NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 17.0%. Since the same quarter one year prior, revenues rose by 15.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ASTE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
- ASTEC INDUSTRIES INC has improved earnings per share by 20.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ASTEC INDUSTRIES INC increased its bottom line by earning $1.74 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($2.20 versus $1.74).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Machinery industry average. The net income increased by 20.7% when compared to the same quarter one year prior, going from $10.14 million to $12.25 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Machinery industry and the overall market, ASTEC INDUSTRIES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
Astec Industries, Inc. engages in the design, engineering, manufacture, and marketing of equipment and components for road building, utility, and related construction activities worldwide. The company has a P/E ratio of 16.6, equal to the average industrial industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Astec has a market cap of $690 million and is part of the
industry. Shares are down 8.1% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.