Alamo Commits to 50% Reduction in Greenhouse Gas Emissions by 2030

What investors need to know Alamo Group stock

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Earlier this week, Alamo Group Inc. (NYSE:ALG) announced a 2030 target to reduce its greenhouse gas emissions by 50% using its 2019 emissions as its base. This target covers Scope 1 & 2 emissions as defined in The Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standards published by the World Business Council for Sustainable Development and World Resources Institute.

Alamo stock has seen some choppy trading of late, with several sharp pullbacks to the $132-$134 area occurring during the past several months. The stock's latest bounce off said area was met with resistance from its  80- and 100-day moving averages, keeping ALG at a year-over-year deficit of 7.5%.

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The machinery company has grown its revenues 32% since fiscal 2018, with 15% growth since fiscal 2020. On the bottom line, Alamo Group's net income is up only 9% since fiscal 2018, with ALG experiencing a 23% decline between fiscal 2018 and fiscal 2020. Still, ALG is estimated to increase its earnings by 23.5% and its revenues by 8.3% for fiscal 2022. In addition, the Alamo Group offers a dividend yield of 0.51% with a forward dividend of $0.72.

However, Alamo Group stock trades at an elevated price-earnings ratio of 20.61 and a price-sales ratio of 1.24, which are both rich values for a small cap in the current market. The machinery company also holds a balance sheet with $42.12 million in cash and $286.45 million in total debt, providing very little long-term security due to its weak balance sheet and slow growth, as well as no incentive in the short-term because of ALG's relatively high valuation.


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