- EF Hutton Analyst Tim Moore initiated the reporting Alamo Group Inc ALG with a buy recommendation and a Price target of $195.
- The analyst recently visited the company’s Texas headquarters to gain a better understanding of its innovation advantages, customer loyalty, international expansion, sustainability efforts and bolt-on acquisition business model.
- The analyst says Alamo warrants a higher valuation in order to evolve into a company primarily focused on industrial equipment and vegetation management.
- Moore added that about 60% of its sales come from government-related customers (states, counties, municipalities), which provide a recurring revenue stream.
- The analyst is forecasting strong margin expansion beginning in the September quarter and continuing into next year.
- He expects the margin improvement, along with organic sales growth and a possible value-added acquisition, to trigger a re-rating of the stock next year.
- Moore is impressed by the company’s focus on innovation, fuel efficiency and weight reduction in its products, the development of hybrid electric products and its sustainability efforts.
- Alamo’s most recent backlog of $894 million provides a good look ahead to 2023 and is in line with seven months of revenue guidance compared to three months historically, he cited.
- Moore expects the company to resume its bolt-on acquisition strategy to deliver 3-5% annual revenue growth and potentially spend as much as $400 million on acquisitions over the next 18 months.
- He also expects the company to spend $10 million to build or buy manufacturing facilities in Europe to increase market penetration of lawn and landscaping mowers and sweepers while avoiding expensive shipping and transportation costs from the US to Europe to save
- Price promotion: ALG shares traded 0.22% lower at $142.04 on the last check Wednesday.
© 2022 Benzinga.de. Benzinga does not provide investment advice. All rights…
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