A month has gone by since the last earnings report for Strattec Security (STRT Quick QuoteSTRT - Free Report) . Shares have lost about 7.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Strattec Security 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 latest earnings report in order to get a better handle on the important drivers.

Strattec Q4 Earnings Beat Estimates

Strattec reported adjusted earnings of $2.06 per share for the fourth quarter of fiscal 2026, unchanged year over year but above the Zacks Consensus Estimate of $1.36 by 51.47%. Pricing, restructuring savings and lower tariff costs helped cushion foreign-exchange pressure.

Revenue of $152 million slipped 0.1% year over year and beat the consensus mark of $147 million by 3.45%. Actual OEM production declined just 1.4%, better than the 3-4% drop STRT had anticipated. Canceled EV programs reduced quarterly sales by $3.2 million. That pressure was partly offset by $1.4 million of pricing benefits and certain customer inventory builds.

Key Tidbits

Fourth-quarter gross profit declined to $23.6 million from $25.4 million, while gross margin contracted to 15.6% from 16.7%. Restructuring savings of $0.8 million, a $0.9 million reduction in tariff charges and pricing were more than offset by $1.9 million of unfavorable foreign exchange and the absence of $1.3 million of prior-year incremental tooling gains.

Selling, administrative and engineering expenses increased 3% to $17.5 million, or 11.5% of sales, from $16.9 million, or 11.1%, a year ago. The quarter included $1.4 million of business transformation and executive transition costs, partly offset by lower engineering and professional fees and restructuring savings.

Cash from operations totaled $9.7 million in the quarter, compared with $30.2 million a year earlier, when working-capital reductions provided a significant benefit. Strattec ended fiscal 2026 with $108.2 million of cash and cash equivalents after paying down the remaining $1 million on its joint-venture credit facility.

The company repurchased 110,269 shares for $7.4 million during the quarter. Its board also authorized a new $40 million repurchase program.

STRT Sees More Room for Automation

The transformation program delivered about $6 million of savings in fiscal 2026 and $9.5 million since fiscal 2025. Strattec added 16 automated assembly stations, bringing automation to 9% of its assembly base, while freeing 91,000 square feet of Milwaukee production space and reducing manufacturing headcount by another 7%.

Management said simple automation projects generally carry paybacks of less than a year. The company is also building a future-looking commercial pipeline around its Permission, Motion and Hold product pillars and is targeting new automotive customers, although new programs typically take more than five years to reach production.

Strattec Braces for Softer Fiscal 2027 Production

For fiscal 2027, management expects North American automotive production to decline about 2%, while production at its three largest customers is projected to fall nearly 6%. The weakness is expected to be fairly consistent through the year, apart from normal second-quarter holiday shutdown seasonality.

Volume and foreign exchange are expected to pressure gross margin, though pricing, continuous-improvement actions and further cost reductions should offset part of the impact. Strattec continues to target an 18%-20% gross margin over the next few years, assuming the Mexican peso returns to its five-year average. It also expects a 24%-25% effective tax rate, about $10 million of operating cash flow per quarter and roughly $12 million of fiscal 2027 capital expenditures.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 5.34% due to these changes.

VGM Scores

Currently, Strattec Security has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of A on the value side, putting it in the top quintile for value investors.

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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Interestingly, Strattec Security has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Strattec Security is part of the Zacks Automotive - Original Equipment industry. Over the past month, Westport Innovations (WPRT Quick QuoteWPRT - Free Report) , a stock from the same industry, has gained 5.9%. The company reported its results for the quarter ended June 2026 more than a month ago.

Westport reported revenues of $2.72 million in the last reported quarter, representing a year-over-year change of -96.9%. EPS of -$0.53 for the same period compares with -$0.29 a year ago.

For the current quarter, Westport is expected to post a loss of $0.32 per share, indicating a change of +46.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Westport. Also, the stock has a VGM Score of F.