Alliance Laundry Holdings Inc. (ALH) stock intrinsic value fair value estimate & owner earnings analysis

Alliance Laundry makes commercial laundry equipment: washers and dryers sold under five brands, Speed Queen, Huebsch, UniMac, IPSO and Primus. The machines go to three kinds of buyer: laundromats and apartment laundry rooms, where customers pay per use; hospitals, hotels, fire stations and other places that do their own large-volume laundry; and households that pay extra for commercial-grade machines. The company believes it has the largest market share in North America, Latin America and Asia Pacific outside China, and the third largest in Europe. In 2025 revenue was $1,709 million, up 13%. About $1,361 million of that came from the United States, $152 million from the Czech Republic, $82 million from Thailand and $114 million from all other countries. Operating income was $317 million. The company also runs a financing arm that lends to laundromat owners buying its equipment and funds those loans by selling them into securitization facilities. Owner earnings, meaning the cash the business produces after the upkeep spending it needs to stay where it is, were $0.78 per share in 2023, $0.74 in 2024 and $1.07 in 2025. Those years carry a much heavier debt load than today. In August 2024 the company borrowed to pay a $900 million dividend. Then the October 2025 initial public offering raised $497 million, and $525 million of the term loan was repaid on October 17, 2025. Interest expense was $35.7 million in the first half of 2026, against $84.3 million a year earlier. Restated for today's interest cost and today's share count of about 204 million, those three years come to roughly $0.80, $0.92 and $1.20 per share. The middle figure, $0.92, is our starting point. The first half of 2026 supports a higher level: revenue rose 8% to $904 million and operating income rose 12.5% to $189 million. So the base case puts 2026 at $1.24. Accounting choices that matter: $51.7 million a year of amortization comes from purchase accounting in the company's earlier private-equity buyout, mostly for the value of its customer agreements and distributor network. We add it back and do not treat it as a wasting asset, because the distributor network is maintained by selling expenses the company already pays and revenue has grown through it. The 2025 figure also adds back a $25.2 million currency loss on loans between the company's own subsidiaries, which cost no cash. Loans made by the financing arm are funded about 88% by the securitization lenders, so we treat that growth as largely self-funded. In every case we deduct the capital a growing business must put back in: new plant, working capital, the company's share of new loans, and purchases of distributors. Base case ($32.41 per share): Owner earnings grow about 8% a year through 2030. The drivers are demonstrated demand (revenue rose 10.5% in 2024 and 13% in 2025, with Europe up 18% and Commercial In-Home up 26% in 2025), gross margin rising from 37% to 38%, and a lower interest bill as debt is paid down. Growth then slows to 5% a year through 2035. After that, earnings are held flat in dollars. Laundromats, hospitals and hotels keep replacing worn-out machines and buying spare parts, and that repeat demand on the company's large existing base of machines is what we expect to last. We assume no growth from it. Bear case ($16.14 per share): 2026 comes in at $1.10. Owner earnings then fall 15% in 2027. That reflects a pullback in equipment purchases by laundromat owners, who often finance their machines, together with higher costs. Tariff-related input costs are already disclosed, and the $600 million interest-rate swap that fixes part of the debt at 3.61% expires on September 1, 2027. Growth then recovers at only 3% a year, and after 2035 earnings shrink 2% a year. Debt makes this case worse. The $1,365 million term loan, priced at SOFR plus 2.25%, is due on August 19, 2031. Both securitization facilities ($530 million for equipment loans and $120 million for trade receivables) expire on May 1, 2028, and if they were not renewed the company would have to fund those loans itself. Bull case ($52.23 per share): 2026 reaches $1.30, in line with the first half. Growth then runs at 11% a year through 2030, matching the roughly 12% yearly revenue growth from 2023 to 2025, with further debt paydown and the loan-margin cuts the credit agreement allows as leverage falls. Growth slows to 7% through 2035 and then 2% a year, supported by the modest price increases the company has shown it can make across its brands. At a 6% discount rate, the shares appear to be worth about $32 in the base case. The main risks are how much equipment demand swings with the economy and with credit for laundromat owners, and continued access to securitization funding. The margin-of-safety price is $19. That is about 40% below the base value, because this is capital equipment with meaningful debt and only three years of detailed financial history available.