ASTRONICS CORP (ATRO): what the price requires

At today's price, ASTRONICS CORP (ATRO) is priced for today's economics sustained for ~11.5 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: 2026-07-19 · Source: https://boothcheck.com/report/ATRO

Headline

FieldValue
TickerATRO
CompanyASTRONICS CORP
Current price$72.06/sh
CompositionAerospace - Electrical Power & Motion 48% / Aerospace - Lighting & Safety 24% / Aerospace - Avionics 14% / Aerospace - Systems Certification 3% / Aerospace - Structures 2% / Aerospace - Other 1% / Test Systems 8%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed6.2%
Operating margin today7.7%
Margin compression implied-1.5pp
Must persist for11.5y
Multiple paid46x operating income

The operating-margin requirement is derived from the framework's value band at year 10, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.4% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.1 years.

Reconcile: at the x-ray's 9.3% required return this reads ~9.2 years; the models below use their own rates.

How unusual the bet is: high

ReferenceValue
vs own history+0.21σ
cohort percentile (of 225 peers)88
sustained it ~10 years at this level14%
implied end-window share0%

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.

FamilyMedian price/FVModelsReads
Asset4.67x4expensive
Earnings4.72x2expensive
Relative2.04x5expensive
Growth1.18x3expensive

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 8.2%); the inversion above states its own rate.

Per-Model Detail (n=14)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$8.738.25xyesFCF base $0.0B, growth 9% (input: historical growth), terminal g 4.0%, WACC 8.2%, 6yr projection
DCF Exit MultipleGrowth$65.121.11xyesExit EV/EBITDA: 25.7x / 27.7x / 29.7x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$43.571.65xyesP/E 33.61x (blended: static sector reference 22x + trailing (TTM) 61x), scenarios: 28.1x / 33.6x / 39.1x (bear / base = reference held flat / bull), EV/EBITDA 18.11x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$12.835.62xyesBV/sh $4.23, ROE (TTM) 28.1%, ke 9.3%
Two-Stage Excess ReturnAsset$22.813.16xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$60.981.18xyesRev $0.9B, growth 9% (input: historical growth; tapered), Terminal P/S: 2.6x / 3.1x / 3.6x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$11.306.38xyesEPS $0.94, growth 2% (input: historical EPS growth), PEG=30.35 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.017205.50xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.02B × (1−21%) / WACC 8.2% → EPV (no growth) (excluded from median)
Residual IncomeAsset$19.363.72xyesBV $4.23 + 5yr PV of (ROE (TTM) 28.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$9.477.61xyes√(22.5 × EPS $0.94 × BVPS $4.23) — Graham's conservative floor
EV/EBITDA RelativeRelative$31.652.28xyesEBITDA $0.11B × sector EV/EBITDA 14.0x
FCF YieldEarnings$0.017205.50xyesFCF $24.0M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings$0.017205.50xyesSBC-adj FCF $0.02B (FCF $0.02B − SBC $0.01B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings$30.392.37xyesEPS $0.94 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$2.1034.31xyesBV $4.23 × (ROIC 4.1% / WACC 8.2%) (excluded from median)
P/Sales SectorRelative$46.401.55xyesRevenue $0.89B × sector P/S 2.0x
PEG Fair ValueRelative$35.322.04xyesEPS $0.94 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$10.187.08xyesEPS $0.94 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$323.1m
Net debt / NOPAT (after-tax)6.00x
Net debt / operating income (pre-tax)4.74x
Share count CAGR (dilution)4.6%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

The balance sheet tells the recovery story in reverse. Astronics carries roughly $335 million of gross debt against barely $12 million of cash, net debt around three and a half times trailing operating income, which a few years ago would have looked precarious for a company emerging from the pandemic collapse in air travel. What makes that leverage a feature rather than a flaw now is what sits against it: a record backlog of $734 million and a book-to-bill ratio of 1.26, meaning the company is booking new orders faster than it ships them. The debt funded the company through the downturn, and the order book is the evidence that the downturn is over. Management is confident enough to raise full-year guidance and continue investing into the ramp.

The operating leverage in the model is dramatic because the fixed cost base built during the lean years is now spread across rising volume. First-quarter revenue rose to $230.6 million, the second-highest quarterly total in the company's history, gross margin expanded to 32.6% from 29.5%, and net income climbed to $25.5 million from $9.5 million a year earlier, lifting diluted earnings per share to $0.67 from $0.26. The 10-K shows the trend across the full year: Aerospace segment sales of $797.3 million were up 12.8%, with the Commercial Transport market growing 14.2%. When a content supplier with high fixed costs sees volume recover, margins expand faster than revenue, which is exactly what the numbers show.

The positioning gives the recovery a long runway. Astronics sells content that goes on aircraft and grows with both build rates and the amount of electrical and electronic equipment each new plane carries. The 10-K notes its exposure to "in-flight entertainment suppliers and global airlines" and to the satellite-communications industry, which is being reshaped by low-earth-orbit constellations, an area where new connectivity hardware creates fresh content opportunity. The Test Systems business adds a second, less cyclical engine tied to wireless and radio testing. With a 28% return on equity reflecting the operating leverage and a backlog that provides a year of visibility, the bull case is a leveraged aerospace-content supplier early in a multi-year build cycle, where the debt taken on to survive becomes the lever that amplifies the recovery.

