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On the contrary, shares of other industry players like Leonardo DRS (DRS - Free Report) , Curtiss-Wright Corp. (CW - Free Report) and Triumph Group (TGI - Free Report) have surged 63.8%, 59.6% and 10.8%, respectively, in the year-to-date period.
With ATRO still incurring expenses related to its refinancing program as well as the industry-wide supply-chain pressure persisting to date, investors may feel wary of the stock.
This might dissuade investors from further investing in ATRO or even encourage them to remove the stock from their portfolio. However, before making any hasty decision, let’s delve into what led to the company’s dismal year-to-date performance, whether there is any room for growth in the near future as well as risks (if any) to investing in the same.
What Led to ATRO Stock’s Recent Downfall?
With Astronics being a leading provider of advanced technologies to the global aerospace sector, Boeing remains a major customer for the company, with 10.5% of its total sales coming from this jet maker as of September 2024. To this end, it is imperative to mention that the production challenges that Boeing has faced recently, particularly related to its 737 Max jet program, along with other headwinds like the recent labor strike, posed a great risk to ATRO’s growth. The Boeing strike hurt ATRO’s revenues in the third quarter of 2024 by about $2 million and its bookings by approximately $7-$8 million.
Moreover, in October 2024, Lilium, an ATRO customer within the Aerospace segment, declared bankruptcy, and as a result, Astronics incurred charges of approximately $2.2 million.
These might have been the prime reasons why investors have lost confidence in this stock lately, as can be witnessed from its dismal year-to-date price performance.
Will ATRO Stock Recover Anytime Soon?
It is commendable to mention that despite facing the aforementioned challenges, Astronics was successful in generating a solid 25% revenue growth in the third quarter of 2024, backed by increased demand for inflight entertainment & connectivity products from airlines, progress on the Future Long-Range Assault Aircraft (“FLRAA”) program as well as the U.S. Marine Corps’ Handheld Radio Test Sets and the U.S. Army’s TS-4549/T programs.
Looking ahead, we may expect these trends to continue to boost ATRO’s operational results, buoyed by an impressive global air travel outlook for next year, steadily increasing defense budget funding by the United States and other nations, along with increasing hostility in the Middle East fueling demand for military programs like FLRAA.
A quick sneak peek at ATRO’s near-term earnings and sales estimates reflects the same.
ATRO’s Upbeat Earnings Estimates
The Zacks Consensus Estimate for ATRO’s 2024 sales reflects a year-over-year growth of 13%, while that for 2025 sales indicates an improvement of 7.6%.
A similar improving trend can also be witnessed in the 2024 and 2025 bottom-line estimates. Moreover, the upward revision observed in its earnings estimate indicates that investors are gaining confidence in this stock’s earnings capabilities.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
ATRO Stock Trading at a Discount
In terms of valuation, ATRO’s forward 12-month price-to-earnings (P/E) is 13.62X, a discount to its peer group’s average of 21.92X. This suggests that investors will be paying a lower price than the company's expected earnings growth compared to that of its peer group.
Image Source: Zacks Investment Research
Risks to Consider Before Choosing ATRO
While growth opportunities in the global aerospace and defense space remain immense, some challenges persist, which investors should consider before investing in Astronics. Notably, the primary challenges that ATRO continues to face include varying levels of supply-chain pressures from the residual impacts of the COVID-19 pandemic, material availability and cost increases, and a rise in the cost of labor and labor availability, particularly skilled labor. These factors might cause a delay in delivering finished products from ATRO, which, in turn, may hurt its operational results.
Should You Buy ATRO Stock Now?
To conclude, investors interested in ATRO may add this stock to their portfolio, considering its discounted valuation, upbeat near-term sales estimates and upward revision in earnings estimates.
Image: Bigstock
Astronics Stock Tumbles 10% This Year: What Should Investors Do Now?
Astronics Corporation’s (ATRO - Free Report) shares have plunged 9.5% in the year-to-date period, underperforming the Zacks Aerospace-Defense Equipment industry’s gain of 34% as well as the broader Zacks Aerospace sector’s loss of 0.02%. It also came short of the S&P 500’s return of 25.3% in the same time frame.
