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

In the published model solve dated 2026-Q2, anchored at $62.43, ALBANY INTERNATIONAL CORP. (AIN) is priced for +14.7% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/AIN

Headline

What The Price Assumes (Inversion)

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

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.2% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: n/a

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

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.

Families that call it expensive: Asset, Earnings

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=8)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

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

• The consolidated operating loss of $36.1 million in 2025 hides the actual shape of the business: Machine Clothing, three fifths of revenue, earned about $156 million at the operating line while Engineered Composites lost $145.1 million on program charges.

• Those charges were not a one-quarter surprise but a re-forecast of contracts that still have years to run: the filing records "a loss reserve adjustment of $98.0 million" representing the estimated full loss over the remaining eight-year life of the CH-53K program.

• The offset is that composites volume is growing while paper machine clothing shrinks, and the next read comes with second-quarter results, guided to revenue of $335 million to $345 million.

Bull Case

The single most useful number in the 2025 accounts is one that never appears in a headline. The company reported a consolidated operating loss of $36.1 million. Inside that, Machine Clothing produced roughly $156 million of operating income and Engineered Composites lost $145.1 million. One business is doing what it has always done. The other took a re-forecast on long-term contracts and swallowed years of expected losses in a single reporting period. Those are not the same problem, and only one of them recurs.

Machine Clothing is worth understanding on its own terms because it is nothing like an aerospace supplier. The 10-K describes the segment as "the world's leading producer of custom-designed fabrics and high-speed process belts critical in the manufacture of all grades of paper products", and the products are "customized, consumable products of technologically sophisticated design that utilize polymeric materials in a complex structure". Consumable is the operative word. Every belt on every paper machine wears out and gets replaced, on a schedule set by the machine rather than by the customer's capital budget. That is why the segment can lose revenue in a soft year and still convert an unusually large share of it into profit. Kadant, selling equipment into the same mills, turns 14.8% of its revenue into operating profit, and Kadant is a good business. Albany's clothing segment, on roughly three fifths of company revenue, produced about $156 million of operating profit last year, a comfortably higher conversion than that.

The composites side is not shrinking. In the first quarter of 2026 that segment produced $145.4 million of revenue against $114.1 million a year earlier, driven by higher volumes on the F-35, missile programs, the LEAP engine and the 787. The reason the volume is not yet visible in profit is disclosed and specific: the troubled CH-53K work is now carried at zero margin following the third-quarter 2025 actions. A contract booked at zero margin still consumes factory hours, but it no longer generates new accounting surprises, and the growth arriving underneath it does carry margin.

That distinction matters for what the segment could eventually look like. The composites cohort is not shy about what these economics can be: Howmet converts 26.7% of revenue into operating profit, HEICO 23.5%, Loar 21.1%, TransDigm 46.5%. Hexcel, whose own annual filing lists Albany International among the key customers of its Composite Materials segment, runs 9.5%. Albany's composites unit is nowhere near any of them today. But the programs it sits on, three-dimensional woven engine components and airframe structures, are exactly the kind of sole-source content that produces those margins once the development and ramp costs are behind it.

The balance sheet gives the company room to wait for that. Net borrowings of about $354 million sit at roughly 3.3 times through-the-cycle operating profit, which is real leverage but not the kind that forces decisions. The share count has come down about 2.8% a year over four years, so the company has been buying its own stock while absorbing the charges rather than issuing equity to cover them. The bull case does not require the composites business to become TransDigm. It requires paper machine clothing to keep doing what it does, and the composites contracts already signed to stop losing money.

Bear Case

The most durable advantage in this company is quietly dismantling itself, and the 10-K says so in plain language. Improvements in paper machine clothing, "while contributing to the papermaking efficiency of customers, have in some cases lengthened the useful life of our products and reduced the number of pieces required to produce the same volume of paper". Read that twice. The engineering that makes the product superior is the same engineering that reduces how much of it customers need to buy. A consumable that lasts longer is a smaller annuity. On top of that, the filing notes the market "has been characterized by continuous pressure to provide more favorable commercial terms", which is the polite description of customers using their own consolidation to push price.

