Astec Industries, Inc. (ASTE): what the price assumes
In the published model solve dated 2026-Q2, anchored at $43.39, Astec Industries, Inc. (ASTE) is priced for +17.5% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.
Generated: 2026-08-30 · Source: https://boothcheck.com/report/ASTE
Headline
| Field | Value |
|---|---|
| Ticker | ASTE |
| Company | Astec Industries, Inc. |
| Sector / Industry | Industrials |
| Current price | $43.39/sh |
| Composition | Equipment sales 63% / Parts and component sales 31% / Service and equipment installation revenue 3% / Used equipment sales 0% / Freight revenue 3% / Other 0% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 3.3% |
| Operating margin today | 3.4% |
| Margin compression (value-band) | -0.1pp |
| Implied growth | 17.5% |
| Multiple paid | 25x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 8.5% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -0.15σ |
| cohort percentile (of 225 peers) | 66 |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 7.11x | 5 | expensive |
| Earnings | 5.75x | 2 | expensive |
| Relative | — | 0 | — |
| Growth | 0.61x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.0%); the inversion above states its own rate.
Per-Model Detail (n=10)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $150.21 | 0.29x | yes | FCF base $0.1B, growth 19% (input: historical growth), terminal g 4.0%, WACC 7.1%, 6yr projection |
| DCF Exit Multiple | Growth | $71.70 | 0.61x | yes | Exit EV/EBITDA: 17.3x / 19.3x / 21.3x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | — | — | no | P/E 27.89x (blended: static sector reference 18x + trailing (TTM) 51x), scenarios: 22.7x / 27.9x / 33.1x (bear / base = reference held flat / bull), EV/EBITDA 14.19x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $9.20 | 4.72x | yes | BV/sh $29.93, ROE (TTM) 2.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $5.44 | 7.98x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $47.43 | 0.91x | yes | Rev $1.6B, growth 19% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.6x / 0.8x (bear / base = today's held flat / bull, cap 12x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $6.40 | 6.78x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.05B × (1−30%) / WACC 7.1% → EPV (no growth) |
| Residual Income | Asset | $4.03 | 10.77x | yes | BV $29.93 + 5yr PV of (ROE (TTM) 2.8% − Kₑ 9.3%) × BV; BV grows 1.8%/yr |
| Graham Number | Asset | $23.92 | 1.81x | yes | √(22.5 × EPS $0.85 × BVPS $29.93) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.07B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $1.97 | 22.03x | yes | FCF $32.4M / Kₑ 9.3% — zero-growth perpetuity (excluded from median) |
| SBC-Adj FCF Yield | Earnings | $0.01 | 4339.00x | yes | SBC-adj FCF $0.02B (FCF $0.03B − SBC $0.01B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | $0.71 | 61.11x | yes | EPS $0.85 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $6.10 | 7.11x | yes | BV $29.93 × (ROIC 1.4% / WACC 7.1%) |
| P/Sales Sector | Relative | — | — | no | Revenue $1.56B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $9.19 | 4.72x | yes | EPS $0.85 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Infrastructure Solutions | operating | enterprise | $857.4m | — | withheld | unresolved no unit value |
| Materials Solutions | operating | enterprise | $553.0m | — | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $314.8m |
| Net debt / NOPAT (after-tax) | 8.42x |
| Net debt / operating income (pre-tax) | 5.90x |
| Interest coverage | 1.8x |
| Share count CAGR (dilution) | 0.5% |
| Burning cash | no |
Bullet Takeaways
- Road-building budgets decide this business, and the order book says the budgets are still spending: backlog reached $514.1 million at the close of 2025 against $419.6 million a year earlier, an increase the 10-K puts at 22.5%.
- The gap between selling a machine and profiting from one is the issue, with only 3.7% of trailing revenue surviving to operating profit against the 9.2% earned by ALG on an almost identical revenue base.
- The next real read arrives with the second-quarter print on August 5, 2026, where the question is whether pricing actions have caught up with the tariff and freight costs that squeezed the March quarter.
