Alta Equipment Group Inc. (NYSE:ALTG) is one of the best NYSE penny stocks to invest in right now. On November 12, DA Davidson cut the firm’s price target on Alta Equipment to $7 from $8 with a Neutral rating on the shares after the company posted its Q3 2025 earnings miss. The company saw a loss per share of $1.31 in the said quarter. Given these circumstances, DA Davidson is now lowering its adjusted EBITDA outlook for 2025 and 2026 due to the impact of tariffs, the presence of mixed end markets, and the ...

Here are three stocks added to the Zacks Rank #5 (Strong Sell) List today:Alta Equipment Group (ALTG) is an industrial and construction equipment company. The Zacks Consensus Estimate for its current year earnings has been revised almost 48.6% downward over the last 60 days.Chagee Holdings Limited - Sponsored ADR (CHA)  is a premium tea drinks brand, serving healthy and delicious freshly-made tea drinks. The Zacks Consensus Estimate for its current year earnings has been revised 14.7% downward over the last ...

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Core Insights - Alta Equipment reported a revenue of $422.6 million for the quarter ended September 2025, reflecting a decline of 5.8% year-over-year [1] - The company's EPS was -$1.31, worsening from -$0.86 in the same quarter last year [1] - Revenue fell short of the Zacks Consensus Estimate of $458.63 million, resulting in a surprise of -7.86% [1] - The EPS surprise was -385.19%, with the consensus estimate being -$0.27 [1] Revenue Breakdown - New and used equipment sales generated $211.1 million, below the average estimate of $241.98 million from two analysts [4] - Parts sales reached $75.3 million, significantly exceeding the estimated $31.49 million [4] - Service revenue was $66.4 million, compared to the average estimate of $75.66 million [4] - Rental revenue amounted to $48.4 million, falling short of the estimated $65.97 million [4] - Rental equipment sales were $21.4 million, compared to the average estimate of $51.36 million [4] Stock Performance - Over the past month, shares of Alta Equipment have returned -9.9%, contrasting with the Zacks S&P 500 composite's +1.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Alta Equipment reported a quarterly loss of $1.31 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.27, marking an earnings surprise of -385.19% [1] - The company's revenues for the quarter ended September 2025 were $422.6 million, missing the Zacks Consensus Estimate by 7.86% and down from $448.8 million a year ago [2] - The stock has underperformed the market, losing about 7.2% since the beginning of the year compared to the S&P 500's gain of 15.6% [3] Financial Performance - Over the last four quarters, Alta Equipment has surpassed consensus EPS estimates only once [2] - The current consensus EPS estimate for the upcoming quarter is -$0.26 on revenues of $494.3 million, and for the current fiscal year, it is -$1.40 on revenues of $1.86 billion [7] Industry Context - Alta Equipment operates within the Zacks Manufacturing - General Industrial industry, which is currently ranked in the bottom 37% of over 250 Zacks industries [8] - The performance of the stock may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The estimate revisions trend for Alta Equipment was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

