Allient (ALNT)

Precision motion systems specialist Allient (NASDAQ:ALNT) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 10.8% year on year to $138.7 million. Its non-GAAP profit of $0.59 per share was 20.4% above analysts’ consensus estimates.

Company Overview

Founded in 1962, Allient (NASDAQ:ALNT) develops and manufactures precision and specialty-controlled motion components and systems.

Like many equipment and component manufacturers, electronic components companies are buoyed by secular trends such as connectivity and industrial automation. More specific pockets of strong demand include data centers and telecommunications, which can benefit companies whose optical and transceiver offerings fit those markets. But like the broader industrials sector, these companies are also at the whim of economic cycles. Consumer spending, for example, can greatly impact these companies’ volumes.

Competitors of Allient Inc. (NASDAQ: ALNT) include Altra Industrial Motion Corp. (NASDAQ: AIMC), Regal Rexnord Corporation (NYSE: RRX), and Ametek Inc. (NYSE: AME).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Allient grew its sales at a decent 8.1% compounded annual growth rate. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Allient’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 3.2% over the last two years.

This quarter, Allient reported year-on-year revenue growth of 10.8%, and its $138.7 million of revenue exceeded Wall Street’s estimates by 3.4%.

Looking ahead, sell-side analysts expect revenue to grow 3.9% over the next 12 months. Although this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average.

Allient’s unit economics are better than the typical industrials business, signaling its products are somewhat differentiated through quality or brand. As you can see below, it averaged a decent 31.3% gross margin over the last five years. Said differently, Allient paid its suppliers $68.68 for every $100 in revenue.

Allient produced a 33.3% gross profit margin in Q3, marking a 1.9 percentage point increase from 31.4% in the same quarter last year. Allient’s full-year margin has also been trending up over the past 12 months, increasing by 1.3 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Allient’s operating margin has been trending up over the last 12 months and averaged 6.9% over the last five years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports mediocre profitability for an industrials business.

Looking at the trend in its profitability, Allient’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Allient generated an operating margin profit margin of 8.8%, up 3.3 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Allient’s EPS grew at a remarkable 13.6% compounded annual growth rate over the last five years, higher than its 8.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Allient, its two-year annual EPS declines of 5.7% mark a reversal from its (seemingly) healthy five-year trend. We hope Allient can return to earnings growth in the future.

In Q3, Allient reported adjusted EPS of $0.59, up from $0.31 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Allient’s full-year EPS of $1.93 to grow 13.7%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Allient has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.4%, subpar for an industrials business.

Taking a step back, an encouraging sign is that Allient’s margin expanded by 4.6 percentage points during that time. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

Allient’s free cash flow clocked in at $2.78 million in Q3, equivalent to a 2% margin. The company’s cash profitability regressed as it was 6.4 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Allient historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 8.3%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Allient’s ROIC averaged 1.3 percentage point decreases each year. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Allient reported $39.48 million of cash and $207.7 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $66.29 million of EBITDA over the last 12 months, we view Allient’s 2.5× net-debt-to-EBITDA ratio as safe. We also see its $6.88 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Allient blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock remained flat at $53.85 immediately after reporting.

Updated: December 4, 2025 at 10:17 PM EST

Before deciding whether to buy Allient or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Allient isn’t a terrible business, but it doesn’t pass our bar. Although its revenue growth was decent over the last five years, it’s expected to deteriorate over the next 12 months and its mediocre ROIC lags the market and is a headwind for its stock price. And while the company’s projected EPS for the next year implies the company’s fundamentals will improve, the downside is its low free cash flow margins give it little breathing room.

Allient’s P/E ratio based on the next 12 months is 22.1x. This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $53.07 on the company (compared to the current share price of $54.44).