Astec (ASTE) Stock Scales 52-Week High: More Room to Run?
Shares of Astec Industries ASTE scaled a new 52-week high of $54.72 on Aug 30, before closing the session a tad lower at $54.41.
Astec has a market capitalization of $1.24 billion and a Zacks Rank #1 (Strong Buy), currently.
In the past six months, Astec’s shares have gained 15.4% compared with the industry’s 11.4% growth. The Industrial Products sector and the S&P 500 has gained 5.7% and 14.8%, respectively, in the same timeframe.
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Solid Results Year to Date
Astec reported record revenues of $350 million in the second quarter of 2023, which was up 10% year over year. In the first two quarters of 2023, the company’s revenues have increased 14.5% to $697.9 million. Astec has been benefiting from the favorable changes in volume, pricing and mix. Revenues in the Infrastructure Solutions and the Infrastructure Solutions segment increased 10% and 21%, respectively, in the first six months of 2023. The company has witnessed improvement in both equipment and parts sales.
Despite cost inflation and supply chain-related issues, Astec has delivered solid earnings growth in this year so far, as its pricing actions have helped it combat these headwinds. Adjusted earnings per share in the second quarter of 2023 was 87 cents which marked a substantial growth of 358%. In the first quarter, the company’s adjusted earnings per share had improved 119.5% year over year to 90 cents.
Earnings estimates for ASTE have moved up over the past 30 days. The Zacks Consensus Estimate for the ongoing quarter’s bottom line has moved up 28%. The consensus mark for 2023 has been revised upward by 16% and for 2024, by 17%. The favorable estimate revisions instill investors’ confidence in the stock.
The Zacks Consensus Estimate for Astec’s earnings per share for fiscal 2023 of $3.21 indicates year-over-year growth of 161%. The estimate of earnings per share of $3.50 for 2024 projects year-over-year growth of 9%.
Strategic Initiatives Bode Well
In March 2020, the company launched its OneASTEC business model, with the strategic pillars of Simplify, Focus and Grow (SFG). The operating model is instrumental in mitigating the current supply-chain challenges and logistic disruptions. These actions will drive greater efficiency, aiding the company in identifying multiple sources for critical components, strengthening the recruiting process and enabling it to meet growing customer demand.
This model is designed to better set strategic direction, define priorities and improve overall operating performance. The company will continue to gain traction from this model. Astec maintains its long-term targets of more than 12% EBITDA margin, earnings per share growth or more than 10% and greater than 14% return on invested capital.
Astec continues to execute its SFG strategy to improve profitability. Per the Simplify aspect, it continues to reduce organizational structure complexity and consolidate and rationalize its footprint and product portfolio. The Focus strategy strives to deliver operational excellence. Through the Grow aspect, the company continues to focus on innovation, developing aftermarket sales, global expansion and growing digital connectivity, among others.
Solid Balance Sheet Bodes Well
As of Jun 30, 2023, Astec had a total liquidity of $227 million. Its total debt-to-total capital ratio was 0.09, much lower than the industry’s 0.70. The times interest earned ratio was 7.6.
The company’s strong balance sheet enables it to continue to invest in boosting capacity to meet the strong demand levels, pursue strategic acquisitions and continue to return value to shareholders.
Other Stocks to Consider
Some other top-ranked stocks from the Industrial Products sector are Terex Corporation TEX, Caterpillar CAT and A. O. Smith Corporation AOS. TEX and CAT sport a Zacks Rank of 1 at present, and AOS has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Terex’s 2023 earnings per share is pegged at $1.61. Estimates were unchanged in the last 60 days. It has a trailing four-quarter average earnings surprise of 27.1%. TEX has gained 3% in the past six months.
Caterpillar has an average trailing four-quarter earnings surprise of 18.5%. The Zacks Consensus Estimate for CAT’s 2023 earnings is pegged at $19.82 per share. The consensus estimate for 2023 earnings has moved 11% north in the past 60 days. CAT’s shares have gained 18% in the last six months.
The Zacks Consensus Estimate for A. O. Smith’s 2023 earnings per share is pegged at $3.57. The consensus estimate for 2023 earnings has moved 5% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 10.5%. AOS has gained 10% in the last six months.
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