While the broader market has struggled with the S&P 500 down 5% since October 2024, Allient has surged ahead as its stock price has climbed by 19.5% to $21.01 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is now the time to buy Allient, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Allient Will Underperform?
We’re happy investors have made money, but we're cautious about Allient. Here are three reasons why we avoid ALNT and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Allient’s sales grew at a mediocre 7.4% compounded annual growth rate over the last five years. This was below our standard for the industrials sector. 
2. Projected Revenue Growth Shows Limited Upside
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Allient’s revenue to stall, a slight deceleration versus its 2.6% annualized growth for the past two years. This projection doesn't excite us and suggests its products and services will see some demand headwinds.
3. EPS Growth Has Stalled
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Allient’s flat EPS over the last five years was below its 7.4% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
We see the value of companies helping their customers, but in the case of Allient, we’re out. With its shares beating the market recently, the stock trades at 11.7× forward price-to-earnings (or $21.01 per share). This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are better investments elsewhere. We’d suggest looking at one of our top software and edge computing picks.
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