ASTRONICS CORPORATION (ATRO): what the price assumes

In the published model solve dated 2026-Q2, anchored at $76.43, ASTRONICS CORPORATION (ATRO) is priced for today's economics sustained for ~8.5 years. 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: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/ATRO

Headline

What The Price Assumes (Inversion)

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

The operating-margin figure is value-band context at year 10: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.5% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: elevated (limited comparison data)

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.

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 8.8%); the inversion above states its own rate.

Per-Model Detail (n=13)

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.

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

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

Bullet Takeaways

• Just under half of revenue comes from electrical power and motion systems built into aircraft cabins, and the number that decides everything is conversion: Astronics turns 7.7% of sales into operating profit on a trailing basis while HEI runs a 23.5% operating margin and CW 18.4%.
• Customer concentration is disclosed rather than hidden, with the 10-K reporting sales to Boeing at "10.4% of sales in 2025, 10.2% of sales in 2024, and 11.0% of sales in 2023", so one airframer's build rate moves the top line directly.
• Bookings hit a record $290.4 million in the first quarter of 2026 for a book-to-bill of 1.26, lifting backlog to a record $734.3 million, and the next print is scheduled for July 30, 2026.

Bull Case

One number decides this entire argument, and it is not the growth rate. Astronics converts 7.7% of trailing sales into operating profit. Its cohort converts far more: HEI runs a 23.5% operating margin, TDY 19.0%, CW 18.4%, MOG-A 12.3%. Move Astronics halfway to the middle of that group and everything else about the company reads differently, because the revenue is already there and the customers are already committed. The bull case is entirely a case about conversion.

There is now evidence that conversion is happening. First-quarter 2026 sales rose 12.0% to $230.6 million and net income reached $25.5 million, with the quarter's operating margin roughly doubling from the prior year on higher aerospace volume, productivity gains and lower litigation costs. One quarter proves nothing on its own. The mix behind it is more persuasive than the number: this is a business where incremental volume flows over a fixed engineering and certification base, which is precisely the cost structure that produces sudden margin steps rather than gradual ones.

What sits underneath is a portfolio of small monopolies inside the cabin. The 10-K describes Aerospace customers as "the airframe manufacturers ("OEM") that build aircraft for the commercial transport, military and general aviation markets, suppliers to those OEMs, aircraft operators such as airlines", and the products as power distribution, seat motion, lighting, avionics, structures and systems certification. Those parts are qualified onto a specific airframe. Once a seat-power module is certified into a cabin layout, the replacement decision belongs to a certification schedule rather than a procurement calendar. The 2025 segment result shows what that looks like when the airlines are spending: "Aerospace segment sales of $797.3 million were up $90.6 million, or 12.8%. Sales in the Commercial Transport market grew $74.7 million, or 14.2%."

Demand visibility improved through 2025 and again into 2026. Test Systems, the smaller of the two reportable segments at 8% of revenue, carried "Backlog in the Test Systems segment was $73.7 million at December 31, 2025, compared to $61.7 million at December 31, 2024", and management has flagged a United States Army radio test programme expected to contribute roughly $40 million to $50 million a year once running. A defence test contract is not a large business by itself. It is a business with almost no customer-acquisition cost attached to it.

The last point is the simplest. Company-wide bookings ran ahead of shipments in the first quarter of 2026 at a book-to-bill of 1.26, and backlog set a record. Order books can turn. But a supplier whose orders exceed deliveries is a supplier with pricing conversations available to it, and pricing is the cheapest possible route to the margin the bull case needs.

Bear Case

The disruption Astronics faces is not coming from another cabin-electronics supplier. It is coming from orbit. The 10-K states that "The satellite communications industry is experiencing significant ongoing disruption, as customers evaluate the benefits of lower-cost, low Earth orbit ("LEO") solutions, challenging the traditional geosynchronous satellite-based systems", and the company describes this transition as both a risk and an opportunity for parts of its business. When the connectivity architecture inside an aircraft changes, the antennas, power draws and equipment bays change with it, and a supplier qualified into the old architecture has to re-qualify into the new one at its own expense.

Behind that sits an ordinary but unforgiving competitive fact. The filing acknowledges that "Our competitors include larger, more diversified corporations and vertically integrated companies that may have greater financial, marketing, production and research and development resources than we do", and the numbers make the point sharper than the language does. TDG earns a 46.5% operating margin, HEI 23.5%, TDY 19.0% and CW 18.4%. Astronics earns 7.7%. In a downturn, the companies with three times the margin can fund a design win by pricing through it; Astronics cannot.

