What a time it’s been for Astronics. In the past six months alone, the company’s stock price has increased by a massive 146%, setting a new 52-week high of $49.35 per share. This run-up might have investors contemplating their next move.
Is now still a good time to buy ATRO? Or are investors being too optimistic? Find out in our full research report, it’s free for active Edge members.
Why Are We Positive On ATRO?
Integrating power outlets into many Boeing aircraft, Astronics (NASDAQ: ATRO) is a provider of technologies and services to the global aerospace, defense, and electronics industries.
1. Skyrocketing Revenue Shows Strong Momentum
We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Astronics’s annualized revenue growth of 15.1% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
2. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Astronics’s margin expanded by 7.5 percentage points over the last five years. Astronics’s free cash flow margin for the trailing 12 months was 4.4%.
3. New Investments Bear Fruit as ROIC Jumps
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Astronics’s ROIC has increased. This is a good sign, but we recognize its lack of profitable growth during the COVID era was the primary reason for the change.
Final Judgment
These are just a few reasons Astronics is a high-quality business worth owning, and with the recent surge, the stock trades at 25.7× forward P/E (or $49.35 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
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