The numbers follow the words. Machine Clothing operating profit fell from roughly $188 million in 2023 to about $184 million in 2024 to about $156 million in 2025, and revenue in the segment declined again in the first quarter of 2026, to $166.0 million from $174.7 million, on softness in Asia. The company has responded by closing engineered fabrics plants in Italy, France and the United Kingdom. Cost removal is the right response to structural volume decline; it is not a growth strategy, and it has a floor.

Meanwhile the segment being counted on to replace that profit spent 2025 proving it cannot yet forecast its own costs. The company recorded a reduction in the estimated profitability of long-term contracts "in the amount of $165.8 million, primarily related to our CH-53K, Boeing waste tank, F-35, and Joint Strike Fighter programs", including "a loss reserve adjustment of $98.0 million for greater than planned labor content and higher material inputs caused by inflation estimated for the duration of the contract". That is not a bad quarter. It is management restating what the next eight years of one program will cost, and doing it across four programs at once. Fixed-price long-term aerospace contracts transfer inflation risk to the supplier, and this is what that transfer looks like when it lands.

Which brings the argument to what the shares already assume. Because the trailing year is loss-making, the price has to be read against through-the-cycle profit, and on that basis it sits at about 23 times operating income. Getting from here to a return on that requires operating profit to compound at roughly 22.9% a year across a five-year stretch. Of comparable fast-growing companies, only about a third have managed that pace over that span. And this company's own operating profit has gone backwards over the last two years, not forwards. The near-term rate is achievable off a depressed base; the run of years is the part with almost no precedent behind it.

Leverage sharpens all of it. Net borrowings of about $354 million equal roughly 3.3 times operating profit measured through the cycle, and that ratio only exists on a normalized basis, because the actual figure last year was negative. When the methods used to value the business are laid side by side, one thing stands out: nothing based on assets, earnings power or projected cash flow reaches today's level. The only lens that does is a broad sales multiple borrowed from the wider sector, applied to revenue that is currently producing no profit at all. That is a thin plank to stand a valuation on.

Valuation

Any honest read of this valuation has to start by throwing out last year's earnings. The 2025 operating result was negative, not because the business stopped working but because one segment absorbed several years of expected contract losses in a single period. Valuing the company off that number would be arithmetic dressed as analysis. The workable frame is the company's own through-the-cycle profitability applied to today's revenue, and on that basis the market is paying about 23 times operating income.

What that multiple embeds is a demand for growth rather than a claim about the present. To earn a normal return from here, operating profit has to compound at roughly 22.9% a year for five years. Two things are worth holding side by side. The near-term rate is not outlandish for a company recovering off a suppressed base, and it is inside what Albany has delivered before. The persistence is the hard part: of comparable fast-growing companies, only about a third sustained that pace across a full five years. Each percentage point of cost of capital shifts the required growth rate by roughly seven points, so this is a solve with wide error bars, and it should be read as a description of the demand embedded in the price rather than a forecast.

Line the methods up and the disagreement is not subtle. Book value and the returns actually earned on it put the shares at a small fraction of today's level, because the trailing return on capital is close to nothing. Capitalizing normalized earnings with no growth assumed lands well below the price as well. Even the cash-flow methods, which are allowed to project, land under it. Only one lens reaches: a broad sector sales multiple applied to $1.2 billion of revenue. When the sole support for a valuation is a revenue multiple borrowed from a wider industry, the level is not being defended by this company's economics. It is being defended by the assumption that this company's economics will come to resemble the industry's.

The peer set makes the size of that assumption concrete. Howmet turns 26.7% of revenue into operating profit, HEICO 23.5%, Loar 21.1%, and even Hexcel, at the least profitable end of the composites cohort, manages 9.5%. Albany's composites segment lost money last year. The gap between where its aerospace unit sits and where the cohort sits is precisely the growth the price is asking for, and closing it means both finishing the loss-making contracts and winning replacement work at better terms.