Bear Case

The variable with the most leverage over Astronics is the aerospace build cycle, and it is one the company does not control. The order book is strong today, but it is firm orders, not delivered hardware, and aircraft production schedules at Boeing and Airbus have repeatedly slipped. Astronics is a content supplier deep in the supply chain, so any pause in airframe production, any delay in a major program, or a softening in airline capital spending flows directly into its shipments. The price assumes the build cycle runs steadily for years, and the history of aerospace is that it does not move in straight lines. A company with this much operating and financial leverage feels a production downturn more sharply than a debt-free peer, because the same fixed-cost base that magnifies the upside magnifies the downside.

The second exposure is specific and quantified: litigation. Astronics is contending with an intellectual-property case in Germany involving Lufthansa Technik, having paid penalties to date and carrying a reserve of about $17.2 million against the remaining estimated damages, with proceedings expected to conclude in 2026. The 10-K notes the company's reliance on defending its own intellectual property, "both internally developed and acquired, in order to maintain a competitive advantage," and that in some supply arrangements its subsidiary "has indemnified its customers from liability arising from such matters," which can expand the company's exposure beyond its own direct liability. Litigation outcomes are binary and hard to handicap, and a worse-than-reserved result would hit a balance sheet that has little cash cushion.

The valuation prices the recovery generously. Against the families of method, the asset-value, earnings-power, and peer-multiple lenses all land well below today's $80.58 (June 27, 2026), and only the forward-growth methods reach it. Inverted, the price pays roughly 51 times company-wide operating income and embeds operating growth held near its self-funding ceiling for about 13 years, a persistence history says only about 14% of fast-growers sustained even ten years. The reason the multiple looks so high is partly that trailing earnings are still climbing off a depressed base, so the forward picture is better than the trailing ratio, but even crediting the ramp, the static methods provide no support near the price. The share count is also growing about 5% a year, diluting the per-share recovery. The bear case is straightforward: this is a leveraged, cyclical content supplier trading at a growth multiple on recovering earnings, with a live litigation overhang, and if the aerospace build cycle stalls or the German case lands badly, the price has a long way down to where the static methods sit.

Valuation

The price is an aerospace-recovery bet carried to an aggressive conclusion. At $80.58, Astronics trades at roughly 51 times company-wide operating income, a level that only resolves if operating profit compounds near its self-funding ceiling for about 13 years. That is a demanding duration, and history says only about 14% of fast-growers sustained that pace even ten years. The mitigating point is that trailing earnings are still recovering from the pandemic-era trough, so the denominator is depressed and the forward multiple is lower than the trailing one. But even on a recovering earnings base, the price sits above what the standard methods support.

The disagreement among the families is uniform and is the signal. The asset-value methods, anchored on a thin book value near $4.23 a share, land in the teens to low $20s, because the company's accounting net worth is small relative to its market value. The earnings-power methods, capitalizing the depressed normalized profit, land near zero, a mechanical result of averaging in the loss years and reflecting how cyclically suppressed the through-cycle earnings figure is. The peer-multiple methods, blending an aerospace-sector price-to-earnings near 22 times against the elevated trailing multiple, reach the mid-$40s. Only the forward-growth methods, which extend the recovering revenue at a generous rate, reach the price. When only the growth family reaches it, the price is a durability premium the static frames structurally cannot price, a bet that the aerospace content cycle runs long and Astronics compounds through it. The earnings-power figure being so low is the most important caveat: it says the market is paying entirely for the recovery to be durable, with no support from the company's demonstrated through-cycle earnings.

Solvency is where the bet carries real risk, because Astronics is leveraged into it. The company holds roughly $335 million of gross debt against just under $12 million of liquid assets, leaving net debt around three and a half times trailing operating income. Interest coverage looks comfortable on the recovering earnings, but the cash cushion is minimal, which matters because of the live German litigation and its roughly $17.2 million reserve, and because a downturn in aircraft production would compress the earnings that service the debt. The share count is also growing about 5% a year. The buyer at today's price is underwriting a long, steady aerospace upcycle on a leveraged balance sheet with a litigation overhang, paying a growth multiple for earnings that are still in recovery. Published analyst targets bracket the current price, with a median in the low $90s and a high above $100, crediting the backlog and the recovery momentum more than the static methods do.

Catalysts

The first quarter of 2026 was a strong recovery print. Revenue rose to $230.6 million, the second-highest quarterly total in company history, gross margin expanded to 32.6% from 29.5%, and net income climbed to $25.5 million from $9.5 million, lifting diluted earnings per share to $0.67 from $0.26. The standout was the order book: record bookings of $290 million produced a record backlog of $734 million and a book-to-bill of 1.26, with about 81% of the backlog expected to convert to revenue within twelve months, which gives unusually clear near-term visibility. Aerospace sales grew nearly 12% with segment margin expanding, and Test Systems added growth tied to radio and wireless testing. On the strength of all this, management raised full-year 2026 revenue guidance to $970 million to $1 billion, a 14% to 16% increase over the prior year.

Two items frame the risk and sentiment. The unresolved Lufthansa Technik intellectual-property case in Germany, with proceedings expected to conclude in 2026 and a reserve of roughly $17.2 million held against remaining damages, is a discrete catalyst whose outcome could surprise in either direction. Analyst sentiment is firmly bullish on the recovery, with a consensus that skews to strong buy and price targets that bracket and in places exceed the current level, including a Truist target raised to $107. The next earnings report, the pace of backlog conversion, the margin trajectory, and any resolution of the German litigation are the events that will confirm or challenge the recovery the price is paying for.

Peer Cohorts (Per Segment, With Filing Citations)

Aerospace (reported)

Test Systems (reported)

Methodology Note

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 FY2026 results, May 2026 · company disclosures, 2026 · analyst consensus, MarketBeat / public.com, 2026 · analyst actions, MarketBeat, 2026

View the full interactive ATRO report on boothcheck