Core Viewpoint - Astronics Corporation (NASDAQ:ATRO) is highlighted as one of the best small-cap defense stocks to buy, with a reaffirmed Buy rating and a price target of $58 by Truist Financial analyst Michael Ciarmoli [1][2]. Financial Performance - Astronics reported a 3.8% increase in revenue to $211.4 million for Q3, driven by strong demand across its product lines, particularly an 8.5% growth in the Aerospace segment [3]. - The gross profit margin improved to 30.5% from 27.1% year-over-year, attributed to increased volume, effective production, and specific pricing actions [4]. - Diluted EPS rose by 44% year-over-year to $0.49, exceeding estimates by 7 cents [4]. Future Outlook - The CEO anticipates a strong finish to the year, projecting fourth-quarter sales between $225 million and $235 million, aiming for record annual sales of $847 million to $857 million [5]. - The stock has experienced significant growth, gaining over 220% year-to-date as of November 14 [5].

Core Viewpoint - Astronics Corporation (ATRO) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates for the company [1][3]. Earnings Estimate Revisions - The upward trend in earnings estimate revisions indicates growing analyst optimism regarding Astronics' earnings prospects, which is expected to positively impact its stock price [2]. - The consensus earnings estimate for the current quarter is $0.54 per share, reflecting a year-over-year increase of +12.5%, with a 10.2% rise in the Zacks Consensus Estimate over the last 30 days [5]. - For the full year, Astronics is projected to earn $1.78 per share, representing a substantial year-over-year increase of +63.3%, with positive revisions noted in the past month [6]. Zacks Rank and Performance - Astronics has achieved a Zacks Rank 1 (Strong Buy), indicating strong potential for outperformance based on favorable estimate revisions [7]. - Historically, stocks with a Zacks Rank 1 have generated an average annual return of +25% since 2008, suggesting a strong correlation between earnings estimate trends and stock performance [3][7]. Recent Stock Performance - Astronics shares have increased by 12.8% over the past four weeks, indicating investor confidence in the company's earnings growth prospects [8].

Core Viewpoint - Astronics (ATRO) is identified as a strong buy with a Zacks Rank of 1, showcasing a D for Value and an A for Growth, indicating a favorable growth outlook despite valuation concerns [1] Company Overview - Astronics Corp. specializes in electrical power generation and distribution systems, including motion systems, lighting, safety systems, avionics products, and aircraft structures, operating through Aerospace and Test Systems segments [2] Earnings Performance - Astronics has consistently exceeded the Zacks Consensus Estimate for the last four quarters, with the latest EPS reported at $0.49 against an estimate of $0.42, resulting in a 16.6% positive earnings surprise [4] - The average positive surprise over the last four quarters stands at 59% [4] Earnings Estimates Revisions - Earnings estimates for Astronics have been revised upwards, with the full year 2025 estimate increasing from $1.60 to $1.78 and the 2026 estimate rising from $2.12 to $2.43 over the past 60 days [5] Growth Projections - Revenue for the current fiscal year is projected at $857 million, reflecting a 7.7% growth, while the next fiscal year anticipates revenue of $980 million, indicating a 14.4% sales growth [6] Valuation Insights - The price-to-book ratio is noted at 16x, which is considered high for a business model that is not asset-light, while the forward PE ratio is at 27x, justified by the expected growth [7] - The price-to-sales ratio is at 2x, attributed to previous low topline growth, which is expected to improve [7] Margin Analysis - Operating margins have shown improvement, increasing from 5.8% to 7.2% and then to 8% over the last three quarters, suggesting that revenue growth combined with margin expansion will lead to higher earnings [8]

