Start here if you're new
what it is
Allegro makes sensor and power chips that help cars and factory equipment measure, move, and manage electricity.
how it gets paid
Last year Allegro made $725M in revenue. Asia Pacific was the main engine at $501.0M, or 69% of sales.
why growth slowed
Revenue fell 30.9% last year. The key number was 49.9% gross margin, because it suggests the recovery is not just about more units shipped but better economics per chip.
what just happened
Allegro's last reported quarter showed $0.15 EPS, ahead of the $0.13 estimate.
At a glance
B+ balance sheet — decent shape, but not bulletproof
40/100 earnings predictability — expect surprises
63.2x trailing p/e — you're paying up for this one
22.5% return on capital — every dollar works hard here
xvary composite: 47/100 — below average
What they do
Allegro makes sensor and power chips that help cars and factory equipment measure, move, and manage electricity.
Allegro wins by getting designed into systems you do not casually swap out. Once its chip is inside a car platform, replacing it means new testing, new qualification, and more risk for the customer. Automotive was ~75% of FY2025 net sales (~$544M of ~$725M).
How they make money
$725M
FY2025 net sales · −31% YoY vs. record FY2024 (~$1.05B)
Asia Pacific
$501.0M
North America
$117.5M
EMEA
$106.6M
Other
$0.0M
The products that matter
sensing and power chips
Sensors and Power ICs
$725M revenue
FY2025 was a down year (~$725M sales, GAAP operating margin about −2.7% and a GAAP net loss per the annual release). Q3 FY2026 showed demand improvement off that trough—do not mix FY2025 GAAP losses with old net-margin screens.
100% of revenue
Key numbers
~75%
auto (FY2025)
~$544M automotive of ~$725M FY2025 net sales—still a car-heavy recovery story.
n/m
trailing p/e
FY2025 GAAP EPS was negative (~$(0.39) per release)—trailing P/E screens are easy to distort; use forward/adjusted lanes consistently.
(2.7)%
GAAP op margin FY2025
FY2025 GAAP operating margin was negative 2.7%; non-GAAP operating margin ~9.5%—label the lane.
$301M
long-term debt
Long-term debt was just 5% of capital, which gives Allegro room to wait out a rough cycle without a balance-sheet panic.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 15 / 100
- long-term debt $301M (5% of capital)
- net profit margin n/m — FY2025 GAAP net loss; ignore stale positive net-margin feeds
- return on equity n/m — loss year; verify in FY2025 10-K
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in ALGM 3 years ago → it's now worth $7,270.
The index would have given you $14,540.
source: institutional data · total return
What just happened
beat estimates
Allegro's last reported quarter showed $0.15 EPS, ahead of the $0.13 estimate.
The beat came as the company continued to climb out of a weak period in demand. Revenue reached about $229.2M in fiscal Q3 2026, while gross margin improved to 49.9% in the company release.
$229.2M
revenue
$0.15
eps
49.9%
gross margin
the number that mattered
The key number was 49.9% gross margin, because it suggests the recovery is not just about more units shipped but better economics per chip.
-
allegro microsystems is seeing a meaningful recovery in financial results.
-
fiscal 2025 third-quarter sales increased 29% from a year ago. (year ends march 27th.) bookings and the backlog improved with solid demand schedules for automotive e-mobility, adas (advanced driver assistance systems), and data centers.despite depressed automotive manufacturing volumes, the adoption of hybrid vehicles and adas solutions supported segment growth. meanwhile, higher manufacturing utilization tied to volume growth supported a strong operating margin. this was partially offset by a higher mix of china sales, which have been pressured by tariff activity.
-
the automotive segment is a core business for long-term growth.it has been the largest growth pillar for allegro in recent years, and management expects this to persist. the higher number of average system solutions per vehicle has supported this expansion in sales, despite industry headwinds.
-
there is a runway for rapid expansion should vehicle volumes make a recovery.however, customer production sites are running on lean inventory levels, indicating near-term difficulties. the tensions around a trade war have weighed on relationships with chinabased electric vehicle brands nio and byd.
-
the data center industry is a second long-term growth opportunity for allegro.
source: Allegro Q3 FY2026 · FY2025 annual
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What could go wrong
the top threat is china EV exposure and tariff pressure. this is not abstract geopolitics. management already said the mix shift pressured margins and strained some customer relationships.
med
china mix gets worse before it gets better
higher china exposure already pressured margins, and the company specifically called out tariff activity and pressure around EV relationships such as NIO and BYD.
if that mix keeps deteriorating, the margin recovery story gets delayed again. that's a problem for a stock trading at 63.2x trailing earnings.
med
auto demand stays uneven
automotive is still the core growth pillar, but management also flagged lean customer inventory and depressed vehicle production. those two facts can coexist, and they make quarterly numbers jumpy.
you own a business with a 40/100 earnings predictability score. in human-speak: a soft auto quarter can surprise you.
med
the multiple leaves little room for slippage
ALGM trades at 63.2x trailing earnings, has a 15/100 price-stability score, and institutions have been net sellers for three straight quarters. that is not forgiving setup.
another quarter like the recent one — $0.04 EPS with a -10.1% margin — can hit sentiment fast even if the long-term business is still intact.
FY2025 was a GAAP loss year on ~$725M sales—the recovery case lives in FY2026 quarters and margin repair, not last year’s net-margin screens.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
revenue path toward $1B
the street expects roughly $1B in fy2026 revenue versus the current $725M base. that's the recovery benchmark now.
risk
china mix and tariff headlines
management already tied china mix to margin pressure. if trade friction rises, this moves from nuisance to thesis issue.
calendar
next earnings and fy2026 guide
the last quarter printed $229M of revenue, $0.04 EPS, and a -10.1% margin. the next guide matters more than the backward-looking beat.
trend
institutional flow
87 buyers versus 121 sellers in 4q2025 made it three straight quarters of net selling. if that reverses, sentiment may finally help instead of hurt.
Analyst rankings
short-term outlook
below average
momentum score 4 — in human-speak, analysts think this is more likely to lag than lead in the near term.
risk profile
average
stability score 3 — the balance sheet is respectable, but the stock still behaves like a cyclical semiconductor name.
chart momentum
average
technical score 3 — there is no special momentum signal here. the chart is waiting for cleaner fundamentals.
earnings predictability
40 / 100
earnings predictability at 40/100 means quarterly results can move around more than you want from a premium multiple stock.
source: institutional data
Institutional activity
institutions have been net selling for 3 consecutive quarters — 87 buyers vs. 121 sellers in 4q2025. total institutional holdings: 0.1B shares. net selling for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$22
$77
$33
current price
$50
target midpoint · +52% from current · 3-5yr high: $50 (+50% · 11% ann'l return)
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