ALBANY INTERNATIONAL CORP. (AIN): what the price requires

At today's price, ALBANY INTERNATIONAL CORP. (AIN) is priced for +21.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/AIN

Headline

FieldValue
TickerAIN
CompanyALBANY INTERNATIONAL CORP.
Current price$72.03/sh
CompositionMachine Clothing 60% / Albany Engineered Composites - ASC 15% / Albany Engineered Composites - Other AEC 26%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed9.2%
Operating margin (mid-cycle)9.1%
Margin expansion implied+0.1pp
Trailing margin (depressed year)-3.5%
Implied growth21.4%
Multiple paid23x mid-cycle operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.3pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.60σ
sustained it ~5 years at this level35%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple; asset-based/earnings-power/growth-DCF land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset3.13x3expensive
Earnings3.11x2expensive
Relative0.68x3justifies
Growth1.54x3expensive

Families that justify the price: Relative Families that call it expensive: Asset, Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.1%); the inversion above states its own rate.

Per-Model Detail (n=11)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$28.952.49xyesFCF base $0.1B, growth 0% (input: historical growth), terminal g 0.5%, WACC 8.1%, 5yr projection
DCF Exit MultipleGrowth$62.241.16xyesExit EV/EBITDA: 51.9x / 53.9x / 55.9x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$105.550.68xyesP/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$25.552.82xyesReference only (book value floor): BV/sh $25.55, ROE negative
Two-Stage Excess ReturnAsset$22.993.13xyesReference only (book value with convergence): BV/sh $25.55, ROE converges to ke
Discounted Future Market CapGrowth$46.791.54xyesRev $1.2B, growth 0% (input: historical growth; tapered), Terminal P/S: 1.4x / 1.7x / 2.0x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$24.512.94xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.13B × (1−33%) / WACC 8.1% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$6.4111.24xyesEBITDA $0.04B × sector EV/EBITDA 12.0x
FCF YieldEarnings$21.983.28xyesFCF $90.8M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$4.9214.64xyesBV $25.55 × (ROIC 1.6% / WACC 8.1%)
P/Sales SectorRelative$105.550.68xyesRevenue $1.21B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$354.0m
Net debt / NOPAT (after-tax)4.95x
Net debt / operating income (pre-tax)3.31x
Share count CAGR (buyback)-2.8%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 9.1%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

First-quarter 2026 revenue rose 7.8 percent to $311.3 million, carried entirely by the aerospace composites segment, where revenue jumped 27.4 percent to $145.4 million on the LEAP engine ramp and defense programs.

Trailing earnings are depressed by a large 2025 write-down in the composites segment, so the price is read against mid-cycle margins. On that basis the market is paying about 22 times normalized operating income, implying roughly 21 percent annual operating growth for five years.

The Machine Clothing business, the paper-fabric cash cow that is about 60 percent of revenue, is softening on Chinese paper overcapacity. The price assumes the composites ramp more than fills that gap.

Bull Case

The earnings trajectory is splitting in two, and the half that is accelerating is the one that matters for the forward case. First-quarter 2026 consolidated revenue rose 7.8 percent to $311.3 million, driven almost entirely by Albany Engineered Composites, where revenue increased 27.4 percent to $145.4 million on the continued LEAP engine ramp and broad-based defense program growth across F-35 and 787 work. This is the aerospace business inflecting from a long investment phase into a volume ramp. The segment makes structural composite parts for jet engines and airframes, a category with multi-year program visibility and high switching costs once a part is qualified onto a platform.

Underneath the ramp sits a genuine franchise in Machine Clothing. Albany's paper-machine fabrics are, in the filing's words, "customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex" structure (FY2025 10-K, accession 0001628280-26-012906), sold for "every grade of paper." Consumable, customized, and specified into each customer's machine is the profile of a sticky, high-margin business that throws off cash. That cash has historically funded the composites investment, and it still anchors the consolidated margin through the cycle, which is why the inversion reads the price against mid-cycle rather than trough earnings.

The forward guidance shows the ramp continuing. Management guided second-quarter 2026 revenue to between $335 million and $345 million with adjusted earnings per share of $0.70 to $0.80, a sequential step up that says the composites volume is building while the paper business stabilizes. The early-quarter equipment failure in Machine Clothing recovered faster than expected, and the company is relocating machinery for a durable fix. With the aerospace segment compounding at a high-twenties rate, a consumable paper-fabric franchise underneath, and net debt at a manageable few times mid-cycle operating income, the business has the forward economics that the trailing, write-down-depressed numbers obscure.

