681566348885},{"time":"2019-12-30","value":0.11040847238384083},{"time":"2020-12-30","value":0.09051487829321195},{"time":"2021-12-30","value":0.11371575383717157},{"time":"2022-12-30","value":0.12978506672099419},{"time":"2023-12-30","value":0.1459759874694858}],"ROA":[{"time":"2014-12-30","value":0.10267121133668572},{"time":"2015-12-30","value":0.12193974180741438},{"time":"2016-12-30","value":0.12320180326208084},{"time":"2017-12-30","value":0.13872443803142553},{"time":"2018-12-30","value":0.14008228559392377},{"time":"2019-12-30","value":0.07840113855716245},{"time":"2020-12-30","value":0.08471247033116415},{"time":"2021-12-30","value":0.0969842636318549},{"time":"2022-12-30","value":0.1135583427843009},{"time":"2023-12-30","value":0.14046329394502285}]}

Alamo Group Inc. designs, manufactures, distributes, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural uses worldwide. It operates through two segments, Vegetation Management and Industrial Equipment. Its Vegetation Management Division segment offers hydraulically-powered and tractor - and off-road chassis mounted mowers, other cutters and replacement parts for heavy-duty and intensive uses and heavy duty, tractor- and truck-mounted mowing and vegetation maintenance equipment, and replacement parts. This segment also provides rotary and finishing mowers, flail and disc mowers, front-end loaders, backhoes, rotary tillers, posthole diggers, scraper blades and replacement parts, zero turn radius mowers, cutting parts, plain and hard-faced replacement tillage tools, disc blades, and fertilizer application components; aftermarket agricultural parts, heavy-duty mechanical rotary mowers, snow blowers, rock removal equipment, tractor attachments, agricultural implements, hydraulic and boom-mounted hedge and grass cutters, hedgerow cutters, industrial grass mowers, agricultural seedbed preparation cultivators, self-propelled sprayers and multi-drive load-carrying vehicles, and cutting blades. The company's Industrial Equipment Division segment offers truck-mounted air vacuum, mechanical broom, and regenerative air sweepers, pothole patchers, leaf collection equipment and replacement brooms, parking lot and street sweepers, excavators, catch basin cleaners, and roadway debris vacuum systems, as well as truck-mounted vacuum machines, combination sewer cleaners, and hydro excavators. This segment also offers ice control products, snowplows and heavy duty snow removal equipment, hitches, attachments, and graders; and public works and runway maintenance products, parts, and services, and high pressure cleaning systems and trenchers. The company was founded in 1955 and is headquartered in Seguin, Texas.

Sector

10-Q
9/30/23
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10-Q
3/31/18
10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Alamo Group Inc

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$95.67M	$106M	$116.8M	$128M	$139.4M	$150.8M	$162.3M	$173.6M	$184.5M	$194.9M	$204.6M	$2.046B
DCF		$92.21M	$88.34M	$84.15M	$79.67M	$74.99M	$70.16M	$65.25M	$60.31M	$55.4M	$50.58M	$505.8M
Value	$1.227B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 14%

Earnings Stability 84%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	4.9%	4.7%	4.9%	7.3%	5.6%	4.9%	6%	6.7%	8.1%	7.9%
ROA	12%	12%	14%	14%	7.8%	8.5%	9.7%	11%	14%	13%
ROE	12%	10%	9.9%	14%	11%	9.1%	11%	13%	15%	14%

What is the average Net Margin?

The average Net Margin over the past 5 years is +6.43%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +0.24%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +10.9%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +0.34%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +12.25%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +0.25%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Under the assumption that FCF does not diminish and debt does not increase, the current years to repay the debt are acceptable.

The Graham’s stability indicate reliability of earnings, and consideration about the future are more dependable.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	3.89	1.07	1.05	-6.25	8.05	1.80	11.66	-19.08	2.68	3.52
Debt Equity	0.40	0.18	0.13	0.17	0.81	0.48	0.40	0.40	0.27	0.35
MIN
Graham Stability	-	-	100%	100%	100%	94%	100%	100%	100%	94%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 3.52.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is -0.77.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.94.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	10%	11%	13%	12%	1.4%
Net Income	19%	13%	34%	34%	3.4%
Stockholders Equity	13%	13%	14%	19%	0.83%
FCF	5.1%	-	-18%	-	-8%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +10.87%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +1.44%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +13.13%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +3.39%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +12.95%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +0.83%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is -.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -7.99%.