NEW YORK ( TheStreet) -- Astec Industries (Nasdaq: ASTE) 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, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 51.93% to $16.03 million when compared to the same quarter last year. In addition, ASTEC INDUSTRIES INC has also vastly surpassed the industry average cash flow growth rate of -1.21%.
  • 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 1.35, which illustrates the ability to avoid short-term cash problems.
  • The revenue growth significantly trails the industry average of 45.3%. Since the same quarter one year prior, revenues slightly increased by 7.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Machinery industry average. The net income increased by 138.6% when compared to the same quarter one year prior, rising from -$15.46 million to $5.97 million.
  • ASTEC INDUSTRIES INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, ASTEC INDUSTRIES INC increased its bottom line by earning $1.42 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($1.64 versus $1.42).

Astec Industries, Inc. engages in the design, engineering, manufacture, and marketing of equipment and components used in road building, utility, and related construction activities worldwide. The company has a P/E ratio of 24.6, equal to the average industrial industry P/E ratio and above the S&P 500 P/E ratio of 16. Astec has a market cap of $790.9 million and is part of the industrial goods sector and industrial industry. Shares are up 8% year to date as of the close of trading on Wednesday.

You can view the full Astec Ratings Report or get investment ideas from our investment research center.
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