ATRO

We rate ASTRONICS CORP (ATRO) as a Buy with a composite score of 67.4/100 at a current price of $78.55. The stock scores above average across the majority of our six quantitative factors and ranks #182 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in momentum (92th percentile) and quality (71th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a No Moat rating (25/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

ASTRONICS CORP holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 67.4/100 places it at rank #182 in our full 7,333-stock universe. At $1.6B in market capitalization, ASTRONICS CORP is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 7% and favorable momentum (92th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 27% (-15.8pp vs sector) narrow to operating margins of 6% (+4.6pp vs sector) and net margins of -1.4%, yielding a gross-to-net conversion rate of -5%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $78.55, ASTRONICS CORP is trading near fair value based on current fundamentals. Our value factor score of 65/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 56.5x (at a premium), P/B of 25.6x, P/S of 3.4x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a High uncertainty rating to ASTRONICS CORP. Key risk factors include significant leverage (526% debt-to-equity), current negative profitability (net margin -1.4%), the combination of leverage (526% D/E) and thin margins (-1.4% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (526% debt-to-equity); current negative profitability (net margin -1.4%); the combination of leverage (526% D/E) and thin margins (-1.4% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 64th percentile and quality factor at the 71th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (64th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate ASTRONICS CORP's capital allocation as Poor. Key concerns include low returns on equity (-11.0%), elevated leverage (526% D/E), negative profitability, weak asset returns (ROA -1.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — ASTRONICS CORP significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, ASTRONICS CORP receives a Buy rating with a composite score of 67.4/100 (rank #182 of 7,333). Our quantitative framework assigns a No Moat (25/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 67/100.

Our analysis supports a constructive view on ASTRONICS CORP. The combination of the current valuation, high uncertainty, and poor capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.