What Happened:

Shares of chip designer Allegro MicroSystems (NASDAQ:ALGM) jumped 5.87% in the after-market session after The company reported fourth-quarter revenue, gross margin, operating income, and earnings per share (EPS) ahead of analysts' estimates. As minor negatives, free cash flow missed, and inventory levels rose. However, revenue and EPS guidance for the next quarter came in ahead of expectations. The company highlighted some of the projected gains discussed during the recent analyst day presentation as it continued to deliver technology to companies in the growing electric vehicles and automation markets. Management added that "E-Mobility increased to 43% of fiscal year 2023 Automotive sales, up from 36% in fiscal year 2022." The combination of the quarter's outperformance, the guidance above expectations, and bullish management commentary made for a very good quarter.

What is the market telling us:

Allegro MicroSystems's shares are quite volatile and over the last year have had 17 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.

Allegro MicroSystems is up 35% since the beginning of the year, but at $39.67 per share it is still trading 17.3% below its 52-week high of $47.99 from March 2023. Investors who bought $1,000 worth of Allegro MicroSystems's shares at the IPO in October 2020 would now be looking at an investment worth $2,240.

Is now the time to buy Allegro MicroSystems? Access our full analysis of the earnings results here, it's free.