Bear Case

The price depends on a specific story holding: the aerospace ramp has to more than offset a weakening paper business, and aerospace programs are exactly where Albany has just been burned. The 2025 results carried a large charge in the composites segment, which the filing quantifies as a decrease in AEC revenue of $69.1 million and operating income of $165.8 million, "primarily driven by a few large complex programs" (FY2025 10-K, accession 0001628280-26-012906). That is the narrative dependency in one sentence: the same complex aerospace programs that are supposed to drive the bull case are the ones that produced a write-down and pushed the company to a trailing operating loss. Long-term composite contracts are recognized over time using estimates of progress and cost to complete, and when those estimates move, the profit on a program can swing hard.

Meanwhile the cash cow is shrinking. Machine Clothing revenue is declining, which management attributes to overcapacity in the Chinese paper market, where heavy investment in new machines has led to overproduction and limited visibility. Roughly 60 percent of the business sits in a segment facing a structural oversupply problem it does not control, and if paper demand and Chinese capacity stay unfavorable, the margin anchor that funds the composites ramp erodes. The price assumes the composites growth fills that hole, but it has to fill a hole that is itself getting deeper.

The valuation gives little room for the story to wobble. The asset, earnings-power and forward-growth frames all read the price as expensive; only the peer-multiple frame supports it. Inverting the price shows the market embedding about 21 percent annual operating growth on normalized margins for five years, a pace only about a third of comparable companies sustained over a window that long. Net debt sits at a few times mid-cycle operating income with interest expense not separately disclosed, so leverage is real even if modest. A company that just took a nine-figure charge on the exact programs that anchor its growth thesis, while its profit engine softens, is priced for execution that has to be cleaner going forward than it has been recently.

Valuation

Trailing earnings are depressed by the cycle and by a large 2025 composites charge, so the price is read against the company's own through-the-cycle margins on current revenue rather than the trough quarter. On that mid-cycle basis the market is paying about 22 times normalized operating income, which inverts to roughly 21 percent annual operating growth over a five-year stage. The asset, earnings-power and forward-growth methods all read the price as expensive; only the relative-multiple frame justifies it, and the blended central value across methods sits near $29 against the depressed trailing base.

The assumption is demanding but not implausible against Albany's own record, which is why the inversion labels it within range. The near-term growth rate is within what the company has recently delivered, given first-quarter composites revenue up 27.4 percent and second-quarter guidance stepping up to $335 to $345 million in revenue with adjusted earnings per share of $0.70 to $0.80. The stretch is in the duration, since only about a third of comparable fast-growers sustained a 21 percent pace across five years, and in the requirement that the aerospace ramp keep compounding while Machine Clothing stabilizes. The investment case is therefore a bet on mix: the high-growth composites segment must carry the consolidated result while the larger paper-fabric segment, facing Chinese overcapacity, holds its margin. If the LEAP and defense ramp delivers and the paper business steadies, the normalized earnings power justifies the price; if the complex aerospace programs stumble again or paper weakens further, the expensive read from the static methods becomes the relevant one.

Catalysts

The composites ramp is the central catalyst. First-quarter 2026 Albany Engineered Composites revenue grew 27.4 percent to $145.4 million on the LEAP engine ramp and defense programs including F-35 and 787, and second-quarter guidance of $335 to $345 million in revenue with adjusted earnings per share of $0.70 to $0.80 assumes the ramp continues. Watch composites revenue growth and, just as important, segment margin, because the 2025 charge showed how quickly a few large programs can move profitability.

Machine Clothing stabilization is the offsetting catalyst. The segment is declining on Chinese paper-market overcapacity, and the early-quarter equipment failure that the company is fixing by relocating machinery is a near-term operational item to track. Any sign that paper demand or Chinese capacity is improving would relieve pressure on the segment that funds the rest of the company; further deterioration would deepen the hole the composites growth has to fill.

Program execution and guidance revisions are the swing factors. Because long-term aerospace contracts are recognized on cost-to-complete estimates, any change to estimated profitability on the large programs is a direct catalyst in either direction, as the 2025 write-down demonstrated. Quarterly results and any update to full-year guidance remain the main proof points on whether the aerospace ramp is delivering clean profit and whether the paper business is finding a floor.

Peer Cohorts (Per Segment, With Filing Citations)

Machine Clothing (reported)

Albany Engineered Composites (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive AIN report on boothcheck