Financial Data and Key Metrics Changes - The company recorded revenue of $422.6 million for Q3 2025, representing a 5.8% organic reduction compared to the previous year [16] - Adjusted EBITDA for the quarter was $41.7 million, slightly down year-over-year on a pro forma basis, primarily due to reduced episodic equipment sales in the construction equipment segment [24] - Free cash flow before rent-to-sale decisioning was approximately $25 million for the quarter, totaling around $80 million year-to-date [24] Business Line Data and Key Metrics Changes - In the material handling segment, new and used equipment sales were down $1.6 million year-over-year but showed a sequential increase [18] - The construction equipment segment experienced a drop in equipment sales by $18.7 million compared to Q3 2024, but October sales indicated a potential recovery [20] - Product support revenues in the material handling segment were flat year-over-year, but up nearly 4% sequentially from Q2 [19] Market Data and Key Metrics Changes - The backlog in material handling remains over $100 million, providing visibility for the next several quarters [6][18] - Industry data suggests that the general-purpose construction markets have bottomed out, positioning the company for growth as replenishment gains momentum in 2026 [9] - The Midwest and Canadian markets for material handling remain soft, primarily due to automotive and general manufacturing weakness [10] Company Strategy and Development Direction - The company is focusing on optimizing its business model by divesting non-core operations, such as the dock and door division, to concentrate resources on core dealership operations [10][11] - The strategy includes enhancing product support capabilities to drive recurring revenue and lifetime customer relationships [11] - The company aims to capitalize on the ongoing reindustrialization of key U.S. regions, particularly in the power and utility sector [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in demand, particularly in construction equipment, as deferred demand from Q3 is expected to flow into Q4 [12] - The enactment of the Big Beautiful Bill is viewed as a net positive, enhancing liquidity and reducing future cash taxes [25] - Management believes the industry is turning a corner, with Alta well-positioned to capture the upswing in demand [12] Other Important Information - The company completed the divestiture of its dock and door division, which is expected to have minimal impact on the EBITDA guidance for 2025 [52] - The company ended the quarter with approximately $265 million in cash and availability on its revolving line of credit, providing ample capacity to navigate the current business climate [25] Q&A Session Summary Question: Discussion on construction equipment and anticipated upswing - Management indicated that October's performance could signal a positive trend for sales and margins in construction equipment [38] Question: Factors affecting gross margins - Management noted that while gross margins are currently flat year-over-year, there are signs of stabilization in used equipment prices, which could lead to an upswing in margins [40] Question: Movement in manufacturing and material handling - Management clarified that the lift in material handling is more related to fleet replenishment rather than a significant increase in market demand [41] Question: Context of backlog in material handling - The backlog has decreased from $125 million at the start of the year to the low $100s, primarily due to improved lead times rather than a significant drop in demand [46] Question: Strong aftermarket gross margins - Management attributed strong aftermarket gross margins to mid-year price increases and improved operational efficiencies [50] Question: Rationale behind the divestiture of the dock and door unit - The divestiture was strategic, as the dock and door business did not align well with the core operations, and it was determined that it would be better managed by a dedicated entity [52]

EARNINGS PRESENTATION THIRD QUARTER 2025 November 6, 2025 LEGAL DISCLAIMERS Forward-Looking Information This presentation includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Alta's actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budge ...

