Alight, Inc. (READ) is a leading cloud service provider of integrated human capital and enterprise solutions. The Company operates in three segments: Employer Solutions; Professional services; and hosted business. It is a subsidiary of alternative investment management company The Blackstone Group, Inc. (BX).
ALIT went public through a reverse merge with institutional investor Bill Foley, a blank check company backed by Foley Trasimene Acquisition Corp. on July 6, 2021. However, the stock has fallen 27.7% since then to close Friday’s trading session at $7.53. Additionally, the stock has fallen 30.7% year-to-date due to the prolonged market correction and lackluster growth outlook.
Here is what could shape ALIT’s performance in the short term:
ALIT’s revenue increased 5.2% year-over-year to $725 million in the first fiscal quarter ended March 31, 2022. Gross profit improved slightly from the same period last year to reach 223 million dollars.
However, the company’s operating expenses rose 30.8% from the year-ago quarter to $225 million. As a result, operating losses amounted to $2 million, compared to a profit of $46 million recorded in the first quarter of fiscal 2021. EBT loss amounted to $12 million . Net loss was $12 million, translating to a loss of $0.02 per share.
Mixed growth prospects
Analysts expect ALIT’s revenue to grow 7.1% year-on-year to $719.88 million in the second fiscal quarter (ending June) and 8% year-on-year to $745 million. $.48 million in the third fiscal quarter (ending September). However, analysts expect the company’s EPS to decline 25% from the same period last year to $0.14 next quarter.
Additionally, Street expects ALIT’s revenue to grow 6.5% year-over-year in fiscal 2022 and 7.7% year-over-year in fiscal 2023. However, the annual consensus estimate of $0.58 for the current year indicates a decline of 19.8% compared to the same period last year.
In non-GAAP forward P/E terms, ALIT is currently trading at 12.98x, 18.9% below the industry average of 16.02. Its forward price/sell and price/book multiples of 1.13 and 0.76 compare to industry averages of 1.27 and 2.48.
However, the stock’s 12-month price-to-cash-flow ratio of 46.23 is 184.3% higher than the industry average of 16.26. Additionally, its forward-looking EV/EBIT multiple of 59.15 is 316.4% higher than the industry average of 14.20. Additionally, ALIT’s EV/Forward Sales ratio of 2.26 is 39.9% higher than the industry average of 1.62.
POWR ratings reflect uncertainty
ALIT has an overall rating of C, which translates to Neutral in our own POWR Rankings system. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.
ALIT has a rating of C for Value and a D for Momentum. The mixed valuation of the action is in line with the Value rating. Moreover, ALIT is currently trading below its 50-day and 200-day moving averages of $8.54 and $10.08, indicating a downtrend and justifying the Momentum rating.
Of the 156 D-rated securities Software app industry, ALIT is ranked #86.
Beyond what I said above, check out ALIT Ratings for Growth, Sentiment, Stability, and Quality here.
Tech stocks have been the worst performers amid the current market correction. In fact, the ongoing tech rout caused ALIT to wipe out its initial gains after listing last year. As the Fed maintains its aggressive hawkish policies, tech stocks are likely to remain under pressure in the near term. Thus, investors should wait for technology markets to stabilize before investing in ALIT.
How does Alight (ALIT) compare to its peers?
Although ALIT has a C rating in our proprietary rating system, one might consider looking at its industry peers, Commvault Systems, Inc. (CVLT), Rimini Street Inc. (RMNI) and Enghouse Systems Limited (EGHSF), which have an A (Strong Buy) rating.
ALIT shares were trading at $7.02 per share on Monday afternoon, down $0.51 (-6.77%). Year-to-date, the ALIT is down -35.06%, compared to a -19.87% rise in the benchmark S&P 500 over the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the dos and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing stocks. After…