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Motion control technology maker Allient (ALNT) has rolled onto the Investor's Business Daily Breakout Stocks Index and the Stock Spotlight screen. And while Allient stock has dramatically outperformed all the Magnificent Seven stocks year to date, including Alphabet (GOOGL), Nvidia (NVDA), Tesla (TSLA), and Meta Platforms (META), it stands poised to break out to yet another record high. Allient, formerly… ...

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. But finding a growth stock that can live up to its true potential can be a tough task.By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.However, the Zacks Growth Style Score (part of the Zacks Style ...

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Core Viewpoint - Growth investors are focused on identifying stocks with above-average financial growth, which can lead to solid returns, but finding such stocks is challenging due to inherent volatility and risks [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - Allient (ALNT) is currently recommended as a strong growth stock, possessing a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is crucial for growth investors, with double-digit growth being highly desirable as it indicates strong future prospects [3] - Allient has a historical EPS growth rate of 14.1%, but projected EPS growth for this year is significantly higher at 38.9%, surpassing the industry average of 26.7% [4] Group 3: Asset Utilization - The asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is an important metric for growth stocks, reflecting how efficiently a company generates sales from its assets [5] - Allient's S/TA ratio is 0.91, indicating it generates $0.91 in sales for every dollar in assets, which is above the industry average of 0.72 [5] Group 4: Sales Growth - Sales growth is another critical factor, with Allient expected to achieve a sales growth of 2.8% this year, compared to an industry average of 0% [6] Group 5: Earnings Estimate Revisions - Trends in earnings estimate revisions are correlated with stock price movements, and Allient has seen a positive trend with current-year earnings estimates rising by 5.4% over the past month [7] Group 6: Overall Positioning - Allient has earned a Growth Score of B and holds a Zacks Rank 1 due to positive earnings estimate revisions, positioning it well for potential outperformance [9]

Market Overview - U.S. stocks have shown resilience, maintaining a strong upswing despite volatility, with major indexes near record levels supported by robust corporate earnings and investor appetite [1][2] - The end of the government shutdown has alleviated concerns, allowing for a more optimistic outlook on gradual policy easing from the Federal Reserve [2] Investment Strategy - A relative price strength strategy is recommended, focusing on stocks that outperform the market even during pauses, which helps investors align with market leadership [3][4] - Stocks that exceed their industry or benchmark performance should be prioritized for inclusion in investment portfolios, as they are more likely to yield significant returns [5] Stock Screening Criteria - Stocks should demonstrate positive relative price changes over 1, 4, and 12 weeks, outperforming the S&P 500 [8] - The screening highlights five stocks with strong relative price strength amid market gains, including Par Pacific Holdings, AngloGold Ashanti, Globus Medical, Allient Inc., and Sandisk Corporation [8] Company Highlights - **Par Pacific Holdings (PARR)**: Market cap of $2.2 billion, with a 146.2% share gain over the past year and a 112.3% increase in 2025 earnings estimates [11][8] - **AngloGold Ashanti (AU)**: Market cap over $33 billion, with a 220% share gain in the past year and a 162.4% year-over-year growth in 2025 earnings estimates [12][11] - **Globus Medical (GMED)**: Expected EPS growth rate of 14.3%, with a 3.2% share increase in a year and a positive revision in earnings estimates [13][14] - **Allient Inc. (ALNT)**: Market cap nearly $900 million, with a 117.7% share gain in a year and a 5.2% increase in 2025 earnings estimates [15][16] - **Sandisk Corporation (SNDK)**: Market cap of $37.3 billion, with a 422.9% share gain in a year and a 308% growth in fiscal 2026 earnings estimates [17][18]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates is challenging due to inherent risks and volatility [1] Group 1: Company Overview - Allient (ALNT) is currently highlighted as a recommended growth stock by the Zacks Growth Style Score system, which evaluates a company's growth prospects beyond traditional metrics [2] - The company has a favorable Growth Score and a top Zacks Rank, indicating strong potential for performance [2] Group 2: Earnings Growth - Allient's historical EPS growth rate stands at 14.1%, but the projected EPS growth for this year is significantly higher at 34%, surpassing the industry average of 20.2% [5] Group 3: Asset Utilization - Allient's asset utilization ratio (sales-to-total-assets ratio) is 0.91, indicating that the company generates $0.91 in sales for every dollar in assets, which is above the industry average of 0.72 [6] Group 4: Sales Growth - The company's sales are expected to grow by 1.6% this year, while the industry average is stagnant at 0% [7] Group 5: Earnings Estimate Revisions - The current-year earnings estimates for Allient have been revised upward, with the Zacks Consensus Estimate increasing by 4% over the past month, indicating positive momentum [9] Group 6: Conclusion - Allient has achieved a Zacks Rank 1 and a Growth Score of B, suggesting it is a strong candidate for growth investors and has the potential to outperform [11]

