ALLIENT INC (ALNT) stock intrinsic value fair value estimate & owner earnings analysis

Allient (formerly Allied Motion Technologies) designs and builds precision motors, drives, controls, gearing and power-quality equipment, mostly custom-engineered for equipment makers in industrial automation, power quality for data centers, vehicles, medical devices and aerospace & defense. No customer is more than 10% of sales. About 55% of 2025 sales went to US customers. Most of the rest went to Europe, Canada and Asia-Pacific, and the company makes products in the US, Mexico, Europe and China, so tariffs are a live cost issue. Revenue grew from $246M in 2016 to $554M in 2025, mostly through a long series of bolt-on acquisitions. Earnings power. We measure the cash the owners could take out in a normal year: operating cash flow with short-term inventory and receivable swings stripped out, less stock compensation and the capital spending needed to maintain the business. We also treat inventory-obsolescence, bad-debt and warranty provisions as ordinary operating costs rather than adding them back. On this basis, owner earnings per share were $1.06 to $1.37 in 2016-2020, $1.65 to $1.67 in 2021-2022, $2.23 in 2023, $1.65 in the 2024 downturn and $2.43 in 2025. Because the 2022 acquisitions roughly doubled the business, we measure it from 2022 onward. That window includes both the 2023 peak and the 2024 slump in industrial and vehicle demand. Interest is a lender cost, so we add it back (about $7M in 2022 and $12-13M a year since) and value the business before its lenders. On that basis the median of 2022-2025 is about $44M a year, or $2.60 per share. 2025 alone was $53.6M, helped by record margins (32.8% gross margin), strong demand for data-center power-quality products and unusually low capital spending ($7.0M against $10-12M guided for 2026). About $12.5M a year of amortization of acquired customer relationships and technology is added back as a non-cash charge. That is a wasting asset, so we offset it by crediting very little growth. Cases (all at a flat 6% discount rate). Base: earnings start at the $44M median and grow 1.5% a year for ten years, then hold flat. Owner earnings grew about 47% in 2025 (34% after adding back interest), while year one assumes only 1.5%. Growth from future acquisitions is not credited, because buying it costs cash that these earnings do not charge for. The flat long-run level rests on a 60-plus-year operating history, a diversified customer base and products designed into customers' equipment. The business is worth about $825M. Bear: a repeat of the 2022/2024 troughs ($34-40M) becomes the norm at $36M a year, through weak vehicle and powersports demand, customer destocking or tariff costs that cannot be passed on. It is flat for ten years, then declines 2% a year as acquired technology ages without replacement. The business is worth about $511M. Even here, cash flow covers interest about three times. Bull: the 2025 level holds, adjusted to $50M for normal capital spending, supported by 2025 bookings of $551M (up 15%) and first-half 2026 revenue up 7.5%. It grows 3.5% a year for ten years from continued pricing and operational gains, then holds flat. The business is worth about $1.1B. Debt. At June 30, 2026 the company owed about $176M: roughly $125M drawn on a revolving credit line maturing in March 2029, $50M of fixed-rate private notes, and finance leases. It held $42M of cash, mostly overseas. Counting about $27M of that as surplus, net debt is about $149M. Borrowing costs are close to 6%, so no adjustment is made. The covenants require leverage below 3.75x and interest coverage above 3.0x, and the company met them every quarter of 2025. After subtracting the debt, the shares appear worth about $21 (bear), $40 (base) and $56 (bull). Compared with our previous estimate (bear $4, base $24, bull $58.75), the bear and base cases rise for two reasons. First, we now value the business before interest at a fixed 6% rate and subtract the debt once, rather than also discounting at higher risk-loaded rates. Second, 2025 cash generation came in strong. Our bull case is slightly lower because we no longer credit acquisition-driven growth. We also correct an earlier figure: year-end 2025 backlog was $233M, not $298M. What would make this wrong: another acquisition that adds debt at a high price; a lasting fall in data-center and industrial demand back to 2024 levels; or tariffs squeezing the margin gains of 2025-2026. The 2029 refinancing of the credit line is manageable at current earnings but would be harder after a deep downturn. Margin-of-safety price: $23, close to the bear-case value. That is about a 42% discount to the base case, reflecting a cyclical, acquisitive and moderately leveraged business.