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Astec (ASTE) to Gain From Restructuring Efforts & Innovation
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On Jun 2, we issued an updated research report on Astec Industries, Inc. (ASTE - Free Report) . Despite the impact of the coronavirus pandemic, the company is poised to gain from cost-reduction actions, restructuring and reorganization moves in the current year. Launch of new products, efforts to grow its part sales volumes and international business will also aid growth.
Strategic Sourcing Initiative to Yield Savings
Astec‘s first-quarter 2020 adjusted earnings per share of $1.00 beat the Zacks Consensus Estimate of 46 cents by a wide margin of 117%. The bottom line also improved 54% from the prior-year quarter. The better-than-expected results were driven by the company’s restructuring initiatives taken in 2019 and the year so far, which offset the impact of lower revenues amid the coronavirus crisis.
Astec had been witnessing the weakening of demand for equipment and parts in all of its segments due to the pandemic. The company continues to implement actions to reduce expenses and conserve cash. These actions include hiring suspension (except for critical positions), reduction in workforce and cutting down discretionary spending, which will help sustain margins.
In addition, Astec anticipates savings from strategic sourcing improvement to grow through the balance of the year, as it completes the engineering validation of new vendors and components, and depletes inventory of the existing components and material. Astec’s fresh sales and operational planning procedures are leading to changes in its bill schedules. The company expects higher cash generation in the days to come, owing to better management of building equipment and controlling inventory to keep up with the demand.
The company also recently rolled out its strategy for profitable growth — Simplify, Focus and Grow. The implementation of the Sales and Operations Planning process will help Astec deal with the changing market scenario. The transition to a two-segment organizational structure ensures that its products are better aligned to end markets and customers. This move helps streamline the company’s reporting structure as it is in the process of selling the GEFCO business that effectively eliminates Astec’s exposure to the energy industry.
New Products, Part Sales to Boost Growth
Astec remains committed toward the improvement of its part sales volume over the long term. It also intends to improve competitive part sales and service sales. Majority of its customers in the United States have been experiencing a stable product market, and the company remains focused on selling the existing and new products. The company also continues to focus on growing its international sales through the establishment of newer regional international sales offices and fresh products for international customers. Astec remains well poised for the long term backed by global population growth, increased urbanization, and the need to repair the ageing infrastructure.
Strong Liquidity Position
Astec ended the first quarter of 2020 with total available liquidity of $186 million, which includes cash and cash equivalents of $44 million. Its total debt is 0.1% of total capital, much lower than its industry's 72%. Its times interest earned ratio is at 30.8, higher than the industry’s 7.0. Thus, with a solid balance-sheet and liquidity position, Astec seems well poised to sail through these turbulent times.
Share Price Performance
Shares of Astec have plunged 46.4%, in the past year, compared with the industry’s decline of 0.9%.
Axon has a projected earnings growth rate of 14.4% for 2020. The company’s shares have gained 15% in the past three months.
Broadwind Energy has an expected earnings growth rate of 174% for the current year. The stock has appreciated 6% over the past three months.
Energous has an estimated earnings growth rate of 17.3% for the ongoing year. The company’s shares have rallied 37% in three months’ time.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Astec (ASTE) to Gain From Restructuring Efforts & Innovation
On Jun 2, we issued an updated research report on Astec Industries, Inc. (ASTE - Free Report) . Despite the impact of the coronavirus pandemic, the company is poised to gain from cost-reduction actions, restructuring and reorganization moves in the current year. Launch of new products, efforts to grow its part sales volumes and international business will also aid growth.
Strategic Sourcing Initiative to Yield Savings
Astec‘s first-quarter 2020 adjusted earnings per share of $1.00 beat the Zacks Consensus Estimate of 46 cents by a wide margin of 117%. The bottom line also improved 54% from the prior-year quarter. The better-than-expected results were driven by the company’s restructuring initiatives taken in 2019 and the year so far, which offset the impact of lower revenues amid the coronavirus crisis.
Astec had been witnessing the weakening of demand for equipment and parts in all of its segments due to the pandemic. The company continues to implement actions to reduce expenses and conserve cash. These actions include hiring suspension (except for critical positions), reduction in workforce and cutting down discretionary spending, which will help sustain margins.
In addition, Astec anticipates savings from strategic sourcing improvement to grow through the balance of the year, as it completes the engineering validation of new vendors and components, and depletes inventory of the existing components and material. Astec’s fresh sales and operational planning procedures are leading to changes in its bill schedules. The company expects higher cash generation in the days to come, owing to better management of building equipment and controlling inventory to keep up with the demand.
The company also recently rolled out its strategy for profitable growth — Simplify, Focus and Grow. The implementation of the Sales and Operations Planning process will help Astec deal with the changing market scenario. The transition to a two-segment organizational structure ensures that its products are better aligned to end markets and customers. This move helps streamline the company’s reporting structure as it is in the process of selling the GEFCO business that effectively eliminates Astec’s exposure to the energy industry.
New Products, Part Sales to Boost Growth
Astec remains committed toward the improvement of its part sales volume over the long term. It also intends to improve competitive part sales and service sales. Majority of its customers in the United States have been experiencing a stable product market, and the company remains focused on selling the existing and new products. The company also continues to focus on growing its international sales through the establishment of newer regional international sales offices and fresh products for international customers. Astec remains well poised for the long term backed by global population growth, increased urbanization, and the need to repair the ageing infrastructure.
Strong Liquidity Position
Astec ended the first quarter of 2020 with total available liquidity of $186 million, which includes cash and cash equivalents of $44 million. Its total debt is 0.1% of total capital, much lower than its industry's 72%. Its times interest earned ratio is at 30.8, higher than the industry’s 7.0. Thus, with a solid balance-sheet and liquidity position, Astec seems well poised to sail through these turbulent times.
Share Price Performance
Shares of Astec have plunged 46.4%, in the past year, compared with the industry’s decline of 0.9%.
Zacks Rank & Other Key Picks
Astec currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Industrial Products sector are Axon Enterprise, Inc , Broadwind Energy, Inc. (BWEN - Free Report) and Energous Corporation (WATT - Free Report) , each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Axon has a projected earnings growth rate of 14.4% for 2020. The company’s shares have gained 15% in the past three months.
Broadwind Energy has an expected earnings growth rate of 174% for the current year. The stock has appreciated 6% over the past three months.
Energous has an estimated earnings growth rate of 17.3% for the ongoing year. The company’s shares have rallied 37% in three months’ time.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>