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Bull Of The Day: Altair Engineering (ALTR)

Brian Bolan

Altair Engineering (ALTR) is a Zacks Rank #1 (Strong Buy) and its sports that growth and value divergence that I really like to see.  The stock has an A for its Growth Style Score and an F for the Value Style Score.  This tells me right away that this is a growth name as growth investors and value investors are inherently looking for different things.

Description

Altair Engineering Inc. is focused on the development and broad application of simulation technology to synthesize and optimize designs, processes and decisions for business performance. The company serves broad industry segments. Altair Engineering Inc. is headquartered in Michigan, USA.

Earning History

The earnings history for this stock is pretty good.  I see three of the last four quarters were beats of the Zacks Consensus Estimate. 

The most recent beat was good for a 23.8% positive earnings surprise with the company posting $0.26 in EPS when $0.21 was expected.

Estimate Revisions

The main driver of the Zacks Rank are earnings estimate revisions, and ALTR has some positive movement that we love to see.  The current quarter has ticked higher to $0.08 from $0.07, which is always good to see, but the Rank tends to focus more on the move for the full year as opposed to a single quarter.

The 2019 Zacks Consensus Estimate has moved from $0.54 to $0.63 over the last 60 days and that is the biggest factor that pushed this stock to a Zacks Rank #1 (Strong Buy).

The 2020 Zacks Consensus Estimate has held constant at $0.80 and that may be due to a lack of visibility on the part of the covering analysts.

Valuation

So the valuation style score is F, and that comes with the territory when you are looking at a growth stock.  The forward PE multiple of 56x is high, as is the 8.4x price to book multiple.  Of course this stock comes with 39% annual topline growth and price to sales multiple of 6x. 

Operating margins have improved of late moving the low 4% area to 6.8% in the most recent quarter.  If margins continue to expand then this stock could see an even higher valuation.

Chart

Altair Engineering Inc. Price and Consensus

Altair Engineering Inc. Price and Consensus

Altair Engineering Inc. price-consensus-chart | Altair Engineering Inc. Quote

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