Astec Attains 52-Week High - Analyst Blog

Astec Industries Inc.'s ASTE shares attained a 52-week high of $45.23 during intraday trading on Mar 21, finally closing lower at $45.07.

The company delivered a year-to-date return of about 17%, outperforming the S&P 500 return of 1.4%. Astec has a market cap of $1.03 billion. Average volume of shares traded over the last 3 months was approximately 102K. The company has long-term estimated earnings per share growth rate of 10%.

What is Driving Astec?

Shares of Astec have trended above $40 since the company reported upbeat fourth-quarter results and 2013 results on Feb 25. Prior to this, its shares had been range bound within $30 and $40.  

Earnings improved 50% to 36 cents per share from 24 cents in the year-earlier quarter, ahead of the Zacks Consensus Estimate of 31 cents. The company also delivered a 16% earnings surprise. The year-over-year growth was driven by successful operation of the new wood pellet plant in Georgia and strong performance of the aggregate processing equipment businesses. For full-year 2013, Astec reported earnings per share of $1.69, up 15% from $1.48 in 2012.

Astec continues to invest significantly in increasing its capacity, manufacturing new products as well as upgrading its existing products. Introduction of products such as stabilizers, new models at Roadtec, larger crushers at Telsmith, pump trailers and vertical drilling rigs will effectively contribute to sales growth. The revealing of 37 new products at ConExpo, the premier construction equipment trade show, will act as a catalyst.

The U.K. parliament has approved a tax credit for utilities to burn wood pellets as a source of fuel and switch from coal-fired plants to wood plants. This opens up a sizeable opportunity for Astec as the company is a supplier of all equipments used in wood pellet plants. Astec continues to receive new orders in addition to existing ones for wood pellet plants and these are expected to be significant contributors to its top line.

Other Stocks to Consider

Astec currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include The Manitowoc Company, Inc. MTW, Hyster-Yale Materials Handling, Inc. HY and Komatsu Ltd. (KMTUY), all of which carry a Zacks Rank #2 (Buy).