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Astec Industries (ASTE) Up 5.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Astec Industries (ASTE - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Astec Industries 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 catalysts.

Astec's Earnings & Revenues Miss Estimates in Q3
 
Astec Industries reported third-quarter 2018 earnings per share of 30 cents comparing favorably with the loss of 12 cents per share in the prior-year quarter. However, earnings missed the Zacks Consensus Estimate of 59 cents. Notably, the bottom-line performance marked the company’s best third-quarter performance since 2012.
 
Astec reported total revenues of $257 million in the quarter ended September 2018, up 2% from $252 million posted in the year-ago quarter. However, the revenue figure missed the Zacks Consensus Estimate of $277 million. Astec’s domestic sales dipped 1% year over year to $194 million. However, international sales increased 12% year over year to $62 million.
 
Cost of sales declined 7% year over year to $198 million. Gross profit came in at $58 million, up 49% from the year-ago quarter. Gross margin expanded 720 basis points to 22.7%.
 
Selling, general, administrative and engineering expenses went up 12% year over year to $51 million. The company reported adjusted operating profit of $7 million against the adjusted loss of $6 million recorded in the prior-year quarter.
 
Segment Performance
 
Revenues for the Infrastructure Group segment declined 12% to $87 million from $99 million in the year-ago quarter. The segment reported an operating profit of $4.8 million, compared with operating loss of $12.2 million witnessed in the year-earlier quarter.
 
Total revenues for the Aggregate and Mining Group segment inched up 2% year over year to $102 million. Profit declined 6% year over year to $9 million.
 
The Energy Group segment’s total revenues jumped 26% year over year to $68 million. The segment reported operating profit of $3.3 million, down 26% from $4.5 million in the comparable period last year.
 
Financial Position
 
Astec reported cash and cash equivalents of $26 million at the end of the reported quarter, down from $66 million witnessed at the end of the year-ago quarter. Receivables increased to $128 million as of Sep 30, 2018, from $110 million as of Sep 30, 2017. Inventories were at $429 million as of Sep 30, 2018, compared with $399 million as of Sep 30, 2017.
 
The company’s total backlog declined around 20% to $309 million as of Sep 30, 2018, from $386 million as of Sep 30, 2017. Backlog improved 39% and 18% in the Aggregate and Mining Group and Energy group, respectively. Backlog in the Infrastructure Group plunged 48%. Domestic backlog decreased 28% year over year to $223 million as of Sep 30, 2018, and international backlog advanced 12% year over year to $85 million at the end of the reported quarter.
 
During the quarter under review, the company repurchased approximately 297,000 shares of its common stock for $14 million.
 
The company noted order activity has been strong since the end of the third quarter, especially for products targeted at infrastructure customers. Backed by a strong backlog and recent order growth, the company is likely to deliver improved results in the fourth quarter of 2018.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -23.66% due to these changes.

VGM Scores

At this time, Astec Industries has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was 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.

Outlook

Astec Industries has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.




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