Financial Performance - Total revenues for Q3 2025 were $422.6 million, a decrease of 5.8% compared to $448.8 million in Q3 2024[14] - Net loss for Q3 2025 was $41.6 million, compared to a net loss of $27.7 million in Q3 2024, representing a 50.3% increase in losses year-over-year[16] - Gross profit for the nine months ended September 30, 2025, was $355.1 million, down from $377.2 million in the same period of 2024, reflecting a decrease of 5.9%[14] - The company reported a basic loss per share of $1.31 for Q3 2025, compared to $0.86 for Q3 2024, indicating a significant increase in loss per share[14] - Net loss for the nine months ended September 30, 2025, was $68.6 million, compared to a net loss of $51.5 million for the same period in 2024, indicating a year-over-year increase in losses of approximately 33.8%[22] Assets and Liabilities - Total assets as of September 30, 2025, were $1,431.0 million, a decrease from $1,480.4 million as of December 31, 2024[13] - Total liabilities increased to $1,428.1 million as of September 30, 2025, compared to $1,402.8 million at the end of 2024[13] - The total stockholders' equity as of September 30, 2025, is $2.9 million, a decrease from $43.9 million at June 30, 2025[19] - The accumulated deficit increased to $223.9 million as of September 30, 2025, from $181.6 million at June 30, 2025[19] Cash and Cash Equivalents - Cash and cash equivalents increased to $14.1 million as of September 30, 2025, up from $13.4 million at the end of 2024[13] - Total cash at the end of the period on September 30, 2025, was $14.1 million, compared to $14.6 million at the end of the same period in 2024[22] Expenses - Selling, general and administrative expenses for Q3 2025 were $105.9 million, a slight decrease from $110.6 million in Q3 2024[14] - Depreciation and amortization expenses for the nine months ended September 30, 2025, were $101.9 million, slightly down from $109.8 million in 2024[22] - Cash paid for interest increased to $51.9 million in 2025 from $43.8 million in 2024, representing an increase of 18.4%[22] Revenue Breakdown - New and used equipment sales for the three months ended September 30, 2025, were $211.1 million, down from $219.8 million in 2024, representing a decline of 3.1%[34] - Service revenues increased to $66.4 million for the three months ended September 30, 2025, compared to $64.6 million in 2024, reflecting a growth of 2.8%[34] - The Company recognized $17.0 million in project-based revenues for the three months ended September 30, 2025, compared to $13.1 million in 2024, marking a growth of 29.8%[38] Debt and Financing - Total debt and finance leases increased to $756.6 million as of September 30, 2025, from $705.8 million as of December 31, 2024, an increase of about 7.2%[63] - The Company was in compliance with all financial covenants set forth in its debt agreements as of September 30, 2025[63] - The effective interest rate on the ABL Facility was 5.8% as of September 30, 2025, down from 6.2% at the end of 2024[58] Divestitures - The Company divested its aerial fleet rental business for $18.0 million, resulting in a gain of $4.3 million[96] - The divestiture of the Dock and Door business generated $6.4 million, with a gain of $0.4 million recognized[97] Operating Segments - The Company has three operating segments: Material Handling, Construction Equipment, and Master Distribution, with performance evaluated using Adjusted EBITDA[99] - The Material Handling segment operates in several U.S. states and Canada, focusing on the sale, service, and rental of lift trucks and material handling equipment[100] - The Construction Equipment segment is engaged in the sale, service, and rental of construction equipment across multiple U.S. states and Canada[101] Taxation - The Company recognized income tax expense of $24.4 million for the three months ended September 30, 2025, significantly higher than the $11.6 million recognized in the same period of 2024[74] - The effective tax rate for the nine months ended September 30, 2025, was (62.6)%, compared to (10.0)% for the same period in 2024[78]

