Astec Industries, Inc. (ASTE): what the price requires
At today's price, Astec Industries, Inc. (ASTE) is priced for today's economics sustained for ~6.0 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ASTE
Headline
| Field | Value |
|---|---|
| Ticker | ASTE |
| Company | Astec Industries, Inc. |
| Current price | $55.88/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 Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 5.1% |
| Operating margin today | 3.7% |
| Margin expansion implied | +1.4pp |
| Must persist for | 6.0y |
| Multiple paid | 31x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.1% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.9 years.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.08σ |
| cohort percentile (of 225 peers) | 70 |
| sustained it ~6 years at this level | 26% |
| implied end-window share | 0% |
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 | 6.03x | 4 | expensive |
| Earnings | 4.61x | 3 | expensive |
| Relative | 1.68x | 5 | expensive |
| Growth | 1.09x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.3%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $49.58 | 1.13x | yes | FCF base $0.0B, growth 12% (input: historical growth), terminal g 4.0%, WACC 7.4%, 6yr projection |
| DCF Exit Multiple | Growth | $66.91 | 0.84x | yes | Exit EV/EBITDA: 21.4x / 23.4x / 25.4x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $33.33 | 1.68x | yes | P/E 27.71x (blended: static sector reference 18x + trailing (TTM) 50x), scenarios: 22.9x / 27.7x / 32.6x (bear / base = reference held flat / bull), EV/EBITDA 15.42x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $12.00 | 4.66x | yes | BV/sh $29.16, ROE (TTM) 3.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $7.55 | 7.40x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $51.47 | 1.09x | yes | Rev $1.5B, growth 12% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.9x / 1.0x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $32.92 | 1.70x | yes | EPS $1.12, growth 29% (input: historical EPS growth), PEG=1.71 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $2.19 | 25.52x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.04B × (1−40%) / WACC 7.4% → EPV (no growth) (excluded from median) |
| Residual Income | Asset | $5.73 | 9.75x | yes | BV $29.16 + 5yr PV of (ROE (TTM) 3.8% − Kₑ 9.3%) × BV; BV grows 2.5%/yr |
| Graham Number | Asset | $27.11 | 2.06x | yes | √(22.5 × EPS $1.12 × BVPS $29.16) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $22.21 | 2.52x | yes | EBITDA $0.07B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $3.87 | 14.44x | yes | FCF $36.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $0.15 | 372.53x | yes | SBC-adj FCF $0.03B (FCF $0.04B − SBC $0.01B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | $36.14 | 1.55x | yes | EPS $1.12 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $2.17 | 25.75x | yes | BV $29.16 × (ROIC 0.5% / WACC 7.4%) (excluded from median) |
| P/Sales Sector | Relative | $158.85 | 0.35x | yes | Revenue $1.48B × sector P/S 2.5x |
| PEG Fair Value | Relative | $42.00 | 1.33x | yes | EPS $1.12 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $12.11 | 4.61x | yes | EPS $1.12 / 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 | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $316.0m |
| Net debt / NOPAT (after-tax) | 13.09x |
| Net debt / operating income (pre-tax) | 6.08x |
| Interest coverage | 2.8x |
| Share count CAGR (dilution) | 0.4% |
| Burning cash | no |
Bullet Takeaways
- Astec makes asphalt, concrete, and aggregate-processing equipment for road building and infrastructure, a cyclical capital-goods business with a high-margin parts stream that is about 31% of revenue.
- The counterintuitive signal is the order book: backlog jumped 36% to $549.2 million on federal funding, state budgets, data-center, and onshoring demand, even as the operating margin compressed to just 2.3%.
- That margin is the whole debate: at about 31 times operating income the price capitalizes a depressed margin at face value, so the stock works only if profitability recovers toward the backlog the company is building.
Bull Case
The most surprising number in the quarter was the backlog, and it points the opposite way from the depressed margin. Orders on the books grew 36.4% year over year to $549.2 million, with the Material Solutions segment alone adding about $110 million, driven by what management described as the stability of federal funding, healthy state budgets, and incremental demand from data centers and onshoring. A capital-goods maker with a backlog growing at that pace is not facing a demand problem; it is facing a profitability-conversion problem, and those are very different things. The future revenue is already contracted.
The operating leverage is the reason that backlog matters so much. Astec's margins are currently thin, an operating margin around 2.3% in the quarter, precisely because so many of its costs are fixed; the filing notes that "many of our costs are fixed and cannot be quickly reduced in response to decreased demand". That fixed-cost base cuts both ways: when volume from the backlog converts to revenue, incremental sales drop to profit at a high rate. A business at the bottom of its margin range with a rising order book is the textbook setup for operating leverage to lift earnings sharply as utilization improves.
The hidden quality is the parts business. About 31% of revenue comes from parts and components, the aftermarket stream that recurs as the installed base of Astec equipment wears and gets serviced, regardless of whether customers are buying new machines that year. That recurring layer is higher-margin and steadier than equipment sales, and it grows with every machine sold. Management maintained full-year 2026 adjusted EBITDA guidance of $170 million to $190 million, well above the trailing run rate, signaling confidence that the margin recovery is a matter of timing. The bull case is a cyclical infrastructure-equipment maker with a record backlog and a recurring parts annuity, priced on trough margins that the order book and operating leverage should lift.
