Astronics Corporation (NASDAQ: ATRO) designs and manufactures electrical power and lighting systems for the aerospace industry. Products generate electricity for aircraft cabins and airframes and provide both interior and external lighting. Customers include manufacturers of business jets, military aircraft, missiles and commercial transports. The company's control panels are also used in a variety of military ground vehicles. Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT) and United Technologies (NYSE: UTX) are among the firm's major clients. Astronics ranked first on the Fortune Small Business Magazine 2008 list of America's 100 fastest-growing small public companies.
The firm surprised the Street earlier in the month, when it reported Q2 EPS of 60 cents and revenues of $47.9 million. Analysts had been looking for 31 cents and $42.1 million. Management also guided FY08 revenues to $175-$185 million, versus Street consensus of $169.49 million. The CEO commented, "While we set an all-time record for shipments in the quarter, the level of orders received was even stronger." Boenning & Scattergood subsequently reiterated its "market outperform" rating on the shares and boosted its price target to $30.
The stock 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.
Altogether, brokers now recommend the issue with two "strong buys", one "buy" and two "holds". Analysts see a 20% average annual growth rate, through the next five years. The ATRO P/E ratio (14.70), Price to Sales ratio (1.20), Price to Free Cash Flow ratio (15.12), Sales Growth rate (15.76%), Return on Assets (12.72%), Return on Investment (19.31%) and Return on Equity (28.05%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 38% of the outstanding shares. Over the past 52 weeks, the stock has traded between $12.30 and $54.20. A stop-loss of $21.40 looks good here.