Construction equipment company Astec (NASDAQ: ASTE) reported Q1 CY2026 results topping the market’s revenue expectations, with sales up 20.3% year on year to $396.3 million. Its non-GAAP profit of $0.54 per share was 35.5% below analysts’ consensus estimates.

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"A 70.6% increase in Materials Solutions net sales was primarily driven by organic and inorganic contributions. Infrastructure Solutions net sales were relatively flat after the inclusion of inorganic sales which offset timing and mix-related shortfalls in our legacy business." said Jaco van der Merwe, Chief Executive Officer.

Company Overview

Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ: ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Astec grew its sales at a decent 7.7% compounded annual growth rate. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Astec’s recent performance shows its demand has slowed as its annualized revenue growth of 6.6% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Astec’s backlog reached $549.2 million in the latest quarter and averaged 4.9% year-on-year declines over the last two years. Because this number is lower than its revenue growth, we can see the company hasn’t secured enough new orders to maintain its growth rate in the future.

This quarter, Astec reported robust year-on-year revenue growth of 20.3%, and its $396.3 million of revenue topped Wall Street estimates by 0.8%.

Looking ahead, sell-side analysts expect revenue to grow 10.8% over the next 12 months, an improvement versus the last two years. This projection is healthy and suggests its newer products and services will fuel better top-line performance.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Astec was profitable over the last five years but held back by its large cost base. Its average operating margin of 5% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Astec’s operating margin rose by 4.2 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q1, Astec generated an operating margin profit margin of 2.3%, down 6.3 percentage points year on year. Since Astec’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Astec’s EPS grew at 9.9% compounded annual growth rate over the last five years, higher than its 7.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Astec’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Astec’s operating margin declined this quarter but expanded by 4.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Astec, its two-year annual EPS growth of 18.5% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q1, Astec reported adjusted EPS of $0.54, down from $0.88 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Astec’s full-year EPS of $2.95 to grow 34.1%.

Key Takeaways from Astec’s Q1 Results

It was good to see Astec narrowly top analysts’ revenue expectations this quarter. On the other hand, its adjusted operating income missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $62.39 immediately following the results.

Astec may have had a tough quarter, but does that actually create an opportunity to invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).