Now the price. Today's quote pays about 45 times company-wide operating income, and the assumption that makes that arithmetic close is not a heroic growth rate but a heroic run of ordinary ones: profit growth roughly at the pace the company has recently managed, sustained for something like eleven years. That is the demanding part. Only about 14% of comparable fast growers held such a pace across a full decade, and the multiple already sits at the very top of its peer distribution, well beyond the upper quartile. The company does not need a miracle. It needs an absence of interruptions for longer than most industrial suppliers get.

Interruptions are exactly what this end market supplies. Boeing accounts for roughly a tenth of sales in each of the last three reported years, and the 10-K warns that "an increasing supply of used aircraft on the market would likely result in reduced demand for our products, which will result in lower profits" and that reduced defence spending would narrow the opportunity set. Input costs are the other exposure: the company describes paying "costs to secure available inventory" and placing non-cancellable purchase commitments, which introduces inventory risk if its own forecasts prove wrong.

The balance sheet leaves less room than the growth story implies. Net debt runs about 323 million dollars, which is 4.74 times operating profit, and liquid assets are thin at under 12 million. The revolving credit facility carries covenants the 10-K discusses at length, including the observation that if borrowings were accelerated the company "cannot assure you that our assets would be sufficient to repay in full our debt". Meanwhile the share count has grown about 4.6% a year over the four years to April 2026. Dilution at that pace quietly consumes a meaningful share of whatever margin expansion arrives, which is the part of the bull case least likely to be modelled by the people repeating it.

Valuation

Forty-five times operating income is a multiple normally reserved for software, and Astronics makes seat-power modules. That gap is the whole valuation question, and unpacking it produces something more specific than "expensive." Working backwards from the quote, what the price needs is not an extraordinary growth rate. It needs profit growth near the pace already delivered, held without interruption for roughly eleven years. The rate is ordinary. The duration is not.

How rare that is has a countable answer. Only about 14% of comparable fast growers sustained such a pace across a full decade, and against its own sector the multiple sits at the very top of the peer distribution, beyond the upper quartile. Neither of those is a prediction. They are the odds attached to the assumption a buyer is accepting.

The methods split cleanly, and only one of them reaches. The forward-growth approaches land about 18% under today's quote. Peer-multiple approaches sit about 63% under. The earnings-power approaches, which capitalize a normalized operating profit with no growth at all, sit about 265% under. The asset-based approaches sit about 352% under, though that reading needs context: book value is $4.23 per share, and an electronics designer whose value lives in certifications and engineering staff was never going to be described well by its balance sheet. The pattern is what matters. Everything anchored on what the business earns today lands far beneath, and only the method that extends the current trajectory forward gets close.

The concrete version of "what has to be true" is a margin sentence. Astronics turns 7.7% of sales into operating profit on a trailing basis, and the 2025 segment disclosure shows the volume that produced it: "Aerospace segment sales of $797.3 million were up $90.6 million, or 12.8%", with Test Systems adding the remainder. For a 45 times multiple on today's profit to look sensible in hindsight, that conversion has to move a long way toward where the cohort already operates, with HEI at a 23.5% operating margin, CW at 18.4% and MOG-A at 12.3%. The first quarter of 2026 delivered a step in that direction. Nine more quarters like it would settle the argument; two soft ones would reopen it.

Solvency sets the boundary on how much patience the situation allows. Net debt of about 323 million dollars amounts to 4.74 times operating profit, or 6.0 times after tax, against liquid assets of under 12 million, and the share count has risen about 4.6% a year over the four years to April 2026. The company is not burning cash and the covenants are not currently the issue. But a business carrying that much leverage against a thin cash position has limited ability to absorb a bad year without either the multiple or the share count paying for it.

Catalysts

The next scheduled event is the second-quarter report on July 30, 2026, and it arrives with an unusually specific bar to clear. Management guided second-quarter sales of $245 million to $250 million, which would be a quarterly record, and raised full-year 2026 revenue guidance to a range of $970 million to $1.0 billion from a prior range of $950 million to $990 million. Guidance raised mid-year is a different signal from guidance issued in January, because it is made with two quarters of order flow already visible.

