Value
6.3/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 6.2 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 6.2 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 20.8x
- ▸PEG: 0.01
ALGM · Why this verdict
Why Allegro MicroSystems (ALGM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score6.2/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Allegro MicroSystems is a semiconductor company with 29% YoY revenue growth, steady small earnings beats and 36.1% analyst upside after a 58% drawdown, but 70.6% of revenue comes from automotive customers and momentum and options signals are negative.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue grew 29% YoY, with the revenue growth component at 9.8/10 and growth ranking well among peers. Growth breakdown | Revenue growth stays above 15% YoY over the next 12 months. | ↑Improving |
| CounterGrowth confidence is low at 0.33 because only revenue data feeds the score, and a cyclical recovery in chips may fade. | ||
Automotive OEM supply chain customers account for 70.6% of revenue, with one high and two medium concentration risks flagged. Bear case | Automotive share of revenue falls below 65% as industrial and data center products grow. | ↓Deteriorating |
| CounterA downturn in vehicle production would hit most of revenue at once. | ||
EPS beat or met estimates in all 4 recent quarters, with the latest at 0.26 versus 0.24 and an average surprise of 5.8%. Avg surprise pct | EPS surprise stays positive at the January 2027 report. | ↑Improving |
| CounterEPS is small (0.15 to 0.26 per quarter), so beats of a cent or two are fragile and may not hold if demand weakens. | ||
The $30.53 price is 36.1% below the $41.54 analyst target after a 58% drawdown, with downside to the stop of 14.2% and reward-to-risk of 2.54. Estimated upside | Price recovers toward the analyst target as growth continues. | ↑Improving |
| CounterAnalyst downgrades are flagged, a 7.0% gap down shows sellers are active, and the target may be cut. | ||
Momentum is 3.5/10 with falling on-balance volume, and the put/call ratio of 3.00 with 11% short interest signals heavy bearish positioning. Key risks | Momentum recovers above 4.5 and put/call falls below 1.5. | ↓Deteriorating |
| CounterThe 200-day average is still rising 2.4% over 30 days, and insiders and institutions are accumulating. | ||
Revenue grew 29% YoY, with the revenue growth component at 9.8/10 and growth ranking well among peers.
↑ImprovingGrowth breakdown
- Expectation
- Revenue growth stays above 15% YoY over the next 12 months.
CounterGrowth confidence is low at 0.33 because only revenue data feeds the score, and a cyclical recovery in chips may fade.
Automotive OEM supply chain customers account for 70.6% of revenue, with one high and two medium concentration risks flagged.
↓DeterioratingBear case
- Expectation
- Automotive share of revenue falls below 65% as industrial and data center products grow.
CounterA downturn in vehicle production would hit most of revenue at once.
EPS beat or met estimates in all 4 recent quarters, with the latest at 0.26 versus 0.24 and an average surprise of 5.8%.
↑ImprovingAvg surprise pct
- Expectation
- EPS surprise stays positive at the January 2027 report.
CounterEPS is small (0.15 to 0.26 per quarter), so beats of a cent or two are fragile and may not hold if demand weakens.
The $30.53 price is 36.1% below the $41.54 analyst target after a 58% drawdown, with downside to the stop of 14.2% and reward-to-risk of 2.54.
↑ImprovingEstimated upside
- Expectation
- Price recovers toward the analyst target as growth continues.
CounterAnalyst downgrades are flagged, a 7.0% gap down shows sellers are active, and the target may be cut.
Momentum is 3.5/10 with falling on-balance volume, and the put/call ratio of 3.00 with 11% short interest signals heavy bearish positioning.
↓DeterioratingKey risks
- Expectation
- Momentum recovers above 4.5 and put/call falls below 1.5.
CounterThe 200-day average is still rising 2.4% over 30 days, and insiders and institutions are accumulating.
Per-dimension breakdown
Quality
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.1 |
| ROA | 2.8 |
| Gross margin | 5.6 |
| Op margin | 5.1 |
| Net margin | 1.5 |
| Current ratio | 8.9 |
| FCF quality | 10.0 |
| Moat | 6.4 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 432% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
9.8/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 9.8 |
- ▸Strong growth: 29% YoY
Momentum
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 7.6 |
| OBV | 1.0 |
| MA position | 5.2 |
| Volume | 2.5 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+2.2%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.5 |
| Analyst rating | 8.5 |
| Price target | 9.4 |
- ▸Analyst upside: 45%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $146,751 (0.002% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.1 |
| quality rank | 3.0 |
| growth rank | 4.8 |
Technical
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.6 |
| support resistance | 5.4 |
| 52w position | 0.0 |
| gap | 4.0 |
Risk (lower is worse)
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.7 |
| days to cover | 7.0 |
| volatility | 0.0 |
| put call | 0.0 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 3.2 |
| debt equity | 8.8 |
- ▸Elevated put/call: 4.56
- ▸High IV: 82%
- ▸Above max pain $18
- ▸Concentration risks: 1 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.4 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- ASYMMETRY:1.9>=1.5
- INSIDER:OK
- EARNINGS_PROXIMITY:86d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:4.2<4.5
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.93
Upside
+26.3%
Downside
13.6%
Sizing output
AVOID
SetupRange Bound — RSI 54 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -53% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 9.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:4.2<4.5) reinforce the read. Current asymmetry R:R is 1.93 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 9.8, Sentiment at 7.5, and Insider at 7.3; the weakest are Risk (lower is worse) at 3.3, Technical at 3.5, and Peer rank at 3.6. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 1.93 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Revenue Growth
Trip ifRevenue growth falls below 10% YoY for 2 consecutive quarters.
- P2Steady Earnings Beats
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P3Analyst Upside After Drawdown
Trip ifShare price falls below the $29.10 stop level, a drop of more than 4.7%.
- P4Automotive Customer Concentration
Trip ifAutomotive share of revenue exceeds 80% from current 70.6%.
- P5Negative Momentum And Options Hedging
Trip ifShort interest rises above 18% from current 11%.