Astronics Soars 118% YTD: Should You Buy, Hold or Fold the Stock?
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Other industry players like Leonardo DRS DRS and Curtiss-Wright Corp. CW have delivered a similar stellar performance in the same period. Shares of DRS and CW have surged 42.8% and 33.4%, respectively, year to date.
With global air travel rising steadily of late and defense modernization gaining pace, aerospace technology stocks like Astronics have been witnessing strong upward momentum, as evident from its aforementioned share price hike. This may prompt investors to consider adding ATRO to their portfolios.
However, before making a hasty investment call, it's crucial to explore the key factors fueling ATRO's recent share price momentum, its prospects for sustained growth, and risks (if any) that could affect future investor returns.
Astronics has gained strong investor confidence in 2025, driven by robust quarterly results, innovative product launches and industry recognition.
The company began the year by announcing preliminary fourth-quarter and full-year 2024 revenues. Quarterly revenues of $208-$210 million (up 7% at the midpoint) and full-year revenues of $796 million reflected a 15.5% increase year-over-year.
In April, Astronics launched the SkyShow Server — an advanced moving map system with 4K visuals and real-time flight data — raising the bar for in-flight entertainment and aircraft cabin integration. The same month, its EmPower UltraLite G2 Power System earned the 2025 PAX Award for Best In-Seat Power Solution, underscoring its innovation and leadership in passenger power systems.
In May, Astronics reported a strong first-quarter performance, with revenues rising 11.3% year over year and gross profit up 28.1%, driven by strength in its Aerospace segment. Backed by record bookings of $279.7 million, the company's backlog surged to a historic high of $673 million as of March 2025.
Together, these achievements have significantly strengthened Astronics' investor sentiment, which has been reflected in its share price hike.
Astronics ended March 2025 with cash and cash equivalents of $26 million. While its long-term debt totaled $160 million as of first-quarter 2025-end, its current debt was nil. So, it is safe to conclude that the stock boasts a solid solvency position in the near term, which, in turn, should enable ATRO to invest in new product innovation. After all, technological innovation is a major growth catalyst for stocks like ATRO, as both the commercial and defense aerospace markets increasingly thrive on next-gen solutions.
Looking ahead, as airlines expand their fleets and enhance passenger experiences, driven by rapidly growing air travel demand worldwide, there is a heightened demand for advanced cabin power systems and in-flight entertainment and connectivity (IFEC) solutions. This should bode well for Astronics, which is already capitalizing on this trend, as evident from the 13.3% year-over-year increase in its first-quarter 2025 Commercial Transport sales.
Now, let's take a sneak peek at ATRO's near-term earnings and sales estimates to check whether they also reflect similar growth prospects.
The Zacks Consensus Estimate for ATRO's 2025 sales suggests year-over-year growth of 6.4%, while that for 2026 sales indicates an improvement of 8.5%.
The 2025 and 2026 bottom-line estimates show a similar improving trend. Moreover, the upward revision in its yearly earnings estimate indicates that investors are gaining confidence in this stock's earnings capabilities.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
In terms of valuation, ATRO's forward 12-month price-to-earnings (P/E) is 21.10X, a discount to the industry average of 46.49X. This suggests that investors will be paying a lower price than the company's expected earnings growth compared to that of its industry average.
Image Source: Zacks Investment Research
Other industry peers are trading at a premium to ATRO. While DRS is trading at a forward 12-month P/E of 39.46X, CW is trading at 36.38X.
The primary challenges that aerospace-defense stocks like ATRO, CW, and DRS continue to face include varying levels of supply-chain pressures stemming from the residual impacts of the COVID-19 pandemic, shortage of raw material, cost increases, and a rise in labor costs and labor shortage, particularly for skilled labor.
Moreover, the recently imposed heightened tariff on the import of goods from almost all trading partners of the United States is likely to exacerbate the supply-chain challenge, which, altogether, might cause a delay in the delivery of finished products by ATRO. This, in turn, may hurt its operational results.
To conclude, investors interested in ATRO may consider adding this stock to their portfolio, given its discounted valuation, upbeat near-term sales estimates, impressive share price performance, and upward revision in earnings estimates. The stock has a VGM Score of A, which is also a favorable indicator of strong performance.
The company's Zacks Rank #1 (Strong Buy) further supports our thesis. You can see the complete list of today's Zacks #1 Rank stocks here.
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Astronics Corporation (ATRO) : Free Stock Analysis Report
Curtiss-Wright Corporation (CW) : Free Stock Analysis Report
Leonardo DRS, Inc. (DRS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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