Shares of Astec Industries (ASTE) have been strong performers lately, with the stock up 2.3% over the past month. The stock hit a new 52-week high of $78.76 in the previous session. Astec Industries has gained 27.3% since the start of the year compared to the 32.2% move for the Zacks Industrial Products sector and the 27.1% return for the Zacks Manufacturing - Construction and Mining industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on March 1, 2021, Astec Industries reported EPS of $0.56 versus consensus estimate of $0.42 while it missed the consensus revenue estimate by 12.56%.
For the current fiscal year, Astec Industries is expected to post earnings of $2.72 per share on $1.14 billion in revenues. This represents a 14.29% change in EPS on a 11.35% change in revenues. For the next fiscal year, the company is expected to earn $3.5 per share on $1.24 billion in revenues. This represents a year-over-year change of 28.68% and 8.76%, respectively.
Astec Industries may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Astec Industries has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 27.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 20.5X versus its peer group's average of 15.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Astec Industries currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Astec Industries passes the test. Thus, it seems as though Astec Industries shares could have a bit more room to run in the near term.
How Does Astec Industries Stack Up to the Competition?
Shares of Astec Industries have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Applied Industrial Technologies (AIT), AGCO (AGCO), and iRobot (IRBT), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 20% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Astec Industries, even beyond its own solid fundamental situation.
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