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Core Insights - U.S. stock markets are experiencing a bullish trend in 2025, driven by a weak labor market and expectations of continued rate cuts by the Federal Reserve [1][8] - The Supreme Court's skepticism regarding tariffs from the Trump administration may influence market sentiment, although recent government shutdowns have delayed key economic data releases [2] - Four stocks have been identified as having strong price momentum: Castle Biosciences Inc. (CSTL), Perimeter Solutions Inc. (PRM), South Atlantic Bancshares Inc. (SABK), and Astronics Corp. (ATRO) [3][8] Stock Performance - Castle Biosciences Inc. (CSTL) has seen a stock price increase of 43.2% over the past four weeks, with an expected earnings growth rate of -137.1% for the current year [9] - Perimeter Solutions Inc. (PRM) has experienced a 17.3% rise in stock price over the last four weeks, with an expected earnings growth rate of 9.9% [11] - South Atlantic Bancshares Inc. (SABK) has advanced 15.2% in stock price over the past four weeks, with a significant expected earnings growth rate of 55.7% [13] - Astronics Corp. (ATRO) has gained 2.2% in stock price over the last four weeks, with an expected earnings growth rate of 63.3% [15] Screening Criteria - Stocks were screened based on several parameters, including a percentage change in price over the last four weeks greater than zero and a percentage change over the last twelve weeks greater than 10% [5] - Additional criteria included a Zacks Rank of 1 (Strong Buy), an average broker rating of 1, and a current price above $5 [6] - Stocks must also be trading near their 52-week highs, with a price/52-week high-low range greater than 85% [7]

Core Insights - Astronics Corporation (ATRO) reported quarterly earnings of $0.49 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, and up from $0.35 per share a year ago, representing an earnings surprise of +16.67% [1] - The company posted revenues of $211.45 million for the quarter ended September 2025, slightly missing the Zacks Consensus Estimate by 0.85%, but showing an increase from $203.7 million year-over-year [2] - Astronics shares have increased approximately 205.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 16.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.49 on revenues of $234.49 million, and for the current fiscal year, it is $1.65 on revenues of $858.36 million [7] - The estimate revisions trend for Astronics was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Aerospace - Defense Equipment industry, to which Astronics belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8] - Ducommun (DCO), another company in the same industry, is expected to report quarterly earnings of $0.95 per share, reflecting a year-over-year decline of -4%, with a consensus EPS estimate revised 6.3% lower over the last 30 days [9]

Financial Data and Key Metrics Changes - The company reported revenue of $211.4 million for Q3 2025, marking the second highest quarterly level ever, slightly below the record [5][6] - Operating margin improved to 10.9% from 4.1% year-over-year, with adjusted operating margin at 12.3% [6][15] - Gross profit increased to $64.5 million, up nearly 17% compared to the prior year, with a gross margin of 30.5% [15][16] - Free cash flow for the quarter was $21 million, driven by strong cash earnings and lower working capital requirements [18] Business Line Data and Key Metrics Changes - Aerospace segment sales were $192.7 million, consistent with recent periods, while the test business reported sales of $18.7 million, down from Q3 2024 but higher than earlier quarters in 2025 [6][15] - Aerospace operating margin was 16.2%, generating all operating income for the quarter, while the test segment had a near break-even operating margin of negative 0.1% [7][15] Market Data and Key Metrics Changes - Total bookings for the quarter were $210 million, resulting in a book-to-bill ratio of 1.0, with a backlog of $647 million, indicating strong future demand [7][8] Company Strategy and Development Direction - The company made two recent acquisitions: Envoy Aerospace, which enhances FAA certification capabilities, and Buhler Motor Aviation, expected to generate $20-$25 million in sales in 2026 [9][10][50] - The company is focusing on increasing OEM build rates and enhancing passenger connectivity and entertainment systems in aircraft, which are key growth drivers [24][25] Management's Comments on Operating Environment and Future Outlook - Management expects Q4 2025 revenue to increase to $225-$235 million, driven by market forces and the recent acquisition [23] - For 2026, the company anticipates at least 10% growth, supported by industry trends and new programs, including a significant U.S. Army contract [24][28] Other Important Information - The company completed refinancing actions that lowered the cost of debt and reduced potential dilution from convertible bonds [11][12][20] - The transition from an asset-based lending facility to a cash flow revolver improved financial flexibility [12][20] Q&A Session Summary Question: Expectations for Test revenue in Q4 - Management expects Test revenue to increase to around $20-$21 million in Q4, marking the strongest quarter for 2025 [34] Question: Insights on aerospace revenue increase - A general ramp in aerospace revenue is expected, with significant programs contributing to the fourth quarter [35][36] Question: Confidence in 2026 growth expectations - Management indicated that the Army test program will be a significant contributor to revenue in 2026, despite uncertainties due to government shutdowns [42][45] Question: Revenue and margin expectations for FLRAA program - Anticipated revenue from the FLRAA program is projected to be around $38-$40 million in 2026, with improved margins expected as the program transitions to production [48][49] Question: Integration of recent acquisitions - The integration of Buhler is underway, with expectations for operational efficiencies, while Envoy will enhance the company's FAA certification capabilities [54][55]

