A month has gone by since the last earnings report for Astec Industries (ASTE). Shares have added about 32.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Astec Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Astec's Earnings & Revenues Miss Estimates in Q4
Astec's fourth-quarter 2019 adjusted earnings per share of 36 cents missed the Zacks Consensus Estimate of 54 cents. The figure also declined 41% from the prior-year quarter, thanks to softer market conditions in North America.
Including one-time items, the company incurred loss per share of 81 cents in the fourth quarter, narrower than the loss per share of $2.08 posted in the year-ago quarter.
Astec reported revenues of $283.2 million in the quarter, down 10.7% from the year-ago quarter. Also, the top line missed the Zacks Consensus Estimate of $306 million. The company’s domestic sales decreased 15.5% year over year to $209.6 million, while international sales rose 7% year over year to $73.6 million.
Cost of sales went down 20% year over year to $255.8 million. Adjusted gross profit came in at around $60 million, down from the year-ago quarter’s $76 million. Gross margin was 21.2% in the reported quarter compared with the prior-year quarter’s 24%. Selling, general, administrative and engineering (SG&A) dropped 4% year over year to $52.5 million. The company reported adjusted operating profit of $7.4 million, which slumped 65% from the prior-year quarter’s $21.2 million.
Revenues for the Infrastructure Group segment declined 7.4% to $115.7 million from the year-ago quarter. The segment reported an adjusted EBITDA of $9.8 million compared with the $8.1 million recorded in the prior-year quarter.
Total revenues for the Aggregate and Mining Group segment went down 20.7% year over year to $91.9 million. The segment reported an adjusted EBITDA of $4.6 million, suggesting a year-over-year drop of 66%.
The Energy Group segment’s total revenues edged down 1.1%, year over year, to $75.1 million. The segment reported an adjusted EBITDA of $8.2 million, compared with $7 million in the year-ago quarter.
Astec reported cash and cash equivalents of $48.8 million in 2019, up from the prior year’s $25.8 million. Receivables declined to $124 million at the end of 2019, from the prior-year period’s $134 million. Inventories were $279 million as of 2019-end compared with $356 million as of 2018-end.
The company’s total backlog declined around 24% year over year to $263.7 million as of Dec 31, 2019. Backlog slid 22.1%, 43.3% and 6.9% in the Energy, Aggregate and Mining Group and Infrastructure Group, respectively. Domestic backlog dropped 25.4% year over year to $194.5 million at the end of 2019, and international backlog decreased to $69.2 million from last year’s $84.2 million.
Astec is actively aligning the business to meet the current demand. The company is progressing towards its strategy for profitable growth — Simplify, Focus and Grow. The company is on track to sell its GEFCO business. This will further simplify the organization, while strengthening financial position and deploy additional capital for strategic growth opportunities. Astec has also taken vital steps for restructuring the company and streamlining its business units, in a bid to increase internal transparency and improve the decision-making process.
Astec reported adjusted earnings per share of $1.55 in 2019, down from the prior year’s $2.94. Earnings also missed the Zacks Consensus Estimate of $1.71. Including one-time items, the company reported earnings per share of 98 cents, as against the loss of $2.64 per share posted in the previous year. Net sales were relatively flat at $1.17 billion, year over year. The top-line figure missed the Zacks Consensus Estimate of $1.19 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -56.65% due to these changes.
At this time, Astec Industries has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Astec Industries has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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