Altair Engineering Inc. (ALTR)

Altair Engineering Inc. (ALTR) Technology Profile & Competitive Position

Altair Engineering Inc. excels in delivering advanced software and cloud solutions for simulation, high-performance computing, and data analytics, positioning itself as a key player in the technology sector with a focus on innovation and customer-centric services.

What Is the Investment Thesis for ALTR?

Altair Engineering Inc. presents a compelling investment thesis driven by its robust financial metrics and strategic focus on innovation. With a market capitalization of $9.63B and a gross margin of 81.3%, the company demonstrates strong profitability potential despite a relatively high P/E ratio of 663.5. Key growth catalysts include the increasing demand for high-performance computing and data analytics solutions, which are projected to grow significantly in the coming years. The company's commitment to R&D and its diverse product offerings position it well to capitalize on emerging trends in artificial intelligence and IoT. Additionally, Altair's established customer base across various industries provides a stable revenue stream, while its ongoing investments in solid-state lighting technology may unlock new revenue opportunities. However, investors should be mindful of potential risks, including market competition and the company's dependency on technological advancements.

Based on FMP financials and quantitative analysis

ALTR Key Highlights

• Market capitalization of $9.63B indicates strong market presence.
• Gross margin of 81.3% significantly exceeds industry averages, highlighting operational efficiency.
• P/E ratio of 663.5 reflects high growth expectations but may indicate valuation concerns.
• Profit margin of 2.1% suggests room for improvement in cost management.
• Beta of 1.45 indicates higher volatility compared to the market, suggesting potential risks.

Who Are ALTR's Competitors?

ALTR is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are ALTR's Key Strengths?

• High gross margin of 81.3%, indicating strong profitability.
• Diverse product portfolio across multiple industries.
• Established brand with a reputation for innovation.

What Are ALTR's Weaknesses?

• High P/E ratio of 663.5 may raise valuation concerns.
• Profit margin of 2.1% suggests potential efficiency improvements.
• Limited presence in emerging markets compared to competitors.

What Could Drive ALTR Stock Higher?

• Expansion of product offerings in artificial intelligence and machine learning.
• Continued growth in demand for high-performance computing solutions.
• Launch of new solid-state lighting products targeting sustainability markets.
• Strengthening of consulting services to enhance customer engagement.
• Strategic partnerships to enhance technology integration and market reach.

What Are the Key Risks for ALTR?

• Rich valuation — a P/E of 663.5 runs well above the Technology sector’s ~38x, leaving little room for a miss.
• Insider selling — insiders were net sellers of roughly $12.2M recently.
• Increased competition from emerging technology firms.
• Dependence on continuous innovation to maintain market position.
• Economic fluctuations impacting client spending on technology.
• Regulatory changes affecting software and technology sectors.

What Are the Growth Opportunities for ALTR?

• Growth opportunity 1: The global market for high-performance computing is expected to reach $50 billion by 2028, driven by increased demand for data processing and analysis. Altair's advanced computing solutions position it to capture a significant share of this expanding market, leveraging its expertise in simulation and optimization technologies.
• Growth opportunity 2: The artificial intelligence sector is projected to grow at a CAGR of 40% through 2027, with applications across various industries. Altair's focus on integrating AI into its software solutions presents a substantial growth avenue, allowing the company to enhance its product offerings and attract new customers.
• Growth opportunity 3: The Internet of Things (IoT) market is anticipated to reach $1.1 trillion by 2026, creating opportunities for Altair to expand its IoT platform and analytics tools. By capitalizing on this trend, Altair can enhance its service offerings and drive revenue growth.
• Growth opportunity 4: With increasing emphasis on sustainability, the solid-state lighting technology market is expected to grow to $100 billion by 2025. Altair's involvement in developing LED solutions positions it to benefit from this trend, potentially diversifying its revenue streams.
• Growth opportunity 5: The consulting and training services segment offers a growth avenue as businesses increasingly seek expert guidance in implementing advanced technologies. Altair's established reputation and expertise can drive demand for its consulting services, enhancing customer loyalty and recurring revenue.

What Opportunities Does ALTR Have?

• Growing demand for high-performance computing solutions.
• Expansion potential in the artificial intelligence market.
• Increased focus on sustainability driving solid-state lighting growth.

What Threats Does ALTR Face?

• Intense competition from established technology firms.
• Rapid technological advancements requiring continuous innovation.
• Economic downturns affecting client budgets and spending.

What Are ALTR's Competitive Advantages?

• Strong brand recognition in the software and simulation market.
• Extensive intellectual property portfolio enhancing competitive advantage.
• Diverse product offerings catering to multiple industries.
• Established relationships with key customers across various sectors.

