It has been about a month since the last earnings report for Astec Industries (ASTE). Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Astec Industries due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Astec Industries, Inc. before we dive into how investors and analysts have reacted as of late.
Astec Q1 Earnings Miss Estimates on Higher Costs
Astec Industries posted adjusted earnings of 54 cents per share for the first quarter of 2026, down 40.7% from the year-ago period. The quarter’s adjusted earnings missed the Zacks Consensus Estimate of 88 cents by 38.6%.
Profitability was pressured by timing and mix within the legacy Infrastructure Solutions segment, along with incremental expenses tied to the ConExpo trade show.
Net sales were $396.3 million, up 20.3% year over year and modestly ahead of the Zacks Consensus Estimate of $394 million. Astec ended the quarter with a backlog of $549.2 million, reflecting a 36.4% increase year over year, pointing to improving demand visibility across the portfolio. Materials Solutions backlog rose 87.5% to $236.6 million, while Infrastructure Solutions segment’s backlog increased 13.1% to $312.6 million.
Profitability Hit by Mix and Event Costs
Cost of sales surged 25% year over year to $297 million. Gross profit rose 7% to $99 million. Gross margin in the quarter was 25% compared with 28.1% in the year-ago quarter.
The company reported operating profit of $9 million in the first quarter of 2026 compared with $20.5 million in the first quarter of 2025.
Adjusted operating profit declined 19% year over year to $23.6 million in the quarter. Adjusted operating margin narrowed 280 basis points year over year to 6.0% in the quarter, reflecting a less favorable mix in legacy Infrastructure Solutions and higher costs. Management also cited expenses associated with ConExpo, a trade show held once every three years, as a meaningful drag on first-quarter profitability.
Additional headwinds included freight, duty and tariffs, which the company pointed to as pressure points on margin. While Astec remained constructive on demand conditions, these near-term cost factors weighed on the pace of earnings conversion in the period.
Materials Solutions Segment Powers Top-Line Growth
Materials Solutions delivered a sharp acceleration in sales, with net sales rising 70.6% year over year to $159.3 million. The company attributed the step-up to a combination of organic growth and inorganic contributions.
Materials Solutions segment operating adjusted EBITDA increased 71.2% to $8.9 million. Segment margin was at 5.6%, flat compared with the prior year quarter.
Sequentially, implied orders declined 14.9% from a strong fourth quarter of 2025, though the book-to-bill ratio remained supportive at 110%.
ASTE’s Infrastructure Segment’s Margins Compressed
Infrastructure Solutions posted net sales of $237 million, essentially flat year over year, as acquired revenues helped offset timing-related shortfalls in the legacy business.
Segment operating adjusted EBITDA for Infrastructure Solutions declined 18.9% to $34.8 million, and segment margin compressed 350 basis points to 14.7%.
Management noted organic backlog in the segment remained at a healthy level, and the book-to-bill ratio of 101%.
Astec’s Cash Flow Improved and Liquidity Stayed Solid
Astec generated an operating cash flow of $40.7 million in the first quarter of 2026, compared with $20.5 million in the prior-year quarter. Free cash flow was $32.6 million in the quarter, 96% higher than the $16.6 million in the last year quarter. reflecting stronger working-capital dynamics. Capital expenditures almost doubled to $8.1 million compared with the prior year quarter. Astec also paid a quarterly dividend of 13 cents per share.
Liquidity totaled $267.5 million at quarter-end, including $73.4 million of cash and $194.1 million of revolver availability. The company ended the quarter with net debt to adjusted EBITDA at 2.3x, which management said remained within its targeted 1.5x-2.5x range.
Astec Maintains 2026 Adjusted EBITDA View
Despite first-quarter cost and mix headwinds, Astec maintained its full-year 2026 adjusted EBITDA guidance of $170-$190 million. Management tied its outlook to favorable order activity and what it described as strong end markets, signaling confidence that profitability can improve as year-to-date pressures moderate.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Astec Industries has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Astec Industries has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Astec Industries is part of the Zacks Manufacturing - Construction and Mining industry. Over the past month, Caterpillar (CAT), a stock from the same industry, has gained 5%. The company reported its results for the quarter ended March 2026 more than a month ago.
Caterpillar reported revenues of $17.42 billion in the last reported quarter, representing a year-over-year change of +22.2%. EPS of $5.54 for the same period compares with $4.25 a year ago.
For the current quarter, Caterpillar is expected to post earnings of $6.19 per share, indicating a change of +31.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.4% over the last 30 days.
Caterpillar has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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This article originally published on Zacks Investment Research (zacks.com).