Bear Case
The structural truth a holder has to face is that the price is paying a premium multiple for a margin that keeps disappointing. The operating margin compressed to 2.3% in Q1 2026, and management itself said profitability was lower than planned, citing tariffs, freight, and sales mix. The trouble with a thin margin is that it is fragile: at 2 to 4 cents of operating profit per revenue dollar, a small cost overrun or pricing slip wipes out a disproportionate share of the earnings. The stock trades at roughly 31 times that depressed operating income, which means the buyer is capitalizing a trough number at a high multiple and betting the recovery comes on schedule. It has not yet.
The cost pressures are not one-time, and several are outside management's control. Tariffs on imported inputs, freight inflation, and an unfavorable sales mix are the same forces that have pressured the entire capital-goods sector, and the filing adds currency exposure, noting that a strong dollar can make the company's products "not being cost-effective for customers" in international markets. A business that cannot quickly cut its fixed costs and cannot fully pass through input inflation is squeezed from both ends precisely when it is trying to convert a record backlog.
The balance sheet narrows the room for the recovery to slip. Net debt of $316 million sits at nearly six times the depressed operating income, and interest is covered only about twice over, which is uncomfortable for a cyclical business whose earnings are at a low ebb. The asset-based methods, anchored on a book value near $29 a share and a return on equity of just 3.8%, land far below the price, in the $7 to $12 range. That gap is the bear's point: the price is supported only by growth methods that assume the margin normalizes. If tariffs and freight persist, if the backlog converts at low margins, or if infrastructure demand cools after the current funding cycle, the stock is expensive on the earnings it actually produces, and the leverage means a stalled recovery hurts more, not less. Cheap-looking it is not; it is priced for a recovery that has not arrived.
Valuation
The price has to be understood against a depressed margin, because that is what makes the multiple look extreme. At about $56 (June 27, 2026) a share, Astec trades near 31 times company-wide operating income, which implies growth held near the firm's ceiling for roughly six years. Keep that approximate; it is one solve under fixed assumptions. The high multiple is not a statement that the business is a fast grower; it is the arithmetic of capitalizing a trough operating margin of under 4%. The real question the inversion poses is whether that margin recovers, because if it does, the same price represents a far lower multiple on normalized earnings.
The methods split exactly along that fault line. The asset-value family, anchored on a book value near $29 a share and a depressed 3.8% return on equity, lands lowest, in the $7 to $12 range. The peer-multiple family lands near $33. Only the growth family reaches the price: the cash-flow exit-multiple method lands near $67 and the future-market-cap model near $52, both by crediting a recovery in volumes and margins. When the static, current-earnings methods sit far below and only the forward methods reach the price, the price is a bet on the margin and the backlog converting, the kind of recovery premium the trough-earnings methods structurally cannot frame.
Solvency is the constraint that deserves real weight here. Net debt near six times depressed operating income with interest coverage around two times is elevated for a cyclical business at a low point in its earnings. The maintained full-year adjusted EBITDA guidance of $170 million to $190 million is the bridge the bull case relies on, well above the trailing run rate. The decisive question the valuation poses is whether the record backlog converts to that level of profitability, because at 31 times trough operating income the stock is priced for the recovery; the asset methods in the low double digits are the reminder of where value sits if the margin stays stuck.
Catalysts
First-quarter 2026 results paired strong orders with weak profitability. Net sales were $396.3 million and the backlog grew 36.4% to $549.2 million, led by a roughly $110 million increase in Material Solutions, but operating margin compressed to 2.3% and adjusted EBITDA was $30.3 million at a 7.6% margin, below plan. Management attributed the profit shortfall to timing effects and near-term cost pressures from tariffs, freight, and sales mix; the adjusted EBITDA figure is company-defined.
The forward catalysts are margin conversion and the demand backdrop. Management maintained full-year 2026 adjusted EBITDA guidance of $170 million to $190 million, a level that requires profitability to recover meaningfully from the first-quarter pace. The backlog strength rests on the stability of federal infrastructure funding, healthy state budgets, and incremental demand from data centers and onshoring. The metrics to watch over the coming quarters are whether the operating margin recovers as the backlog converts, whether tariff and freight pressures ease, and whether infrastructure demand holds after the current funding cycle. Each is a direct test of whether the trough margin the price is capitalizing is temporary or sticky.
Peer Cohorts (Per Segment, With Filing Citations)
Infrastructure Solutions (reported)
- TEX (Terex Corporation)
- (no filing in the citation store)
- ALG (ALAMO GROUP INC.)
- (no filing in the citation store)
- CAT (CATERPILLAR INC)
- (no filing in the citation store)
- DE (DEERE & CO)
- (no filing in the citation store)
- GVA (GRANITE CONSTRUCTION INC)
- (no filing in the citation store)
Materials Solutions (reported)
- TEX (Terex Corporation)
- (no filing in the citation store)
- ALG (ALAMO GROUP INC.)
- (no filing in the citation store)
- CAT (CATERPILLAR INC)
- (no filing in the citation store)
- DE (DEERE & CO)
- (no filing in the citation store)
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.
- 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
Q1 2026 results, May 2026 · FY2025 10-K · company financials