The first quarter set the tone. Sales grew 12.0% to $230.6 million, net income rose to $25.5 million, and the operating margin roughly doubled year over year on higher aerospace volume and productivity gains, with lower litigation costs helping. Orders ran ahead of shipments at a book-to-bill of 1.26, bookings reached a record $290.4 million and backlog closed at a record $734.3 million. Backlog of that size is roughly three quarters of a year of shipments, which is what turns a guidance raise from optimism into arithmetic.

One programme is worth tracking separately. Management expects the United States Army radio test contract to contribute roughly $40 million to $50 million annually once it is running, with a partial contribution in the second half of 2026. That flows through Test Systems, the segment carrying 8% of revenue, whose own backlog the 10-K puts at "$73.7 million at December 31, 2025, compared to $61.7 million at December 31, 2024". A defence programme of that scale meaningfully changes the shape of the smaller segment without changing the company's story, which is why the aerospace margin trajectory, not this contract, remains the thing that decides the outcome.

Peer Cohorts (Per Segment, With Filing Citations)

Aerospace (reported)

• HEI (HEICO CORPORATION)
• FY2025 10-K: …and business aircraft, aircraft engines and related components and equipment. Due in large part to our established industry presence, we enjoy strong customer relations, name recognition and repeat business. We sell our products to a broad customer base consisting of domestic and foreign commercial and cargo…
• FY2025 10-K: …missile hardware and components, as well as machining, brazing, fabricating and welding services. (4) Includes various component parts such as electro-optical infrared simulation and test equipment, electro-optical laser products, electro-optical, microwave and other power equipment, high-speed interface products,…
• DCO (DUCOMMUN INCORPORATED)
• FY2025 10-K: …from commercial aircraft could be affected as a result of 7 Table of Contents changes in new aircraft orders, or the cancellation or deferral by airlines of purchases of ordered aircraft. Further, our revenues from commercial aircraft programs could be affected by changes in our customers' inventory levels and…
• FY2025 10-K: …of the LTAs do not meet the definition of a contract under ASC 606 and thus, the backlog amount may or may not be greater than the remaining performance obligations amount disclosed in Note 1 to our consolidated financial statements included in Part IV, Item 15(a) of this Form 10-K. Backlog is subject to delivery…
• CW (CURTISS-WRIGHT CORPORATION)
• FY2025 10-K: …90% of our sales in this market and are highly dependent on new aircraft production from our primary customers, Boeing and Airbus. We have significant content on the majority of the commercial aircraft programs, where our business is more leveraged to narrowbody (~60%) than widebody (~40%) commercial aircraft. We…
• FY2025 10-K: …passenger growth. While we closely monitor these industry metrics, our success and future growth in the commercial aerospace market is primarily tied to the anticipated growth in aircraft production rates (e.g., Boeing 737 and 787, Airbus A320 and A350), the timing of our order placement, continued partnering with…
• TDG (TransDigm Group Incorporated)
• FY2025 10-K: …following table sets forth, for the periods indicated, certain financial information by reportable segment, which includes a reconciliation of EBITDA As Defined to consolidated income from continuing operations before income taxes (in millions): Fiscal Year Ended September 30, 2025 Power & Control Airframe…
• FY2025 10-K: ; (5) defense OEMs; (6) system suppliers; and (7) various other industrial customers. Our top ten customers for fiscal year 2025 accounted for approximately 40% of our net sales. Products supplied to many of our customers are used on multiple platforms. None of our customers individually accounted for greater than 10%…
• AIR (AAR CORP)
• FY2025 10-K: …global reach and long-standing customer relationships position us to meet market demand for these products. We also distribute new OEM-supplied replacement parts to aircraft operators, airlines, government customers and other MRO companies across the world. Our parts are supplied to narrow-body, wide-body and…
• FY2025 10-K: 05-31 0000001750 air:ForeignCountriesMember us-gaap:SalesMember us-gaap:GeographicConcentrationRiskMember 2023-06-01 2024-05-31 0000001750 air:USDepartmentOfDefenseOtherUSGovernmentAgenciesAndContractorsMember us-gaap:SalesMember us-gaap:CustomerConcentrationRiskMember 2022-06-01 2023-05-31 0000001750…
• DRS (Leonardo DRS, Inc.)
• FY2025 10-K: Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 Our operating results for the year ended December 31, 2025, are highlighted by our strong $8.4 billion of backlog and over $4.2 billion of new orders, demonstrating the strong customer demand for our mission critical technologies. Embedded in…
• FY2025 10-K: …$65 million (30.5%) from the year ended December 31, 2024, respectively, attributed to the higher gross profit, and lower net interest expense, offset slightly by higher tax expense. Revenue For the year ended December 31, 2025, revenue increased by $414 million, or 12.8%, to $3,648 million from $3,234 million for…
• MOG-A (MOOG Inc.)
• FY2025 10-K: …in aerospace and defense and industrial markets. We have four operating segments: Space and Defense, Military Aircraft, Commercial Aircraft and Industrial. Additional information describing the business and comparative segment revenues, operating profits and related financial information for 2025, 2024 and 2023 are…
• FY2025 10-K: …and existing fleets. Commercial Aircraft. We design, manufacture and integrate primary and secondary flight-critical control systems and products for various commercial aircraft including widebody, narrowbody, business jets and regional jets for both OEM and aftermarket customers. Our large commercial production…
• KTOS (Kratos Defense & Security Solutions, Inc.)
• FY2025 10-K: …market position. In November 2024, Kratos announced that Zeus 1 and Zeus 2 SRMs had completed their first successful flight on October 24, 2024, from the NASA Wallops Flight Facility in Virginia under a customer funded mission. In June 2024, Kratos announced the successful launch and flight of the Kratos Erinyes…
• FY2025 10-K: …commercial customers. Improve operating margins. We believe that we have opportunities to increase our operating margins and improve profitability in the future as we transition from certain development programs, which typically generate inherently lower margins, to production programs, which typically generate…