What Does ALTR Do?

Altair Engineering Inc., established in 1985, has evolved into a prominent player in the technology sector, providing cutting-edge software and cloud solutions worldwide. Headquartered in Troy, Michigan, the company operates through two primary segments: Software and Client Engineering Services. The Software segment encompasses a wide array of products, including solvers, optimization technologies, high-performance computing applications, and data analytics tools, catering to industries such as aerospace, automotive, and architecture. Additionally, Altair's offerings extend to Internet of Things (IoT) platforms, computational fluid dynamics, and manufacturing process simulations, underscoring its commitment to enhancing product design and engineering processes. The Client Engineering Services segment complements its software solutions by offering consulting, implementation, and training services, ensuring that clients maximize the value of their investments. Furthermore, Altair is involved in the development of solid-state lighting technology, showcasing its innovative capabilities. With a workforce of approximately 3,500 employees, Altair serves a diverse clientele, including universities, government agencies, and major corporations in various sectors. The company's integrated suite of software solutions is designed to optimize design performance across multiple disciplines, reinforcing its competitive positioning in the global market.

What Products and Services Does ALTR Offer?

• Develops software solutions for simulation and high-performance computing.
• Provides data analytics tools for various industries.
• Offers consulting and training services to enhance product design and engineering.
• Creates Internet of Things platforms and analytics tools.
• Engages in the development of solid-state lighting technology.
• Delivers optimization technology products for diverse applications.

How Does ALTR Make Money?

• Generates revenue through software licensing and subscriptions.
• Offers consulting and engineering services for product development.
• Sells hardware products related to high-performance computing.
• Provides training and support services to clients.
• Develops and sells proprietary technologies in solid-state lighting.

What Industry Does ALTR Operate In?

The software infrastructure industry is experiencing robust growth, driven by increasing demand for advanced computing solutions and data analytics capabilities. As organizations seek to enhance operational efficiency and leverage big data, the market for simulation and high-performance computing is projected to expand significantly. Altair Engineering Inc. is well-positioned within this competitive landscape, facing competition primarily from companies like Gen Digital Inc. The ongoing digital transformation across various sectors further solidifies Altair's relevance, as businesses increasingly adopt innovative technologies to stay competitive.

Who Are ALTR's Key Customers?

• Universities and educational institutions seeking advanced simulation tools.
• Government agencies requiring high-performance computing solutions.
• Manufacturers in aerospace, automotive, and architecture sectors.
• Pharmaceutical firms utilizing data analytics for research.
• Financial services and insurance companies leveraging simulation technologies.

Altair Engineering Inc. (ALTR) Valuation Context

Valued at $9.63B, ALTR is classified as a mid-cap stock. Relative to its peer group, ALTR's quantitative score of 57/100 is below the peer average of 68/100.

ALTR Revenue & Earnings Trend

In Q4 2024, ALTR generated $192.6M in top-line revenue, marking a sequential increase of 27.2%. The company recorded net income of $996K, with diluted EPS of $0.01. Revenue has increased across the last three reported quarters, suggesting sustained momentum for this mid-cap Technology company. Across the four most recent quarters, ALTR averaged $0.04 in diluted EPS.

Company Profile

Altair Engineering Inc. operates in the Software - Infrastructure industry within the Technology sector. It is headquartered in Troy, US. The company is led by CEO James R. Scapa. ALTR has traded publicly since 2017.

ROE 2%Key Financial Metrics

Return on equity for Altair Engineering Inc. stands at 1.8%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 1.0%, showing how much profit it generates from its asset base. ALTR trades at a trailing price-to-earnings ratio of 663.49, above the Technology sector average of ~38x. Its free cash flow yield is 1.5%, a gauge of the cash the business throws off relative to its market value. A current ratio of 1.61 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 0.2%, the inverse of the P/E and a quick read on earnings relative to price.

F-Score 5/9Financial Health

Altair Engineering Inc.'s Piotroski F-Score is 5/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 10.50 places it in the safe zone, indicating low near-term bankruptcy risk.

FY2026 estForward Outlook

Wall Street analysts project Altair Engineering Inc. revenue of about $770.9M for fiscal 2026, with EPS near $1.61. The estimate reflects 4 contributing analysts.

Net sellingInsider Activity

The most recent 12 insider filings for Altair Engineering Inc. break down as 12 sales and 0 purchases. On net that is roughly 212K shares disposed (about $12.2M), a signal worth weighing alongside the fundamentals.

ALTR Financials

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ALTR Analyst Consensus

ALTR MoonshotScore

What Investors Ask About Altair Engineering Inc. (ALTR) — Technology

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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