Alta Equipment: Alta's (NYSE:ALTG) Q4 Sales Beat Estimates

In This Article: Alta's (NYSE:ALTG) Q4 Sales Beat Estimates Alta Quarterly Revenue Alta Year-On-Year Revenue Growth We can dig further into the company's revenue dynamics by analyzing its most important segments, Equipment and Parts, which are 57.6% and 13.6% of revenue. Over the last two years, Alta's Equipment revenue (new and used) averaged 3.7% year-on-year declines while its Parts revenue (maintenance and repair products) averaged 1.7% declines. This quarter, Alta's revenue fell by 4.5% year on year to $498.1 million but beat Wall Street's estimates by 3.6%. Looking ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges. Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend . Operating Margin Alta was profitable over the last five years but held back by its large cost base. Its average operating margin of 1.7% was weak for an industrials business. This result isn't too surprising given its low gross margin as a starting point. On the plus side, Alta's operating margin rose by 1.9 percentage points over the last five years, as its sales growth gave it operating leverage. Alta Trailing 12-Month Operating Margin (GAAP) This quarter, Alta's breakeven margin was down 1.9 percentage points year on year. Since Alta's gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses. Earnings Per Share We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable. Alta's earnings losses deepened over the last four years as its EPS dropped 41.4% annually. We tend to steer our readers away from companies with falling EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Alta's low margin of safety could leave its stock price susceptible to large downswings. Alta Trailing 12-Month EPS (Non-GAAP) Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. Sadly for Alta, its EPS declined by 113% annually over the last two years while its revenue grew by 9.3%. This tells us the company became less profitable on a per-share basis as it expanded. We can take a deeper look into Alta's earnings to better understand the drivers of its performance. Alta's operating margin has declined by 1.7 percentage points over the last two yearswhile its share count has grown 2.6%. This means the company not only became less efficient with its operating expenses but also diluted its shareholders. Alta Diluted Shares Outstanding In Q4, Alta reported EPS at negative $0.46, down from $0.03 in the same quarter last year. This print missed analysts' estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Alta's full-year EPS of negative $1.39 will reach break even. Key Takeaways from Alta's Q4 Results We were impressed by how significantly Alta blew past analysts' revenue expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street's estimates. On the other hand, its EBITDA in the quarter missed and its EPS also fell short of Wall Street's estimates. Overall, this was a mixed quarter. The stock remained flat at $5.10 immediately following the results. So should you invest in Alta right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it's free . Alta Year-On-Year Revenue Growth Alta Trailing 12-Month Operating Margin (GAAP) Alta Trailing 12-Month EPS (Non-GAAP) Alta Diluted Shares Outstanding