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Astec (ASTE) to Report Q3 Earnings: What's in the Offing?

Zacks Equity Research
·5 min read

Astec Industries Inc. ASTE is scheduled to report third-quarter 2020 results on Nov 4, before the opening bell.

Q2 Results & Surprise History

In the last reported quarter, Astec delivered a year-over-year improvement in earnings despite a drop in revenues aided by restructuring initiatives. The company beat the Zacks Consensus Estimate on both counts.

The company beat estimates in two of the trailing four quarters and missed twice. It has a trailing four quarter earnings surprise of 124.3%, on average.
 

Astec Industries, Inc. Price and EPS Surprise

Astec Industries, Inc. Price and EPS Surprise
Astec Industries, Inc. Price and EPS Surprise

Astec Industries, Inc. price-eps-surprise | Astec Industries, Inc. Quote

Q3 Estimates

The Zacks Consensus Estimate for third-quarter total sales is pegged at $228 million, suggesting a decline of 11% from the prior-year quarter. The consensus mark for earnings per share currently stands at 11 cents, indicating a plunge of 35% from the year-ago reported figure. Notably, the earnings estimate has remained stable over the past 30 days.

Factors to Note

Astec’s backlog as of the end of second-quarter 2020 was $182 million, down 26.1% year over year thanks to the COVID-19 uncertainties. Astec, which is a manufacturer of equipment used in each phase of road building, from quarrying and crushing the aggregate to applying the asphalt, has been witnessing weakening of demand for equipment and parts in all of its segments, particularly in domestic markets and the third quarter was no exception to this trend. Given that 80% of Astec’s sales are generated from domestic markets, it is anticipated to get reflected in the third-quarter results.

Owing to late start to the construction season, few customers are utilizing existing equipment for the remainder of the construction season. While the nearly drought-free conditions across the country have impacted demand for water well drilling equipment, low oil prices led to lower demand for high pressure pump trailers and process seeders used in oil and gas production.

The coronavirus outbreak has also impacted customer spending. Demand in mining industries is likely to be lower due to mixed commodity prices. Spending in the construction sector also remains restrained. This might have weighed on Astec’s performance in the quarter to be reported. Meanwhile, the company continued to implement actions to reduce expenses and conserve cash, which include hiring suspension (except for critical positions), reduction in workforce and cutting down discretionary spending. These initiatives may have contributed to margin in the to-be-reported quarter.

Segment Expectations

In first-quarter 2020, Astec completed an internal reorganization into two segments — Infrastructure Solutions (which generated approximately 69% of the Astec’s total revenues) and Materials Solutions (approximately 31% of the total revenues). While the Zacks Consensus Estimate for the Infrastructure Solutions segment’s third-quarter sales stands at $148 million, the same for Materials Solutions segment is pegged at $82 million.

For the to-be-reported quarter, the Zacks Consensus Estimate for operating profit for the Infrastructure Solutions segment is pegged at $5.6 million. Meanwhile, the same for the Materials Solutions segment stands at $6.9 million.

What Our Model Unveils

Our proven model does not conclusively predict an earnings beat for Astec this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Astec is 0.00%.

Zacks Rank: The company currently carries a Zacks Rank of 3.

Price Performance

Shares of the company have gained 14.9% in the past three months, compared with the industry’s growth of 13.8%.

Stocks Poised to Beat Earnings Estimates

Here are some Industrial Products stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

AGCO Corporation AGCO has an Earnings ESP of +6.07% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flowserve Corporation FLS, currently a Zacks #2 Ranked stock, has an Earnings ESP of +2.56%.

ParkerHannifin Corporation PH has a Zacks Rank #2 and an Earnings ESP of +5.44%, at present.

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Astec Industries, Inc. (ASTE) : Free Stock Analysis Report
 
AGCO Corporation (AGCO) : Free Stock Analysis Report
 
Flowserve Corporation (FLS) : Free Stock Analysis Report
 
ParkerHannifin Corporation (PH) : Free Stock Analysis Report
 
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