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Astec Industries, Inc. (ASTE - Analyst Report) recently surprised on the Zacks Consensus Estimate for the 6th quarter in a row. Sales also jumped 18.5% in Q2. This Zacks #1 Rank (strong buy) is undervalued with a price-to-sales ratio of just 0.8.

Astec is at the center of the global recovery. Headquartered in Tennessee, the company makes specialized equipment for building and restoring the world's infrastructure, including asphalt road building, pipeline and utility trenching and wood processing.

It operates four segments: aggregate processing and mining equipment; asphalt production equipment; mobile asphalt paving equipment; and underground boring, directional drilling and trenching equipment.

Expanding In Energy Services

On Aug 4, Astec announced it was acquiring all of the assets of the GEFCO and STECO divisions of Blue Tee Corporation for $26 million. GEFCO makes portable drilling rigs and related equipment for the water well, environmental, construction and shallow oil and gas explorers and producers.

STECO makes transfer and dump trailers for the solid waste, scrap processing, construction and demolition industries. It is a pioneer in the production of hydraulic dump trailers.

The acquisition is expected to enhance the company's current line of gas and oil drilling equipment and directional drills.

The deal is expected to close in the fourth quarter.

Astec Beat Again in the Second Quarter

On July 25, Astec reported its second quarter results and surprised on the Zacks Consensus Estimate by a penny. But a beat is a beat.

Earnings per share were 61 cents compared to the Zacks Consensus of 60 cents. The company made just 45 cents per share in the year ago quarter.

Revenue surged 18.5% to $247.8 million, up from $209.2 million last year. The quarter was boosted by international sales which climbed to 43.7% of total sales, up from 38.2% last year. International sales also jumped 26% to $108.3 million from $80 million in the year ago quarter.

Domestic sales were also higher, rising to $139.5 million from $129.2 million last year.

The backlog is showing no signs of slowing down. It grew to $217.1 million as of June 30 from $139.7 million, up 55.4%, from last year. Both domestic and international backlogs rose, with the domestic climbing 64.2% and international increasing 49.2%.

What Conditions Look Like

The company was pleased with its second quarter performance even as "tough" economic conditions continue to persist.

It is seeing caution in its domestic customers due to uncertainty over the deficits and the lack of a long-term highway bill.

Analysts Still Bullish

Astec didn't provide any 2011 guidance, but the analysts were bullish after the second quarter report.

The 2011 Zacks Consensus rose 8 cents to $2.04 per share. That is earnings growth of 44% as the company made just $1.42 in 2010. Not too shabby given the "tough" conditions.

Astec Is a Value Stock

Shares have come down sharply in the recent market sell off.

This has pushed the stock into value territory.

In addition to a P/S ratio under 1, which indicates value, Astec has a forward P/E of 14.9, which is just under the 15x cut-off I use for value stocks.

It also has a price-to-book of 1.3, well under the 3.0 limit many use for value.

Astec is one of those rare value stocks that also has double digit earnings growth.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.

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