On the contrary, shares of other industry players like Leonardo DRS (DRS - Free Report) , Curtiss-Wright Corp. (CW - Free Report) and Triumph Group (TGI - Free Report) have surged 63.8%, 59.6% and 10.8%, respectively, in the year-to-date period.
With ATRO still incurring expenses related to its refinancing program as well as the industry-wide supply-chain pressure persisting to date, investors may feel wary of the stock.
This might dissuade investors from further investing in ATRO or even encourage them to remove the stock from their portfolio. However, before making any hasty decision, let’s delve into what led to the company’s dismal year-to-date performance, whether there is any room for growth in the near future as well as risks (if any) to investing in the same.
What Led to ATRO Stock’s Recent Downfall?
With Astronics being a leading provider of advanced technologies to the global aerospace sector, Boeing remains a major customer for the company, with 10.5% of its total sales coming from this jet maker as of September 2024. To this end, it is imperative to mention that the production challenges that Boeing has faced recently, particularly related to its 737 Max jet program, along with other headwinds like the recent labor strike, posed a great risk to ATRO’s growth. The Boeing strike hurt ATRO’s revenues in the third quarter of 2024 by about $2 million and its bookings by approximately $7-$8 million.
Moreover, in October 2024, Lilium, an ATRO customer within the Aerospace segment, declared bankruptcy, and as a result, Astronics incurred charges of approximately $2.2 million.
These might have been the prime reasons why investors have lost confidence in this stock lately, as can be witnessed from its dismal year-to-date price performance.
Will ATRO Stock Recover Anytime Soon?
It is commendable to mention that despite facing the aforementioned challenges, Astronics was successful in generating a solid 25% revenue growth in the third quarter of 2024, backed by increased demand for inflight entertainment & connectivity products from airlines, progress on the Future Long-Range Assault Aircraft (“FLRAA”) program as well as the U.S. Marine Corps’ Handheld Radio Test Sets and the U.S. Army’s TS-4549/T programs.
Looking ahead, we may expect these trends to continue to boost ATRO’s operational results, buoyed by an impressive global air travel outlook for next year, steadily increasing defense budget funding by the United States and other nations, along with increasing hostility in the Middle East fueling demand for military programs like FLRAA.
A quick sneak peek at ATRO’s near-term earnings and sales estimates reflects the same.
ATRO’s Upbeat Earnings Estimates
The Zacks Consensus Estimate for ATRO’s 2024 sales reflects a year-over-year growth of 13%, while that for 2025 sales indicates an improvement of 7.6%.
A similar improving trend can also be witnessed in the 2024 and 2025 bottom-line estimates. Moreover, the upward revision observed in its earnings estimate indicates that investors are gaining confidence in this stock’s earnings capabilities.
ATRO Stock Trading at a Discount
In terms of valuation, ATRO’s forward 12-month price-to-earnings (P/E) is 13.62X, a discount to its peer group’s average of 21.92X. This suggests that investors will be paying a lower price than the company's expected earnings growth compared to that of its peer group.
Risks to Consider Before Choosing ATRO
While growth opportunities in the global aerospace and defense space remain immense, some challenges persist, which investors should consider before investing in Astronics. Notably, the primary challenges that ATRO continues to face include varying levels of supply-chain pressures from the residual impacts of the COVID-19 pandemic, material availability and cost increases, and a rise in the cost of labor and labor availability, particularly skilled labor. These factors might cause a delay in delivering finished products from ATRO, which, in turn, may hurt its operational results.
Should You Buy ATRO Stock Now?
To conclude, investors interested in ATRO may add this stock to their portfolio, considering its discounted valuation, upbeat near-term sales estimates and upward revision in earnings estimates.
ATRO currently has a VGM Score of B, which is also a favorable indicator of strong performance. The company’s Zacks Rank #1 (Strong Buy) further supports our thesis. You can see the complete list of today’s Zacks #1 Rank stocks here.