The balance sheet underneath carries real debt without yet being stretched by it. Net borrowings of about $354 million work out to roughly 3.3 times operating profit measured through the cycle, a ratio that only exists on that basis because the actual trailing figure was negative, and interest coverage cannot be calculated from what the filings separately report. Set against that, the share count has fallen about 2.8% a year over four years, so the company has been retiring stock through the worst of it rather than raising it. That is the honest summary of the downside: there is time and there is cash generation, but there is not much cushion between a second bad program forecast and a balance sheet that starts to constrain choices.

Catalysts

First-quarter results on April 30, 2026 showed the two halves of the company moving in opposite directions, which is now the pattern to track. Consolidated revenue was $311.3 million against $288.8 million a year earlier. Engineered Composites supplied all of the growth and then some, rising to $145.4 million from $114.1 million, on higher volumes across the F-35, missile programs, the LEAP engine and the 787. Machine Clothing went the other way, $166.0 million against $174.7 million, with management pointing to weakness in Asia and particularly China. Reported earnings came in at $0.54 a diluted share on a GAAP basis, and $0.60 on the company's adjusted measure.

The CH-53K work is the item to watch inside Engineered Composites, and its status is now explicit: the program is carried at zero margin following the actions taken in the third quarter of 2025. That has two consequences worth separating. Revenue from it still shows up in the segment and dilutes reported profitability, which is part of why composites margins looked soft against a much larger revenue base. But the accounting downside has been taken, so incremental surprises would have to come from further cost overruns rather than from recognizing losses already anticipated. The filing also notes the company is engaging with the customer about the contract, which is where any recovery of value would come from.

Second-quarter guidance is specific enough to check against. Management pointed to consolidated revenue of $335 million to $345 million, split between Machine Clothing of $180 million to $185 million and Engineered Composites of $155 million to $160 million, with adjusted earnings of $0.70 to $0.80 a diluted share on a non-GAAP basis and an effective tax rate of 31.5%. The Machine Clothing range implies a sequential recovery from the March quarter that rests on Chinese paper inventories normalizing, and management has been careful to describe that timing as uncertain. If clothing lands at the low end while composites lands at the high end, the mix shift that has been running for two years accelerates, and the company becomes an aerospace supplier with a paper business attached rather than the reverse.

Peer Cohorts (Per Segment, With Filing Citations)

Machine Clothing (reported)

• HXL (HEXCEL CORP /DE/)
• FY2025 10-K: …including the required service temperature, mechanical performance, and rate of cure. We continually focus on innovation that will help our customers reduce their cycle time and increase their production through-put, including lower curing temperatures, faster curing times, and enhancing the flow characteristics of…
• FY2025 10-K: …and civilian helicopters globally. CH-53K is a growth program, including the composite helicopter blades and new helicopter programs in development which use Hexcel composites in prototypes. The blades include Composite Materials products such as carbon fiber, prepregs, and honeycomb core to improve blade…
• KAI (KADANT INC)
• FY2025 10-K: 6 to 2043, related to fluid handling and doctoring, cleaning, and filtration equipment. From time to time, we enter into licenses with other companies for products that serve the pulp, papermaking, converting, and paper recycling industries. Industrial Processing Segment We have numerous U.S. and foreign patents,…
• FY2025 10-K: …the packaging, paper and tissue, food, energy, defense and numerous other industrial sectors. The Flow Control segment consists of our fluid-handling and doctoring, cleaning, & filtration product lines. Fluid-Handling We develop, manufacture and market fluid-handling systems, equipment and integrated technologies…

Albany Engineered Composites (reported)

