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Bull Of The Day: Astronics (ATRO)

Zacks

Astronics Corp (ATRO) is a Zacks Rank #2 (Buy) that has a B for Value and a C for Growth. The Zacks Industry Rank is among the top coming in at 21 of 256 placing it in the top 8%. That alone has to spark your interest in this stock. That solid Zacks Rank coupled with a strong Industry

The company makes lighting and electronics that are used in cockpits. They sell in both the military and commercial markets as well as to private business jet aircraft. I did check to see their exposure to the Boeing 737MAX line, and they are not in the cockpit on that plane, but they do service the exterior lighting on that plane.

Earnings History

I see a good earnings history here, with the company beating the Zacks Consensus Estimate in 3 of the last four quarters. The most recent beat was a positive earnings surprise of 5.7%. Prior to that, the beats were 10.6% and 44%. So the level of beat is coming down, but still on the right side of the equation.


Estimate Revisions

The current quarter and next quarter have not seen any estimate revisions that would cause the Zacks Rank to change. There is some movement in the full year 2019 number as that has moved from $1.67 60 days ago to $1.71 at the current level. This implies that the second half of the year has seen some recent increases in estimates.

The 2020 number has held still at $1.94, but that implies some healthy earnings growth which is just what investors need to see.

Valuation

I really like the valuation here for ATRO. I see a forward PE of 18.5x and sales growth of the exact same level versus last year. The price to book of 2.6x is still keeping the value investors interested as they like that number below 3x. The price to sales of 1.28x shows there is some premium on their product, but really it shows plenty of room to grow.

Net margins have improved in each of the last three quarters, moving from 2.5% to 3.7% and were 5.8% after the most recent quarter. If ATRO can keep that number moving higher along with topline growth of 18% or more, then this stock will likely be reaching new highs in the not too distant future.

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