Why Is Astec Industries (ASTE) Up 4.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Astec Industries (ASTE). Shares have added about 4.3% in that time frame, underperforming 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 catalysts.
Astec Q3 Earnings Miss Estimates, Revenues Dip Y/Y
Astec reported a third-quarter 2023 adjusted loss per share of 1 cent, missing the Zacks Consensus Estimate of earnings of 64 cents. The company reported adjusted earnings of 28 cents in the year-ago quarter.
Including one-time items, the company reported a loss of 29 cents in the quarter under review against earnings per share of 3 cents in the year-ago quarter.
Revenues & Backlog
Astec’s revenues fell 3.8% year over year to a record $303 million in the quarter under review. The top line missed the Zacks Consensus Estimate of $330 million.
Domestic sales were down 7.9% year over year, while International sales were up 11.7% in the quarter.
Astec reported a backlog of $615 million at the third-quarter end, suggesting a year-over-year decline of 36.6%. Domestic backlog fell 37.2% year over year to $511 million, whereas international backlog declined 33.4% to $104 million.
We expected the total backlog to be $1,101 million in the quarter.
Operating Performance
Cost of sales decreased 6.5% year over year to $234 million in the third quarter. The gross profit was $70 million compared with the year-ago quarter’s $66 million. The gross margin moved up to 23% from the year-ago quarter’s 20.8%.
Selling, general, administrative and engineering (SG&A) increased 17% year over year to $74 million. The company reported an adjusted operating income of $3.1 million, reflecting a year-over-year fall of 67.4%. The adjusted operating margin was 1% compared with 3% in the prior-year quarter.
Adjusted EBITDA was $10 million in the reported quarter, down 39.8% from the year-ago quarter. The adjusted EBITDA margin was 3.3%, down from the prior-year quarter’s 5.3%.
Segmental Performances
Revenues in the Infrastructure Solutions segment were down 5.5% to $191 million from the year-ago quarter. We predicted the segment’s sales to be $218 million. The segment’s adjusted EBITDA was $16.5 million, down 6.3% from the prior-year quarter.
The Materials Solutions segment’s total revenues were $111 million in the quarter under review, reflecting a year-over-year fall of 1.2%. We expected sales of $130 million for the segment. The segment’s adjusted EBITDA was $8.3 million, down 36.6% year over year.
Financial Position
Astec ended the third quarter of 2023 with cash and cash equivalents of $74 million compared with $66 million at the 2022-end. At the end of third-quarter 2023, the company’s long-term debt was $122 million compared with $78 million at the end of 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -25.7% due to these changes.
VGM Scores
At this time, Astec Industries has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Astec Industries has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Astec Industries belongs to the Zacks Manufacturing - Construction and Mining industry. Another stock from the same industry, Caterpillar (CAT), has gained 4.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Caterpillar reported revenues of $16.81 billion in the last reported quarter, representing a year-over-year change of +12.1%. EPS of $5.52 for the same period compares with $3.95 a year ago.
Caterpillar is expected to post earnings of $4.76 per share for the current quarter, representing a year-over-year change of +23.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.9%.
Caterpillar has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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