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We came across a bullish thesis on Alta Equipment Group Inc. (ALTG) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on ALTG. Alta Equipment Group Inc. (ALTG)'s share was trading at $5.66 as of March 19th. ALTG’s trailing and forward P/E were 69.50 and 222.22 respectively according to Yahoo Finance.
A forklift truck carrying a pallet of material in the warehouse of an industrial machinary manufacturer.
Alta Equipment Group (ALTG) has been caught in the recent market selloff, compressing its market capitalization to just $174 million, coincidentally aligning with the lower end of management’s 2025 EBITDA guidance of $175 million to $190 million. Despite this, ALTG stands to benefit from reshoring trends, and annualized EBITDA for the twelve months spanning H2 2025 and H1 2026 is likely to surpass $200 million. The company, a founder-led construction equipment and forklift dealership rollup, operates under an entrenched dealership system dating back to the Great Depression, which grants exclusive regional monopolies. This structure provides a durable advantage, particularly in the high-margin parts and service business. ALTG’s primary forklift supplier, Hyster Yale (HY), prohibits private equity ownership of its dealerships, eliminating the risk of a take-private deal at today’s suppressed valuations. Moreover, HY is actively pushing for further consolidation among its dealer networks, aligning with ALTG’s long-term strategy.
Since its IPO in 2020, ALTG has executed 16 acquisitions at highly favorable multiples, often between 4x and 5x EBITDA, with one deal closing at just 3x EBITDA. Some of these acquisitions resulted in the rare “gain on bargain purchase” accounting line, signaling that the acquired assets were worth more than what ALTG paid. Despite a two-year pause in acquisitions, the company retains $300 million in undrawn credit, leaving ample room for future deals. Meanwhile, its business model ensures resilience, with cyclical equipment sales balanced by the counter-cyclical parts and service revenue. Even in the downturn of 2024, this segment grew, demonstrating the stability of ALTG’s cash flows. While new equipment sales slumped in 2024 due to higher interest rates and the exhaustion of the COVID-era backlog, Q4 activity rebounded post-election, and manufacturing indicators suggest that a cyclical recovery is on the horizon.
ALTG refinanced its debt in mid-2024, extending maturities to 2029, albeit at a burdensome 9% coupon. This added interest expense has temporarily offset the economies of scale achieved through the rollup, but management has prioritized debt paydown, reducing liabilities by $60 million over the past six months. While ALTG has $15 million remaining in its share buyback authorization, deleveraging remains the near-term focus. Despite elevated leverage, at approximately 4.1x EBITDA, management’s guidance and the ISM Manufacturing survey suggest that 2024 was a trough year, and EBITDA is poised for a rebound. Even at the high end of guidance, leverage would still be 3.65x, but ALTG has demonstrated resilience, generating over $30 million in free cash flow in 2024 despite a historically weak manufacturing environment.