Financial Performance - Total revenues for Q3 2025 decreased by $26.2 million year over year to $422.6 million, a decline of 5.8%[5] - The net loss available to common stockholders for the quarter was $(42.3) million, translating to a basic and diluted net loss per share of $(1.31)[5] - Adjusted EBITDA for Q3 2025 decreased by $1.5 million year over year to $41.7 million[5] - Net loss for the nine months ended September 30, 2025, was $68.6 million, compared to a net loss of $51.5 million for the same period in 2024[24] - Gross profit for Q3 2025 was $117.8 million, down from $124.6 million in Q3 2024, reflecting a gross margin of 27.8%[23] - Rental revenues decreased to $48.4 million in Q3 2025, down 10.4% from $53.7 million in Q3 2024[23] - The company reported a basic loss per share of $1.31 for Q3 2025, compared to a loss of $0.86 per share in Q3 2024[23] - Total operating expenses for the nine months ended September 30, 2025, were $337.1 million, down from $361.0 million in 2024[23] - Adjusted EBITDA for the nine months ended September 30, 2025, is $123.8 million, slightly down from $127.6 million in 2024[26] - Basic net loss per share for the three months ended September 30, 2025, is $(1.31), compared to $(0.86) in the same period of 2024[26] Asset and Liability Management - Total assets as of September 30, 2025, were $1,431.0 million, a decrease from $1,480.4 million as of December 31, 2024[22] - Cash increased to $14.1 million from $13.4 million as of December 31, 2024[22] - Accounts receivable rose to $216.0 million, up from $199.7 million as of December 31, 2024[22] - Inventories decreased to $504.6 million from $535.9 million as of December 31, 2024[22] - Total current liabilities decreased to $542.7 million from $577.2 million as of December 31, 2024[22] - Long-term debt, net of current portion, increased slightly to $483.1 million from $480.0 million as of December 31, 2024[22] - The accumulated deficit increased to $(223.9) million from $(149.3) million as of December 31, 2024[22] - Total stockholders' equity decreased to $2.9 million from $77.6 million as of December 31, 2024[22] - Floor plan payable for new equipment decreased to $270.8 million from $293.4 million as of December 31, 2024[22] - Total debt as of September 30, 2025, is $1,116.2 million, an increase from $1,103.4 million as of December 31, 2024[26] Strategic Initiatives and Market Outlook - Construction Equipment segment revenues decreased by $20.7 million, primarily due to a deliberate fleet optimization strategy, resulting in a rental fleet size approximately $40 million below the prior year[4] - Product support revenues increased by 1.1% year over year to $141.7 million, with a gross profit percentage rising by 160 basis points to 47.2%[5] - The enactment of the One Big Beautiful Bill Act (OBBBA) is expected to positively impact future cash taxes and liquidity, as the company is now in a taxable loss position[9] - The company completed the divestiture of its Dock and Door division for $6.4 million, with $3.1 million received in cash at close[9] - The company projects Adjusted EBITDA for the full fiscal year 2025 to be between $168.0 million and $172.0 million[9] - DOT spending budgets in major U.S. markets are projected to rise by 6.0% in fiscal 2026, supporting infrastructure projects[4] - October 2025 was noted as the strongest month of the year for equipment sales, particularly in the Construction Equipment segment, indicating potential recovery[4] Cash Flow and Financing Activities - Cash provided by financing activities was $20.7 million for the nine months ended September 30, 2025, compared to $9.7 million in 2024[24] - Cash paid for interest in the nine months ended September 30, 2025, was $51.9 million, compared to $43.8 million in 2024[24] - Net cash used in investing activities was $19.3 million for the nine months ended September 30, 2025, compared to $48.0 million in 2024[24] Expense Management - Interest expense for the nine months ended September 30, 2025, is $66.6 million, up from $57.9 million in 2024[26] - Depreciation and amortization for the three months ended September 30, 2025, is $34.9 million, down from $37.8 million in 2024[26]

Core Insights - The company reported a 5.8% year-over-year decrease in total revenues for Q3 2025, amounting to $422.6 million, primarily due to a decline in the Construction Equipment segment [4][9] - Despite the overall revenue decline, product support revenues increased by 1.1% to $141.7 million, indicating resilience in this area [4][5] - The CEO expressed optimism about future performance, citing a strong sales month in October and potential benefits from recent legislative changes and interest rate cuts [3][5] Financial Performance - Total revenues decreased by $26.2 million compared to the previous year, with the Construction Equipment segment contributing a $20.7 million reduction [4][9] - Material Handling revenues remained relatively stable at $167.9 million, showing a slight decrease of $1.0 million year-over-year [4][9] - The company experienced a net loss of $42.3 million for the quarter, with a basic and diluted net loss per share of $(1.31) [4][9] Strategic Focus - The company is focusing on long-term federal and state infrastructure projects, with DOT spending budgets projected to rise by 6.0% in fiscal 2026 [3][5] - A divestiture of the Dock and Door division was completed for $6.4 million, aligning with the company's strategy to optimize its portfolio [8][5] - The management is optimistic about entering a fleet replenishment cycle, which is expected to extend into the next year [5][3] Market Conditions - The company noted subdued capital investment in material handling and heavy equipment across select markets, leading to depressed industry volumes [3][5] - Demand remains strong among energy, utility, and food and beverage customers, despite softness in the automotive and general manufacturing sectors [3][5] - The enactment of the One Big Beautiful Bill Act (OBBBA) is anticipated to positively impact the company's financial position and customer base [8][5]