Astec Industries Inc (NASDAQ: ASTE)

Sector: Industrials Industry: Farm & Heavy Construction Machinery CIK: 0000792987
Market Cap 1.35 Bn
P/B 2.22
P/E 41.10
P/S 1.37
ROIC (Qtr) 7.15
Div Yield % 0.90
Rev 1y % (Qtr) 20.14
Total Debt (Qtr) 352.00 Mn
Debt/Equity (Qtr) 0.53
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About

Astec Industries Inc., often referred to as ASTE, is a prominent player in the construction and mining industries, manufacturing equipment and components for these sectors. The company operates through two primary segments: Infrastructure Solutions and Materials Solutions, as well as a Corporate and Other category. The Infrastructure Solutions segment, which accounts for around 70% of Astec's total revenue, is the company's largest segment. This segment focuses on designing, engineering, manufacturing, and marketing a comprehensive range of asphalt...

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Investment thesis

Bull case

  • Healthy cash reserves of 69.30M provide 2.44x coverage of short-term debt 28.40M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 1.11B provides 3.15x coverage of total debt 352M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 45.60M exceeds capital expenditure of 16.30M by 2.80x, indicating strong organic growth funding capability.
  • Retained earnings of 559.40M provide full 1.73x coverage of long-term debt 323.60M, indicating strong internal capital position.
  • Operating cash flow of 61.90M fully covers other non-current liabilities 38.10M by 1.62x, showing strong long-term stability.

Bear case

  • Operating cash flow of 61.90M barely covers its investment activities of (264.40M), with a coverage ratio of -0.23, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 69.30M against inventory of 500.80M, the 0.14 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 61.90M provides thin coverage of dividend payments of (11.90M) with a -5.20 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 69.30M provide limited coverage of acquisition spending of (248.50M), which is -0.28x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 82.30M show weak coverage of depreciation charges of 31.40M, with a 2.62 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Farm & Heavy Construction Machinery
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CAT Caterpillar Inc 483.60 Bn 124.96 8.76 43.33 Bn
2 DE Deere & Co 188.47 Bn 68.51 5.30 63.94 Bn
3 PCAR Paccar Inc 68.19 Bn 57.51 3.81 15.85 Bn
4 CNH CNH Industrial N.V. 16.63 Bn 27.85 0.93 27.17 Bn
5 AGCO Agco Corp /De 10.86 Bn 33.29 1.16 2.56 Bn
6 OSK Oshkosh Corp 10.81 Bn 16.71 1.04 1.10 Bn
7 TEX Terex Corp 4.57 Bn 20.69 0.84 2.58 Bn
8 ALG Alamo Group Inc 2.46 Bn 38.76 2.10 0.21 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.00 1.36
EV to Cash from Ops. EV/CFO 43.51 2.52
EV to Debt EV to Debt 3.82 36.19
EV to EBIT EV/EBIT 24.68 19.84
EV to EBITDA EV/EBITDA 18.13 11.98
EV to Free Cash Flow [EV/FCF] EV/FCF 68.12 10.22
EV to Market Cap EV to Market Cap 1.00 2.67
EV to Revenue EV/Rev 1.37 2.22
Price to Book Value [P/B] P/B 2.22 2.56
Price to Earnings [P/E] P/E 41.10 19.56
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 4.03 116,909.42
Dividend Payout Ratio % Div Payout % (Qtr) 24.60 51.44
Dividend per Basic Share Div per Share (Qtr) 0.52 1.01
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 26.10 11.55
Interest Coverage Int. cover (Qtr) 6.01 6.02
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 28.19 -4.60
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 25.32 27.84
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -2.90
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 127.50 22.54
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 226.95 2.73
EBIT Growth (1y) % EBIT 1y % (Qtr) 648.18 36.64
EBT Growth (1y) % EBT 1y % (Qtr) 68,500.00 2,839.65
EPS Growth (1y) % EPS 1y % (Qtr) 2,737.50 154.78
FCF Growth (1y) % FCF 1y % (Qtr) 342.72 -12.49
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 17.10 -11.09
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.01 1.00
Cash Payout Ratio Cash Payout (Qtr) 0.15 0.07
Cash Ratio Cash Ratio (Qtr) 0.22 0.46
Current Ratio Curr Ratio (Qtr) 2.58 2.51
Debt to Equity Ratio Debt/Equity (Qtr) 0.53 0.43
Interest Cover Ratio Int Coverage (Qtr) 6.01 6.02
Times Interest Earned Times Interest Earned (Qtr) 6.01 6.02
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.30 -7.57
EBIT Margin % EBIT Margin % (Qtr) 6.01 -11.88
EBT Margin % EBT Margin % (Qtr) 5.01 -14.87
Gross Margin % Gross Margin % (Qtr) 26.90 19.78
Net Profit Margin % Net Margin % (Qtr) 3.50 -16.22