Bull Case
Look at what management did with the money and the thesis assembles itself. During 2025 Astec drew a term loan, put its own cash beside it, and bought TerraSource, clearing out the old credit lines in the same motion. The 10-K sets out the sequence without ceremony: the proceeds went to "(i) finance the Acquisition, (ii) repay existing indebtedness of the Company and its subsidiaries" and to the transaction costs. That is a management team choosing scale in crushing and screening over an unencumbered balance sheet. Whether that was the right trade is the entire bull argument.
The early evidence is in the order book, which is the one number in this industry that cannot be talked up. Backlog "as of December 31, 2025 was $514.1 million compared to $419.6 million as of December 31, 2024, an increase of $94.5 million, or 22.5%. Backlog includes an incremental $53.2 million from the acquired TerraSource business in the Materials Solutions segment." Strip the acquisition out and the underlying book still grew. Materials Solutions sales reached $553.0 million in 2025 against $467.7 million in 2024, an 18.2% increase the filing attributes to volume, mix and pricing.
The factories are also getting better, slowly. The share of each sales dollar left after building the machine widened by roughly a point and a half in 2025, driven by pricing and mix, and partly given back to manufacturing inefficiencies of $17.8 million. Astec describes the remedy as "Simplifying our product offerings and production processes through the development of a rationalized global product portfolio executed through manufacturing centers of excellence." That is corporate for making fewer versions of the same machine in fewer places, which is exactly the lever a company with too many plants and too many product lines has available.
Here is why that matters more than it sounds. Astec turns 3.7% of trailing revenue into operating profit. ALG, running a business of almost identical size, turns 9.2% of revenue into operating profit; TEX, roughly four times larger, manages 5.5%; CAT manages 16.5%. Astec is the lowest of the set. On a revenue base near 1.5 billion dollars, closing even part of that distance is worth more to the earnings line than any plausible increase in units shipped. The bull case does not need Astec to sell more machines. It needs Astec to keep more of what it already sells.
That is also the reason the balance sheet decision is defensible rather than reckless. Borrowing to buy a business that adds to a rising order book, while the acquirer's own margin is the thing being fixed, gives management two independent routes to the same result. It only works if the second one lands.
Bear Case
The variable with the most leverage on this company is not one it controls, and not one its customers control either. It is whether public money is available to pave things. When the 10-K lists what could turn the construction cycle down, the first item is "a decrease in the availability of funds for construction", followed by a declining domestic economy. Asphalt plants and crushers are bought by contractors who win state and federal road work, and when that pipeline thins the orders do not taper. They stop, because a paving contractor can run last season's plant for another season and nobody notices.
Rates are the second lever, and Astec names it directly: "Changes in interest rates and the lack of credit and third-party financing arrangements for our customers could reduce demand for our products." A crusher is a financed purchase for most buyers. The company's own filing notes that global interest rates have stayed elevated relative to recent history, which pushes marginal buyers toward repairing what they own.
On the cost side the exposure runs the other way and is just as concentrated. The company "rel[ies] on a limited number of suppliers for steel and certain other raw materials, parts and components", and its read on 2026 is that domestic mills will manage output to hold pricing roughly where it is. That is a forecast, not a hedge. Tariff and freight costs already compressed margins in the March quarter of 2026, and a manufacturer running a 3.7% operating margin has almost no cushion between an input surprise and an operating loss.
Set that against what the price asks for. Today's quote capitalizes the whole company's trailing operating profit at about 31 times, and it only works if operating profit compounds at the fastest rate this business can fund from its own cash flow, sustained for about six years. The rate itself is within what Astec has recently delivered. The persistence is the stretch: of comparable fast compounders, only about 26% held the pace that long. Every percentage point the rate falls short adds close to two years to how long the run has to continue, and nobody buys a machinery company for a decade of uninterrupted execution.
The balance sheet is what converts a slow cycle into a genuine problem rather than a dull one. Net borrowings run about 6.1 times operating profit, against liquid assets of 76.9 million dollars, and operating profit covers the interest bill 2.8 times. Those ratios are survivable at today's margin and unpleasant a point below it. Meanwhile the share count has drifted slightly higher across the last four years rather than lower, so there is no buyback quietly improving the per-share arithmetic while the operating story works itself out.