• HXL (HEXCEL CORP /DE/)
• FY2025 10-K: …the key customers and the major manufacturing facilities of the Composite Materials segment: COMPOSITE MATERIALS KEY CUSTOMERS Aernnova Daher Lockheed Martin Airbus Dassault Nordam Albany International Embraer Northrop Grumman Blue Origin FACC RTX The Boeing Company General Dynamics Safran Bombardier General Electric…
• FY2025 10-K: …produced as further discussed under the captions "Significant Customers", "Markets" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". Engineered Products The Engineered Products segment manufactures and markets composite structures and precision machined honeycomb parts…
• HWM (HOWMET AEROSPACE INC.)
• FY2025 10-K: …Ciudad Acuña (2) Engine Products; Fastening Systems Aerospace Castings/Rings and Fasteners Monterrey Forged Wheels Forgings Morocco Casablanca (2) Fastening Systems Fasteners United Kingdom Exeter (2) Engine Products Aerospace and Gas Turbine Castings and Alloy Glossop Engine Products Metal, Billets Ickles Engine…
• FY2025 10-K: Products Rings Barberton, OH Forged Wheels Wheels Machining Brecksville, OH (2) Engine Products Aerospace and Gas Turbine Castings Tooling Canton, OH (2) Engineered Structures Titanium Mill Products Cleveland, OH Engine Products; Engineered Structures; Forged Wheels Forgings, Aerospace and Gas Turbine Castings…
• TDG (TransDigm Group Incorporated)
• FY2025 10-K: …following table sets forth, for the periods indicated, certain financial information by reportable segment, which includes a reconciliation of EBITDA As Defined to consolidated income from continuing operations before income taxes (in millions): Fiscal Year Ended September 30, 2025 Power & Control Airframe…
• FY2025 10-K: …2025-09-30 0001260221 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CashFlowHedgingMember tdg:NetSalesMember 2024-10-01 2025-09-30 0001260221 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CashFlowHedgingMember tdg:InterestExpenseNetMember 2024-10-01 2025-09-30 0001260221…
• HEI (HEICO CORPORATION)
• FY2025 10-K: …misappropriation or obsolescence from occurring by developing new techniques and improving existing methods and processes, which we will continue on an ongoing basis as dictated by the technological needs of our business. We believe that, based on our competitive pricing, reputation for high quality, short lead time…
• FY2025 10-K: …which we design and manufacture for this market, a market that includes commercial satellites. Our customers for these products include satellite and spacecraft manufacturers. Electromagnetic Interference (EMI) and Radio-Frequency Interference (RFI) Shielding and Suppression Filters . The ETG designs and manufactures…
• LOAR (Loar Holdings Inc.)
• FY2025 10-K: …acquisition of LMB occurred as of January 1, 2024, net sales on a pro forma basis for the years ended December 31, 2025 and 2024 would have been $ 549.0 million and $ 445.2 million, respectively. Additionally, income before income taxes on a pro forma basis would have been $ 60.9 million and $ 0.1 million, for the…
• FY2025 10-K: , LMB provides the market with 2,000+ unique fans, blowers, motors and specialized rotating machines. See Note 2, Acquisitions, of the Notes to Consolidated Financial Statements for further information. Recent Developments On January 21, 2026, the Company acquired Harper Engineering for $250 million in cash. Founded…
• DRS (Leonardo DRS, Inc.)
• FY2025 10-K: …an aggregate capacity of $ 225 million. The receivables sold under the factoring facilities are without recourse for any customer credit risk and result in a true sale. Receivables are derecognized in their entirety when sold, and the Company's continuing involvement is limited to their servicing, for which the…
• FY2025 10-K: …Integrated Mission Systems 74,300 Owned 1200 Sherman Street, Dallas, TX Engineering, Office Advanced Sensing and Computing 73,646 Leased 645 Anchors Street, Ft. Walton Beach, FL Manufacturing, Engineering, Office Advanced Sensing and Computing 72,761 Owned 1240 Seesetown Rd., Sidman, PA Distribution, Warehouse…
• KRMN (Karman Holdings Inc.)
• FY2025 10-K: …and space programs, utilizing our current integrated design-to-production capabilities and industry partnerships to efficiently develop and deliver innovative solutions. Aided by long-term secular growth trends across our key end-markets and by our ability to meet the increasingly complex design challenges required…
• FY2025 10-K: …ability to offer customers integrated system solutions. Other competitors for these integrated system solutions include our prime contractor customers' ability and decision to insource as part of their "make vs. buy" determination. Despite different positioning, we do compete with piece part and subsystem providers…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

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.