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ALTR.TO August 25, 2026

Altair Engineering (ALTR): Software, HPC and AI platforms drive growth amid rich valuation and earnings recovery

Altair Engineering Inc. develops and sells software and cloud solutions for simulation, high-performance computing, data analytics, and artificial intelligence, serving customers in the United States and internationally. The company operates through Software and Client Engineering Services segments and also offers engineering services, consulting, implementation, and training across industries such as automotive, aerospace, manufacturing, financial services, government, and universities. Altair is a meaningful mid-cap software name with a market capitalization of about $9.6 billion and revenue of $665.8 million over the trailing twelve months. Recent results show improved profitability, with 2024 net income of $14.2 million versus a loss in 2023, while operating margin and profit margin remain modest at 5.8% and 2.1%, respectively. The stock also screens as expensive on trailing earnings, with a P/E ratio of 699.1 and price-to-sales of 14.5, suggesting investors are paying for growth and the companyā€™s simulation/AI software theme. Analyst coverage is neutral overall, with seven Hold ratings and a target price around $106, while the balance sheet shows net cash of $302.8 million at year-end 2024.

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šŸ’” Key Insights / Thesis
  • Altair shows a clear fundamental turnaround: FY2024 revenue rose to $665.8M from $612.7M in FY2023, gross profit expanded to $541.0M, and net income swung back to $14.2M from a loss of $8.9M, supported by positive EBITDA and stronger operating income.
  • Top-line momentum remains intact, with quarterly revenue growth of 12.3% YoY in the latest reported quarter; however, earnings growth was still sharply negative YoY, highlighting that profitability is improving but remains uneven quarter to quarter.
  • Margins remain modest for a software name: TTM operating margin is 5.8% and net margin is 2.1%, while ROA (0.8%) and ROE (1.8%) indicate the business is still generating limited returns on its asset and equity base.
  • Valuation looks demanding relative to current fundamentals: trailing P/E is 699.1x, forward P/E is 82.6x, price/sales is 14.5x, and EV/EBITDA is 115.7x, so the stock needs continued execution and margin expansion to justify the multiple.
  • Balance sheet liquidity is a key support: cash and equivalents were $561.9M at year-end 2024, net debt was negative at $302.8M, and free cash flow reached $140.0M, giving the company flexibility despite only modest earnings.
  • Near-term catalyst is earnings and estimate revision momentum, with FY2025 EPS estimated at $1.2633 rising to $1.525 for FY2026, but the current-year estimate is below the prior-year EPS and analyst coverage is muted, which tempers the setup.
  • Risks remain centered on valuation, earnings volatility, and leverage to sentiment: beta is 1.45, short interest is elevated at 14.2% of float with a 7.47 short ratio, and institutions own 92.5% of shares, leaving the name sensitive to any disappointment in execution.