TECH WORLD: Astec Continues Solid Growth in Road Construction
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August 28, 2007
Astec Industries Incorporated (ASTE) designs, engineers, manufactures and markets equipment and components used primarily in road building and related construction activities. The company''s products are used in each phase of road building, from quarrying and crushing the aggregate to application of the road surface. It also manufactures certain equipment and components unrelated to road construction, including trenching, auger boring, directional drilling and industrial heat transfer equipment.
Astec Industries’ products are marketed both domestically and internationally. The company also manufactures and sells replacement parts for equipment in each of its product lines. It operates in four business segments: Asphalt Group, Aggregate and Mining Group, Mobile Asphalt Paving Group and Underground Group
Based in Chattanooga, Tennessee, the Astec Industries, Incorporated family of companies have become America’s leading manufacturer of equipment for aggregate processing, asphalt road building and pipeline and utility trenching. The company was founded in 1972 with the vision to apply creative thinking and state-of-the-art technology to a traditionally low-tech industry, bolstered by a corporate culture known for putting customer service first.
Fundamentals are very solid, with strong sales growth as well as their increased earnings projections. Net income for the second quarter of 2007 was $0.83 per diluted share compared to $0.56 per diluted share for the second quarter of 2006, for a 48.2 percent increase.
Revenues for the second quarter of 2007 were $226.4 million compared with $191.3 million for the second quarter of 2006, for an 18.3 percent increase. Domestic sales accounted for $156.6 million during the second quarter of 2007 compared to $137.8 million during the second quarter of 2006. International sales accounted for $69.8 million of revenues during the second quarter of 2007 compared to $53.5 million during the second quarter of 2006. The company reported net income of $18.5 million for the second quarter of 2007 compared to net income of $12.4 million for the second quarter of 2006, for an increase of 49.2 percent
Technically, the stock looks poised to move to the $67 per share area. The stock does have an options market, but can be thinly traded at times—so the trader would be well advised to use limit orders. Astec does not offer LEAPS, but the current cycle extends out to March of 2008.
Figure 1: Daily Elliot Wave-4 Buy Pattern for Astec Industries
Happy Trading.
Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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