Test Systems (reported)

• MRCY (MERCURY SYSTEMS, INC.)
• FY2025 10-K: …in the market: Mission-Ready; Trusted and Secure; Software-Defined; and Open and Modular. • Mission-Ready: Fit for purpose to meet the demanding needs of our customers' missions. Advanced thermal management and rugged packaging technology ensures optimal performance and reliable operation in the most challenging…
• FY2025 10-K: …product, where the customer evaluates alternative technologies and design approaches. We work with defense prime contractors as well as directly with the DoD. We help drive subsystem development and deployment in both classified and unclassified environments. The principal competitive factors in our market are…
• KTOS (Kratos Defense & Security Solutions, Inc.)
• FY2025 10-K: …our control environment and overall accounting system; general IT system; budget and planning system; purchasing system; material management and accounting system; compensation system; labor system; indirect and other direct costs system; billing system; and estimating system used for pricing on government contracts.…
• FY2025 10-K: …Significant liabilities of STS assumed by the Company included deferred revenue of $ 11.4 million. The operating results of the acquisition have been included in the Company's results of operations from the effective date of the acquisition. The amount of net sales and earnings of STS included in the consolidated…
• CW (CURTISS-WRIGHT CORPORATION)
• FY2025 10-K: …production orders to begin materializing by the middle of the next decade. General Industrial We derive revenue from our widely diversified offering to the general industrial market, which primarily consists of electronic sensors and control systems, electro-mechanical actuation, and surface treatment services. We…
• FY2025 10-K: …arrangements also provide for automatic expiration in the event of death, dissolution, bankruptcy, or insolvency of the adopting person. 3. The volume of sales is based on pricing triggers outlined in the Rule 10b5-1 Trading Arrangement. 4. Transactions under each Rule 10b5-1 Trading Arrangement commence no earlier…
• AVAV (AEROVIRONMENT, INC.)
• FY2025 10-K: …growth platforms in the future, creating additional market opportunities. Effective May 1, 2025, we operate our business in two reportable segments: (1) Autonomous Systems and (2) Space, Cyber and Directed Energy. 3 Table of Contents ​ Autonomous Systems ​ Uncrewed Aircraft Systems ("UAS"). Our family of uncrewed…
• FY2025 10-K: …mission capabilities which address rapidly evolving threats and customer specifications. 9 Table of Contents ​ We continue to invest in infrastructure that has enabled us to meet growing demand and efficiently scale capacity to produce thousands of systems annually. By drawing upon experienced personnel across…
• TDY (TELEDYNE TECHNOLOGIES INC)
• FY2025 10-K: …to evaluate the release rate characteristics and physical properties of various dosage forms to ensure the safety and efficacy of medicines worldwide. Finally, we manufacture fixed and portable industrial gas and flame detection instruments used in a variety of industries, including petrochemical, power generation,…
• FY2025 10-K: …including traffic generators and emulators, to accurately and reliably monitor and test high data-rate communication interfaces and diagnose operational problems in a wide range of systems and devices to ensure that they comply with industry standards, including in the areas of cloud computing, data storage and…

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.