Albany currently trades at $80.77 per share and has shown little upside over the past six months, posting a small loss of 2.2%. The stock also fell short of the S&P 500’s 6.3% gain during that period.

Is now the time to buy Albany, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

We don't have much confidence in Albany. Here are three reasons why you should be careful with AIN and a stock we'd rather own.

Why Do We Think Albany Will Underperform?

Founded in 1895, Albany (NYSE:AIN) is a global textiles and materials processing company, specializing in machine clothing for paper mills and engineered composite structures for aerospace and other industries.

1. Long-Term Revenue Growth Disappoints

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Albany grew its sales at a sluggish 3.5% compounded annual growth rate. This was below our standard for the industrials sector.

2. Operating Margin Falling

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses–everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Analyzing the trend in its profitability, Albany’s operating margin decreased by 7.1 percentage points over the last five years. Even though its historical margin is high, shareholders will want to see Albany become more profitable in the future. Its operating margin for the trailing 12 months was 11.7%.

3. EPS Trending Down

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Sadly for Albany, its EPS declined by 3.7% annually over the last five years while its revenue grew by 3.5%. This tells us the company became less profitable on a per-share basis as it expanded.

Final Judgment

We cheer for all companies making their customers lives easier, but in the case of Albany, we’ll be cheering from the sidelines. With its shares underperforming the market lately, the stock trades at 21.4× forward price-to-earnings (or $80.77 per share). This valuation tells us a lot of optimism is priced in - you can find better investment opportunities elsewhere. We’d suggest looking at Google, whose cloud computing and YouTube divisions are firing on all cylinders.

Stocks We Like More Than Albany

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