Financial Performance - Third quarter sales increased 3.8% to $211.4 million, driven by Aerospace growth of 8.5% to $192.7 million[4]. - Third quarter net loss was $11.1 million, reflecting $32.6 million in refinancing-related charges; adjusted EBITDA was $32.7 million, or 15.5% of sales[4]. - Gross profit increased 16.8% to $64.5 million, with a gross margin improvement to 30.5%[5]. - Operating income for Q3 2025 was $23.1 million, with an operating margin of 10.9%, compared to 4.1% in Q3 2024[37]. - Net loss for Q3 2025 was $11.1 million, or 5.2% of sales, compared to a net loss of $11.7 million, or 5.8% of sales, in Q3 2024[37]. - Adjusted EBITDA for the three months ended September 27, 2025, was $32,718 thousand, representing a margin of 15.5%, up from 13.3% in the prior year[52]. - Adjusted net income for the three months ended September 27, 2025, was $19,404 thousand, compared to $12,163 thousand for the same period in 2024[57]. Sales and Revenue Outlook - The company expects fourth quarter revenue to be between $225 million and $235 million, leading to a total revenue expectation of $847 to $857 million for 2025[4][26]. - Q3 2025 sales were $211.4 million, a 3.4% increase from $203.7 million in Q3 2024[37]. - Total consolidated sales for the nine months ended September 27, 2025, were $622,061 thousand, representing a 6.0% increase from $586,886 thousand in the prior year[46]. - Aerospace segment sales increased by 11.5% to $577,726 thousand for the nine months ended September 27, 2025, compared to $518,135 thousand in the same period of 2024[46]. Backlog and Bookings - Solid quarterly bookings of $210.4 million resulted in a backlog of $646.7 million[4]. - Backlog at the end of Q3 2025 was $646.7 million, with approximately 74% expected to be recognized as revenue over the next twelve months[27]. - The company reported a backlog of $646,723 thousand as of September 27, 2025, compared to $599,229 thousand at the end of the previous quarter[50]. Cost and Expenses - Interest expense decreased by 53.0% to $3.0 million due to lower rates following refinancing activities[12]. - The company recorded a loss on settlement of debt amounting to $32,644 thousand for the nine months ended September 27, 2025[44]. - Interest expense for the nine months ended September 27, 2025, was $9,167 thousand, a decrease from $17,832 thousand in the same period of 2024[44]. Capital Expenditures and Debt - Planned capital expenditures for 2025 are expected to be between $40 million and $50 million[27]. - Long-term debt rose significantly to $334.0 million from $168.7 million at the end of 2024[40]. - Capital expenditures for the nine months ended September 27, 2025, were $19,860 thousand, up from $5,244 thousand in the prior year[42]. Cash Flow - The company generated $34.2 million in cash from operations during the third quarter[4]. - The company generated net cash provided by operating activities of $47,172 thousand for the nine months ended September 27, 2025, compared to $4,149 thousand in the prior year[42]. Market Outlook - The company anticipates a significant reduction in future dilution due to the repurchase of 80% of its 5.5% Convertible Senior Notes due 2030[21]. - The company anticipates low double-digit growth for 2026, indicating a strong market outlook[28]. - The company is focused on developing technologies and capabilities to provide innovative solutions to its targeted markets[31].