Core Insights - Allient reported Q3 CY2025 results exceeding market expectations, with revenue of $138.7 million, reflecting a year-on-year growth of 10.8% and surpassing analyst estimates by 3.4% [1][6] - The non-GAAP profit was $0.59 per share, which is 20.4% above analysts' consensus estimates of $0.49 [1][6] - Despite strong performance, the market reacted negatively, attributed to ongoing softness in mobility solutions and a significant defense contract cancellation affecting backlog quality [3][4] Revenue and Profitability - Revenue reached $138.7 million, exceeding analyst estimates of $134.2 million [6] - Adjusted EPS was $0.59, beating analyst estimates of $0.49 by 20.4% [6] - Adjusted EBITDA stood at $20.3 million, with a margin of 14.6%, surpassing estimates by 15.9% [6] - Operating margin improved to 9.4%, up from 5.5% in the same quarter last year [6] Market Segments - The industrial segment was the largest contributor, driven by strong demand for power quality solutions in data centers, offsetting weaknesses in oil and gas [7] - Medical revenue grew, particularly in surgical instruments, while mobility solutions continued to show softness [8] - The vehicle business stabilized, with improvements in commercial automotive and construction sectors, while exposure to powersports was reduced to below 10% of revenue [8] Operational Efficiency - Gross margin reached a record 33.3%, attributed to ongoing operational improvements and a shift towards higher-margin programs [7] - The company's Simplify to Accelerate Now initiative contributed to margin expansion and operational efficiency [5][7] - The transition of the Dothan facility is expected to yield further cost savings as it becomes a fabrication center of excellence [7] Future Outlook - Management expressed confidence in sustaining margin expansion and cash generation through operational discipline and targeted growth in high-value markets [4] - Key trends such as electrification, automation, and digital infrastructure are central to Allient's strategy [4] - Ongoing efforts to address tariff-related challenges and secure supply chains are prioritized for the upcoming quarters [4]

Core Insights - Allient's shares dropped 11.2% following the cancellation of the M10 Booker Tank program by the U.S. Army, which raised concerns about future business in its Aerospace & Defense division [1] - The company reported a book-to-bill ratio of 0.96, indicating that it received fewer orders than it filled, suggesting a potential slowdown in demand [1] - Despite achieving double-digit revenue growth and a record gross margin, the loss of the defense contract overshadowed these positive results [1] Market Reaction - Allient's stock has shown significant volatility, with 21 moves greater than 5% in the past year, indicating that the recent news has greatly affected market perception [3] - The previous notable stock movement occurred when shares gained 6% after the announcement of the Pyxmos™ Servo Drive, highlighting the company's focus on innovation and performance in motion systems [4] Financial Performance - Year-to-date, Allient's stock is up 104%, but it is currently trading 11.8% below its 52-week high of $56.69 [5] - An investment of $1,000 in Allient's shares five years ago would now be worth $1,873, reflecting strong long-term growth despite recent volatility [5]

Financial Data and Key Metrics Changes - Q3 revenue increased by $13.5 million year-over-year, reaching $138.7 million, driven by strong industrial market demand and solid performance in core end markets [7][8] - Gross profit reached $46.2 million, with gross margin expanding to a record 33.3%, up 190 basis points year-over-year [11][12] - Net income more than tripled year-over-year to $6.5 million, or $0.39 per diluted share, with adjusted net income at $9.9 million, or $0.59 per share [13] - Year-to-date operating cash flow was $43.1 million, up 46% from last year [14][15] - Debt declined by $12 million sequentially in Q3, bringing total year-to-date debt reduction to nearly $34 million, with a leverage ratio improved to 2.1 times [16] Business Line Data and Key Metrics Changes - Industrial market revenue advanced 20%, led by strong demand for power quality solutions in data centers and improving industrial automation trends [8][10] - Medical revenue grew 6%, driven by surgical instruments, while vehicle sales were up 6%, supported by commercial automotive and construction [9][10] - Aerospace and defense revenue increased by 2%, with scheduled defense and space program deliveries continuing [9] - Distribution channel sales were down 6%, representing a smaller share of overall mix [9] Market Data and Key Metrics Changes - Sales to U.S. customers accounted for 57% of Q3 revenue, with Europe, Canada, and Asia-Pacific representing the balance [7] - The industrial market is the largest vertical at 48% of total revenue, with aerospace and defense at 15% and medical also at 15% [10] - Vehicle revenue represented 17% of total revenue, down from 22% in the prior year, primarily due to reduced demand in power sports and select truck applications [10] Company Strategy and Development Direction - The company is focused on advancing strategic initiatives that enhance long-term value, driving further margin expansion, and maintaining working capital discipline [18][19] - The "Simplify to Accelerate Now" program continues to drive cost savings and operational efficiency, with $10 million in annualized savings achieved in 2024 and an additional $6-$7 million expected in 2025 [12][19] - The company is positioning itself towards markets with strong secular growth drivers, including electrification, automation, energy efficiency, and digital infrastructure [19] Management's Comments on Operating Environment and Future Outlook - Management noted that the global industrial environment is gradually improving but remains uneven, with ongoing policy and tariff risks [17][18] - The company is encouraged by the quality and margin potential of new orders in the backlog, despite the cancellation of the M10 Booker tank program [17][24] - Management expressed confidence in the operational financial momentum generated in Q3 as a strong foundation for future growth [19] Other Important Information - The company recorded $800,000 in realignment costs during Q3 to support transformation efforts [12] - Temporary inventory build impacted free cash flow by approximately $5 million, largely tied to rare earth magnets [14] Q&A Session Summary Question: Quality and visibility of current backlog - Management indicated that the backlog quality is strong, particularly in power quality and defense areas, despite a cancellation impacting the book-to-bill ratio [23][24] Question: Progress on "Simplify to Accelerate Now" initiatives - Management confirmed that significant cost savings have been validated, with ongoing efforts to optimize production and sourcing strategies [25][26] Question: Demand in the data center market - Management highlighted strong demand for power quality equipment in data centers, with facility expansions expected to come online in the second quarter of next year [37] Question: Impact of M10 program cancellation - Management confirmed no write-downs will be necessary due to the cancellation, with full recovery of costs expected [52] Question: Vehicle market exposure - Management clarified that commercial automotive remains below 10% of annual revenues, with a focus on diversifying into other vehicle markets [60][61]