Astec’s stock price has taken a beating over the past six months, shedding 25.6% of its value and falling to $43.55 per share. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Following the drawdown, is this a buying opportunity for ASTE? Find out in our full research report, it’s free.
Why Does ASTE Stock Spark Debate?
Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.
Two Things to Like:
1. Long-Term Revenue Growth Shows Momentum
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Astec’s 8.5% annualized revenue growth over the last five years was decent. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Astec’s EPS grew at 12.6% compounded annual growth rate over the last five years, higher than its 8.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
One Reason to Be Careful:
Weak Backlog Growth Points to Soft Demand
Investors interested in Construction Machinery companies should track backlog in addition to reported revenue. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Astec’s future revenue streams.
Astec’s backlog came in at $601.1 million in the latest quarter, and over the last two years, its year-on-year growth averaged 4.1%. This performance was underwhelming and suggests that increasing competition is causing challenges in winning new orders. 
Final Judgment
Astec’s merits more than compensate for its flaws. After the recent drawdown, the stock trades at 10.7× forward P/E (or $43.55 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.
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