Alamo Group Inc. designs manufactures, and distributes equipment for infrastructure maintenance, agriculture and other applications. Products include truck and tractor mounted mowing and other vegetation maintenance equipment, street sweepers, snow removal equipment, excavators, vacuum trucks, other industrial equipment, agricultural implements and related aftermarket parts and services. The company was founded in 1955 and is based in Seguin, Texas.
ALG Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Alamo Group Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Alamo Group Inc ranked in the 75th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 225.17% on a DCF basis. The most interesting components of our discounted cash flow analysis for Alamo Group Inc ended up being:
The company's compound free cash flow growth rate over the past 5.48 years comes in at 0.36%; that's greater than 73.43% of US stocks we're applying DCF forecasting to.
Alamo Group Inc's weighted average cost of capital (WACC) is 8%; for context, that number is higher than merely 23.03% of tickers in our DCF set.
As a business, Alamo Group Inc experienced a tax rate of about 18% over the past twelve months; relative to its sector (Industrials), this tax rate is higher than 62.75% of stocks generating free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
RGP, HUBG, FIX, LXFR, and PRG can be thought of as valuation peers to ALG, in the sense that they are in the Industrials sector and have a similar price forecast based on DCF valuation.
Third Avenue Management, a disciplined, value-oriented asset manager and investment fund, published its ‘Small-Cap Value Fund’ third-quarter 2020 Investor Letter – a copy of which can be downloaded here. A return of 11.41% was recorded by the fund for the 3rd Quarter of 2020, below its Russell 2000 Value benchmark that returned 18.91%. You can view […]
Alamo Group Inc. (NYSE: ALG) announced today that its Board of Directors has declared its quarterly dividend of $0.14 per share, approving an increase in the Company's quarterly dividend, from $0.13 per share to $0.14 per share. Payment will be made on January 29, 2021 to shareholders of record at the close of business on January 19, 2021.