Core Insights - Astronics Corporation (ATRO) is expected to report third-quarter 2025 results on November 4, with revenue estimates of $213.3 million, indicating a 4.7% year-over-year growth, and earnings per share (EPS) estimated at 42 cents, reflecting a 20% increase from the previous year [1][6]. Financial Performance - The Zacks Consensus Estimate for the current quarter's EPS is 0.42, with a year-over-year growth estimate of 20% [2]. - ATRO has a strong earnings surprise history, beating the Zacks Consensus Estimate in the last four quarters with an average surprise of 78.54% [2][3]. Revenue Drivers - Increased demand for cabin power, in-flight entertainment, and connectivity products from airlines is expected to boost sales in the Aerospace segment, which constitutes approximately 90% of total revenues [7][8]. - The military aircraft market is also anticipated to contribute positively due to heightened demand for lighting and safety products [7]. Cost and Margin Considerations - The Test Systems unit may experience a year-over-year sales decline due to revised cost estimates and delays in a long-term mass transit contract [8]. - Strong sales performance in the Aerospace segment, along with gross profit margin expansion and cost savings from restructuring, are expected to enhance overall earnings [9]. Stock Performance and Valuation - ATRO's shares have increased by 205.4% year-to-date, outperforming the Zacks Aerospace-Defense Equipment industry's growth of 33.4% and the S&P 500's gain of 17.9% [10]. - The forward 12-month price-to-sales (P/S) ratio for ATRO is 1.87X, significantly lower than the peer group average of 4.79X, indicating a more attractive valuation [12][14]. Industry Context - The global aerospace and defense industry continues to show strong growth prospects, although ATRO faces challenges such as supply-chain disruptions and rising costs of raw materials [15][16]. - The company maintains a strong position in the defense sector, providing resilience during market downturns, despite being heavily leveraged compared to peers [17]. Investment Outlook - ATRO is positioned for solid third-quarter performance, supported by projected growth in sales and earnings, a favorable Zacks Rank, and strong share price momentum, making it an attractive investment in the aerospace sector [18].

Company Performance - Astronics Corporation (ATRO) has seen a significant stock increase of 14.3% over the past month, reaching a new 52-week high of $50, and has gained 213.2% since the start of the year [1] - The company has consistently outperformed earnings expectations, beating the Zacks Consensus Estimate in each of the last four quarters, with the latest EPS reported at $0.38 against a consensus of $0.33 [2] Financial Projections - For the current fiscal year, Astronics is projected to achieve earnings of $1.65 per share on revenues of $858.36 million, reflecting a 51.38% increase in EPS and a 7.91% increase in revenues [3] - The next fiscal year forecasts earnings of $2.27 per share on revenues of $936.03 million, indicating a year-over-year change of 37.58% in EPS and 9.05% in revenues [3] Valuation Metrics - Astronics has a Value Score of D, while its Growth and Momentum Scores are both B, resulting in a combined VGM Score of B [6] - The stock trades at 30.3X current fiscal year EPS estimates, below the peer industry average of 36.3X, and at 26.8X trailing cash flow compared to the peer group's average of 27.7X [7] Zacks Rank - Astronics holds a Zacks Rank of 1 (Strong Buy), supported by favorable earnings estimate revisions from analysts [8] - The company meets the criteria for investment selection, indicating potential for further gains [9] Industry Comparison - In comparison to industry peers, BWX Technologies, Inc. (BWXT) also shows strong performance with a Zacks Rank of 2 (Buy) and robust earnings expectations [10] - BWXT is expected to post earnings of $3.74 per share on revenues of $3.12 billion for the current fiscal year, with shares gaining 13.5% over the past month [11]