Valuation
Thin margins make fat multiples. Astec converts 3.7% of trailing revenue into operating profit, and capitalizing a number that small produces a headline of roughly 31 times the company's operating profit at today's quote. The multiple on its own therefore tells you very little. What it is really measuring is how depressed the denominator is.
Run the price backwards and it asks for two separate things. The operating margin has to reach about 5.1%, against the 3.7% actually delivered on a trailing basis. And operating profit has to compound at the ceiling the business can fund out of its own cash flow, held there for about six years. The first ask is modest, roughly a point and a half. The second is where the difficulty lives: of companies that have compounded at that pace, only about 26% sustained it that long, and each percentage point of shortfall in the rate stretches the required run by close to two years.
The methods split, and only one side of the split reaches the price. The price sits roughly 68% above where the peer-multiple methods land, and multiples of that above the earnings-power methods, which capitalize what the company earns today with no improvement assumed. Reaching it takes a forward cash-flow projection, and even that leaves the price about 9% clear of where those methods land. When every backward-looking lens says one thing and only the forward-projecting one says another, the price is a bet on improvement rather than a description of anything already in the accounts.
The peer set makes the shape concrete. ALG runs a business of almost the same size, 1.63 billion dollars of revenue against Astec's roughly 1.48 billion, and converts 9.2% of it to operating profit. TEX, several times larger, manages 5.5%. CAT, the largest of the set, manages 16.5%. Astec's 3.7% is the bottom of that list, which is either the opportunity or the verdict depending on which way the next two years break.
The 2025 improvement was real but narrow, and worth reading closely because it is the raw material for the margin the price wants. Gross profit rose 14.1% on the year, which the 10-K attributes to "the impact of favorable pricing coupled with net favorable volume and mix of $81.6 million", partly offset by "manufacturing inefficiencies of $17.8 million". Roughly a fifth of the gain was consumed inside Astec's own factories. That line item is where the improvement has to come from, and it is the one the company has the most direct control over.
Solvency sets the boundary on how long the improvement has to arrive. Net borrowings run about 6.1 times operating profit, liquid assets total 76.9 million dollars, and interest is covered 2.8 times. None of that is distress. All of it means the margin repair is on a clock rather than an open-ended one, which is the substantive difference between this and a debt-free cyclical waiting for its cycle.
Catalysts
The March quarter set up the argument for the rest of the year. Revenue rose about a fifth year over year, while cost pressure narrowed profitability and earnings landed below consensus. Backlog reached $549.2 million, 36.4% ahead of the prior year, with another quarter of orders exceeding shipments. Demand, in other words, is not the problem this year. Conversion is.
Management held its full-year 2026 outlook after that print and told investors it expects pricing actions to offset tariff and freight pressure, with better margins in the June quarter. That is a specific, checkable claim rather than a general reassurance, which makes the next disclosure unusually informative.
Second-quarter results go out on August 5, 2026, before the market opens, with the call at 8:30 a.m. Eastern. Two things are worth isolating in it: whether the order book held above its March level, and whether the operating margin moved in the direction management promised. The first tells you about the road-building cycle. The second tells you whether the company can keep any of it.
Peer Cohorts (Per Segment, With Filing Citations)
Infrastructure Solutions (reported)
- TEX (Terex Corporation)
- FY2025 10-K: …utilities and emergency response fleets. 3rd Eye also offers connected compactors and balers. Soft-Pak provides back-office, route management, and customer relations software solutions to the waste and recycling industry. Combined with its in-cab tablet-based applications, Soft-Pak provides refuse fleets with…
- FY2025 10-K: …American parts and logistics operations are conducted through a combination of outsourced facilities and Terex managed operations. 5 We also provide service and support for aerial products through a network of service branches and field service operations. OTHER We may assist customers in their rental, leasing and…
- ALG (ALAMO GROUP INC.)
