What Happened?
Shares of construction equipment company Astec (NASDAQ: ASTE) fell 5.7% in the morning session after its third-quarter 2025 report revealed significant weakness in underlying profitability and cash flow.
Astec reported strong top-line results, with revenue growing 20.1% year-over-year to $350.1 million and adjusted earnings per share of $0.47, both surpassing analyst expectations. However, investors appeared to focus on more troubling details within the release. The company's adjusted EBITDA came in at $20.6 million, missing Wall Street's estimates by a substantial 27.5%. Furthermore, operating margin fell sharply to just 0.3% from 3.4% in the same quarter last year, indicating growing costs. Astec also reported a negative free cash flow of $12.3 million, a stark reversal from a positive $19.9 million a year ago. The significant profitability miss and cash burn likely overshadowed the revenue beat, raising concerns about the company's operational efficiency and near-term outlook.
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What Is The Market Telling Us
Astec’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock gained 18.4% on the news that the company reported strong fourth-quarter results, with EPS and EBITDA significantly surpassing analysts' expectations. However, revenue fell well short of estimates, as weakness in the Materials Solutions segment offset strong growth in Infrastructure Solutions. Looking ahead, backlog declined 26.4% year-on-year, indicating potential challenges in sustaining recent growth. Overall, the quarter was solid, with strong earnings growth and margin expansion outweighing revenue softness, though backlog trends suggest some near-term headwinds.
Astec is up 39.4% since the beginning of the year, and at $45.69 per share, it is trading close to its 52-week high of $49.46 from October 2025. Investors who bought $1,000 worth of Astec’s shares 5 years ago would now be looking at an investment worth $915.35.
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