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Astec (ASTE) Down 11.7% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Astec Industries, Inc. (ASTE - Free Report) . Shares have lost about 11.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Astec Lags Earnings, Revenues Beat Estimates in Q1
Astec posted earnings of $0.65 per share in first-quarter 2017, dipping 16% year over year and also falling short of the Zacks Consensus Estimate of $0.68.
The maker of building, paving and mining equipment Astec, posted total revenue of $318 million, rising 14% from the $279 million reported in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $292 million.
Astec’s domestic sales jumped 8% year over year to $254 million. International sales also increased 46% year over year to $65 million.
Cost of sales was up 17% year over year to $243 million. Gross profit of $75.8 million advanced from $72 million reported in the year-ago quarter. Gross margin contracted 200 basis points (bps) year over year to 23.8%. Selling, general, administrative and engineering expenses went up 21% year over year to $53 million. Income from operations dipped 20% year over year to $22.7 million. Operating margin contracted 300 bps year over year to 7.1%.
Segment Performance
Revenues for the Infrastructure Group segment advanced 7.9% to $165 million from $153 million in the prior-year quarter. Segment profit declined 17% year over year to $18 million.
Total revenue for the Aggregate and Mining Group segment improved 8.8% year over year to $100 million. Profit declined 12% year over year to $8.4 million.
The Energy Group segment’s total revenue increased 59% to $52.5 million from $33 million in first-quarter 2016. The segment reported operating profit of $2.7 million, up from the loss of $0.2 million in the year-ago quarter.
Financial Position
Astec reported cash and cash equivalents of $55 million at the end of the first quarter, down from $62 million as of Mar 31, 2016. Receivables increased to $1567 million as of Mar 31, 2017, from $119 million as of Mar 31, 2016. Inventories went down to $372 million as of Mar 31, 2017, from $389 million as of Mar 31, 2016.
Astec’s total backlog decreased 18% year over year to $361.8 million. Domestic backlog dipped 25% year over year to $290 million as of Mar 31, 2017 and international backlog improved 40% year over year to $71.3 million from the prior year quarter. However, excluding all pellet plant backlogs, the company’s backlog increased $35.2 million or 14% compared to Mar 31, 2016.
Outlook
Astec’s Aggregate and Mining group is expected to improve in the domestic market for products targeted at traditional rock quarries while the mining market remains sluggish. In Energy group the company experienced an increase in quote and order activity in the oil and gas markets.
Given these positive developments, and positive order activity, Astec remains optimistic about 2017. While the increase in order activity is a good sign for the year ahead, the company still faces significant challenges on the U.S. exports given the strengthening U.S. dollar.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 7.8% due to these changes.
At this time, Astec's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Following the exact same course, the stock was allocated also a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Astec (ASTE) Down 11.7% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Astec Industries, Inc. (ASTE - Free Report) . Shares have lost about 11.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Astec Lags Earnings, Revenues Beat Estimates in Q1
Astec posted earnings of $0.65 per share in first-quarter 2017, dipping 16% year over year and also falling short of the Zacks Consensus Estimate of $0.68.
The maker of building, paving and mining equipment Astec, posted total revenue of $318 million, rising 14% from the $279 million reported in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $292 million.
Astec’s domestic sales jumped 8% year over year to $254 million. International sales also increased 46% year over year to $65 million.
Cost of sales was up 17% year over year to $243 million. Gross profit of $75.8 million advanced from $72 million reported in the year-ago quarter. Gross margin contracted 200 basis points (bps) year over year to 23.8%.
Selling, general, administrative and engineering expenses went up 21% year over year to $53 million. Income from operations dipped 20% year over year to $22.7 million. Operating margin contracted 300 bps year over year to 7.1%.
Segment Performance
Revenues for the Infrastructure Group segment advanced 7.9% to $165 million from $153 million in the prior-year quarter. Segment profit declined 17% year over year to $18 million.
Total revenue for the Aggregate and Mining Group segment improved 8.8% year over year to $100 million. Profit declined 12% year over year to $8.4 million.
The Energy Group segment’s total revenue increased 59% to $52.5 million from $33 million in first-quarter 2016. The segment reported operating profit of $2.7 million, up from the loss of $0.2 million in the year-ago quarter.
Financial Position
Astec reported cash and cash equivalents of $55 million at the end of the first quarter, down from $62 million as of Mar 31, 2016. Receivables increased to $1567 million as of Mar 31, 2017, from $119 million as of Mar 31, 2016. Inventories went down to $372 million as of Mar 31, 2017, from $389 million as of Mar 31, 2016.
Astec’s total backlog decreased 18% year over year to $361.8 million. Domestic backlog dipped 25% year over year to $290 million as of Mar 31, 2017 and international backlog improved 40% year over year to $71.3 million from the prior year quarter. However, excluding all pellet plant backlogs, the company’s backlog increased $35.2 million or 14% compared to Mar 31, 2016.
Outlook
Astec’s Aggregate and Mining group is expected to improve in the domestic market for products targeted at traditional rock quarries while the mining market remains sluggish. In Energy group the company experienced an increase in quote and order activity in the oil and gas markets.
Given these positive developments, and positive order activity, Astec remains optimistic about 2017. While the increase in order activity is a good sign for the year ahead, the company still faces significant challenges on the U.S. exports given the strengthening U.S. dollar.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 7.8% due to these changes.
Astec Industries, Inc. Price and Consensus
Astec Industries, Inc. Price and Consensus | Astec Industries, Inc. Quote
VGM Scores
At this time, Astec's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Following the exact same course, the stock was allocated also a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.