Astronics (US:ATRO) ZACKSยท2025-07-14 14:42Core Insights - Astronics Corporation (ATRO) has acquired Envoy Aerospace for $8 million, enhancing its capabilities in aircraft connectivity and cabin modifications as airlines invest in upgrades [1][3] - The acquisition provides Astronics with a competitive edge in obtaining FAA approvals, strengthening its regulatory capabilities [2] - The deal positions Astronics to capture growth in aerospace retrofits and in-flight entertainment, signaling strategic expansion into high-margin aviation segments [3] Company Performance - Astronics' shares have increased by 126.3% year-to-date, outperforming the Zacks Aerospace-Defense Equipment industry's growth of 22.8% and the broader Zacks Aerospace sector's gain of 23.5% [5][9] - The military aircraft unit of Astronics reported a 95% year-over-year sales improvement, benefiting from increased defense spending due to geopolitical tensions [10] Growth Prospects - Rising global defense budgets driven by geopolitical tensions are increasing demand for military aircraft and related technologies [7] - The demand for advanced cabin power systems and in-flight entertainment solutions is also growing due to surging global air travel [11] - Sales estimates for 2025 and 2026 indicate year-over-year growth of 6.4% and 8.5%, respectively, reflecting solid growth prospects [13] Valuation - Astronics' forward 12-month price-to-earnings (P/E) ratio is 21.54X, which is a discount compared to the industry average of 47.89X, suggesting a favorable valuation for investors [16] - Other industry peers are trading at higher P/E ratios, with Leonardo DRS at 40.31X and Curtiss-Wright Corp. at 35.93X [17] Financial Considerations - Astronics is currently facing elevated debt levels, with a long-term debt-to-capital ratio of 37.51%, higher than the peer group average of 26.94% [20][23] - The company has not seen movement in its near-term earnings estimates over the past 60 days, indicating a cautious outlook from analysts [13]