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Astec (ASTE) Up 7.2% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Astec Industries, Inc. (ASTE - Free Report) . Shares have added about 7.2% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ASTE 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 drivers.

Astec Beats on Q1 Earnings, Misses Sales Estimates

Astec’s earnings per share in first-quarter 2018 jumped around 34% year over year to 87 cents. Earnings also beat the Zacks Consensus Estimate by a penny.

Astec reported total revenues of $326 million in the first quarter, up 2.2% from $318 million reported in the year-ago quarter. However, the revenue figure missed the Zacks Consensus Estimate of $339 million.

Astec’s domestic sales grew 6.5% year over year to $270 million. However, international sales decreased 14.7% year over year to $55.4 million.

Cost of sales rose nearly 2% year over year to $247 million. Gross profit came in at $78 million, up 3% from $75.8 million reported in the year-ago quarter. Gross margin expanded 20 basis points (bps) year over year to 24%.

Selling, general, administrative and engineering expenses slipped 2% year over year to $52 million. The company reported operating income of around $26 million compared with $23 million recorded in the prior-year quarter.

Segment Performance

Revenues for the Infrastructure Group segment dropped 11% to $147 million from $165 million in the year-ago quarter. The segment reported an operating profit of $14.9 million, down 18% from $18.2 million witnessed in the year-earlier quarter.

Total revenues for the Aggregate and Mining Group segment climbed 18% year over year to $119 million. Profit increased significantly around 55.6% year over year to $13 million.

The Energy Group segment’s total revenues jumped 12.8% year over year to $59.3 million. The segment reported operating profit of $4.6 million, surging around 69% from $2.7 million in the year-ago quarter.

Financial Position

Astec reported cash and cash equivalents of $41.9 million at the end of the first quarter, down from $55.4 million at the end of the year-ago quarter. Receivables decreased to $154 million as of Mar 31, 2018, from $156 million as of Mar 31, 2017. Inventories were at $411 million as of Mar 31, 2018, compared with $373 million as of Mar 31, 2017.

The company’s total backlog improved around 18% to $445 million as of Mar 31, 2018, from $378 million as of Mar 31, 2017. Backlog improved 38.6% and 35.8% in the Aggregate and Mining Group and Energy group, respectively. Backlog in the Infrastructure Group was up 4%. Domestic backlog improved 11.6% year over year to $341 million as of Mar 31, 2018, and international backlog advanced 44.5% year over year to $104 million at the end of the reported quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter

VGM Scores

At this time, ASTE has a subpar Growth Score of D. Its Momentum is doing a bit better with a C. The stock was also allocated a grade of C on the value side, putting it in the middle 20% 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.

Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Notably, ASTE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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