Astec (ASTE) Hits 52-Week High On Strong Q1 & Stable View

Shares of Astec Industries, Inc. (NASDAQ:ASTE) reached a new 52-week high of $52.25 on May 17 before closing lower at $51.34. The stock price appreciation came on the back of strong first-quarter 2016 results, expected benefits from a sound backlog and new orders.

This Chattanooga, TN-based manufacturer of building, paving and mining equipment has a market cap of $1.2 billion. Average volume of shares traded over the last three months is approximately 164K. Astec has delivered a one-year return of over 20% and year-to-date return of around 26%.

Growth Drivers

Astec’s shares have been on an uptrend, rising nearly 11% since the company posted first-quarter results on Apr 26. Despite a year-over-year sales decline of 3.5%, the company reported earnings of 77 cents per share in the quarter, which marked a year-over-year increase of around 18.5%. Earnings also beat the Zacks Consensus Estimate.

Astec believes that results in the second quarter will remain unchanged sequentially. The current revenue outlook for the rest of 2016 reflects an upside of 5% on the back of an improved bottom-line performance. The outlook for the infrastructure group is promising with the passage of the highway bill and pellet plant. For the full year, the company expects a year-over-year improvement in results.

Astec’s total backlog as of Mar 31, 2016 was $432.8 million, up 48.7% year over year. The increase was mainly driven by its domestic backlog, which recorded a substantial 90.3% year-over-year improvement. This is primarily attributable to the passage of a new Federal highway bill, ongoing strong private market activity and the $122.5 million pellet plant order announced during the first quarter.

The company also received the remainder of the contracted payment on the first $30 million order. Astec had previously announced receipt of the initial $30 million order on Aug 20, 2015 to build, deliver and install the first production line of a new turnkey wood pellet production facility. The company plans to build and deliver the equipment in the additional order during 2016.

Moreover, Astec will benefit from acquisitions and the launch of new products. Extension of the long-term highway bill, further opportunity from pellet plants and strong infrastructure sales activity will also drive growth.

Astec currently has a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the sector include Alamo Group, Inc. (NYSE:ALG) , Altra Industrial Motion Corp. (NASDAQ:AIMC) and Alarm.Com Holdings, Inc. (NASDAQ:ALRM) . All these stocks carry a Zacks Rank #2 (Buy).


ASTEC INDS INC (ASTE): Free Stock Analysis Report

ALAMO GROUP INC (ALG): Free Stock Analysis Report

ALTRA INDUS MOT (AIMC): Free Stock Analysis Report

ALARM.COM HLDGS (ALRM): Free Stock Analysis Report

Original post

Zacks Investment Research