- FY2025 10-K: …our accounting and financial functions, and to comply with regulatory, legal, and tax requirements. We also depend on our information technology infrastructure for digital marketing activities and for electronic communications among our locations, personnel, customers, and suppliers. These information technology…
- FY2025 10-K: …hydro excavators. Its products are sold to municipalities, utilities and contractors through a nationwide distributor network. Super Products also operates a network of rental stores that provides short and long-term rental contracts for its products. 9 Rental customers are primarily contractors serving the…
- CAT (CATERPILLAR INC)
- FY2025 10-K: …parts and work tools. Inter-segment sales are a source of revenue for this segment. Resource Industries : A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates. Responsibilities include business strategy, product design, product management and…
- FY2025 10-K: …which is the impact of changes in the relative weighting of sales prices between geographic regions. 21. Resource Industries - A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates. Responsibilities include business strategy, product design,…
- DE (DEERE & CO)
- FY2025 10-K: …We have pursued a strategy of building and shipping such equipment as close to retail demand as possible. Consequently, to increase asset turnover and reduce the average level of field inventories throughout the year, production and shipment schedules of these product lines are normally proportionately higher in the…
- FY2025 10-K: …sales, technical, parts, and operator training for dealers and customers so that the features and technologies of our solutions are understood and utilized with the goal of maximizing customer productivity, jobsite safety, and uptime. Our construction products include excavators, motor graders, crawler dozers and…
- GVA (GRANITE CONSTRUCTION INC)
- FY2025 10-K: …integrated operations across Alaska, Arizona, California, Kentucky, Louisiana, Mississippi, Nevada, Oregon, Tennessee, Utah and Washington in addition to regional civil construction home markets in the Midwest, Florida and Texas. Our Construction segment also operates national businesses within the Tunnel division…
- FY2025 10-K: …storage and other power-related projects. The Materials segment focuses on production and delivery of aggregates, asphalt concrete, liquid asphalt and recycled materials for internal use in our construction projects and for sale to third parties. See Note 21 of "Notes to the Consolidated Financial Statements" for…
Materials Solutions (reported)
- TEX (Terex Corporation)
- FY2025 10-K: …utilities and emergency response fleets. 3rd Eye also offers connected compactors and balers. Soft-Pak provides back-office, route management, and customer relations software solutions to the waste and recycling industry. Combined with its in-cab tablet-based applications, Soft-Pak provides refuse fleets with…
- FY2025 10-K: …products that support renewable energy, and products that aid in the recovery of useful materials from various types of waste. The Company's products are manufactured in North America, Europe, and Asia Pacific and sold worldwide. Terex engages with customers through all stages of the product life cycle, from initial…
- ALG (ALAMO GROUP INC.)
- FY2025 10-K: …possible that supply chain disruptions, labor constraints, and other new and/or unanticipated effects, could cause delays in delivery or an inability to complete unfilled customer orders. The Company's orders are subject to cancellation at any time before shipment; therefore, a comparison of unfilled orders from…
- FY2025 10-K: …hydro excavators. Its products are sold to municipalities, utilities and contractors through a nationwide distributor network. Super Products also operates a network of rental stores that provides short and long-term rental contracts for its products. 9 Rental customers are primarily contractors serving the…
- CAT (CATERPILLAR INC)
- FY2025 10-K: …parts and work tools. Inter-segment sales are a source of revenue for this segment. Resource Industries : A segment primarily responsible for supporting customers using machinery in mining, heavy construction and quarry and aggregates. Responsibilities include business strategy, product design, product management and…
- FY2025 10-K: …in mining, heavy construction and quarry and aggregates. Caterpillar offers a broad product range and services to deliver comprehensive solutions for our customers. We develop and manufacture high productivity equipment for both surface and underground mining operations around the world, as well as provide select…
- DE (DEERE & CO)
- FY2025 10-K: …We provide our dealers with volume sales incentives, demonstration programs, and other advertising support to assist sales. We design our sales programs, including retail financing incentives, and our policies for maintaining parts and services availability with product warranties to enhance our dealers' competitive…
- FY2025 10-K: …We have pursued a strategy of building and shipping such equipment as close to retail demand as possible. Consequently, to increase asset turnover and reduce the average level of field inventories throughout the year, production and shipment schedules of these product lines are normally proportionately higher in the…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
FY2025 10-K · Astec conference call announcement, July 14, 2026 · Astec Q1 2026 results and earnings call, May 2026 · Astec Q1 2026 earnings call, May 2026 · Astec press release, July 14, 2026