What Happened?
Shares of specialized equipment manufacturer for infrastructure and vegetation management Alamo Group (NYSE: ALG) fell 4.5% in the afternoon session after the company reported third-quarter 2025 earnings that missed profit expectations, even as sales came in higher than anticipated.
The specialized equipment manufacturer's adjusted earnings per share came in at $2.34, falling short of Wall Street's forecast of $2.64. While total revenue for the period rose 4.7% year-on-year to $420 million and beat estimates, investors focused on signs of weakening profitability. Notably, the company’s operating margin, a key measure of efficiency, declined to 8.9% from 10% in the same quarter last year. Furthermore, adjusted EBITDA of $55.01 million also missed analysts' expectations. These profitability concerns appeared to overshadow the positive sales news, weighing on investor sentiment.
The shares closed the day at $166.69, down 3.6% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Alamo? Access our full analysis report here.
What Is The Market Telling Us
Alamo’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 3.7% on the news that investment firm Baird upgraded the stock to 'Outperform' from 'Neutral'. The investment firm Baird raised its price target on the company to $260 from $209, which suggested a potential 24.4% upside. Baird pointed to a stabilizing market and growth opportunities in the utility and small tractor sectors as key reasons for its increased optimism. The firm also noted that lower dealer inventories likely spurred demand for Alamo's attachments. Furthermore, a recovery in hay and alfalfa prices bolstered the outlook for the company's Vegetation segment, while recent cost-cutting measures improved earnings forecasts.
Alamo is down 7.4% since the beginning of the year, and at $166.86 per share, it is trading 28.2% below its 52-week high of $232.42 from August 2025. Investors who bought $1,000 worth of Alamo’s shares 5 years ago would now be looking at an investment worth $1,240.
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