Astec Industries (NASDAQ: ASTE) manufactures
specialized equipment for building and restoring infrastructure. The firm provides aggregate processing and mining equipment; asphalt production equipment; mobile asphalt paving equipment; and underground boring, directional drilling and trenching equipment. It also has a unit in the wood grinding and processing industry. Caterpillar (NYSE: CAT) is a major competitor.
The Street was surprised last week, when Astec reported Q4 EPS of 50 cents and revenues of $221 million. Analysts had been expecting 41 cents and $200.9 million. Management also guided FY08 EPS to $2.80-$2.95 ($2.77 consensus) and FY08 revenues to $1 billion ($930.05 million consensus).
The share price
popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with two "buys" and four "holds". Analysts see a 27% average annual growth rate, through the next five years. The ASTE P/E ratio (14.90), PEG ratio (0.54), Price to Sales ratio (0.97), Price to Book ratio (2.24), Sales Growth rate (36.29%), EPS Growth rate (72.41%), Return on Assets (11.82%) and Return on Investment (15.97%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 73% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $25.51 and $60.40. A stop-loss of $31.90 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in either of the stocks mentioned above.
Entrepreneur's Journal: Key steps for telesales success
The week in preview: Focus returns to earnings: Alcoa, Chevron, Family Dollar
Comfort Zone Investing: Survival of the fittest -- letting some banks fail
