Value
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.0 |
| P/S | 8.0 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.5 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 23.2x
- ▸PEG: 0.19
ATRO · Why this verdict
Why Astronics (ATRO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Astronics offers a consistent earnings execution record and solid growth within aerospace and defense, but thin upside of roughly 5% to the analyst target produces a risk/reward of approximately 1.2-to-1 — technically favorable but below the minimum 1.5-to-1 threshold — while negative free cash flow and elevated leverage constrain the fundamental quality case.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten consensus earnings estimates in three of the last four quarters, including the two most recent reports, with an average positive surprise of roughly 30% — suggesting the management team consistently under-promises and over-delivers. Earnings | Earnings beats continue for at least 2 more consecutive quarters, each with a positive surprise exceeding 10%. | →Stable |
| CounterAn in-line quarter at the oldest data point tempers the narrative, and the high-leverage balance sheet constrains the upside scenario; execution could deteriorate if aerospace cycle demand softens. | ||
Free cash flow is negative relative to net income at approximately -5%, meaning the company is not converting reported profits into cash — a concern that reduces earnings quality and signals potential working capital or capital expenditure strain. Quality breakdown | The free cash flow to net income ratio recovers above 50% over the next 4 quarters, confirming that earnings are converting into real economic cash. | →Stable |
| CounterA Piotroski financial health score of 8 out of 9 signals broad financial health across multiple balance sheet and income dimensions, suggesting the negative free cash flow may be transient rather than structural. | ||
At current prices, the stock offers roughly 5% upside to the analyst consensus target, producing a risk/reward ratio of approximately 1.2-to-1 — technically favorable in direction but still short of the minimum 1.5-to-1 threshold that would justify initiating a new position. Warnings | Risk/reward improves to at least 1.5-to-1 as either the price pulls back meaningfully or analysts raise their targets. | ↓Deteriorating |
| CounterThe thin-upside problem is a spot-price issue, not a fundamental one; a moderate pullback would re-open the setup, and a continued earnings beat streak makes an analyst target upgrade plausible. | ||
A debt-to-equity ratio of 2.3 leaves the balance sheet meaningfully stretched, reducing financial flexibility and amplifying downside risk if revenue or cash flow disappoints. Bear case | Debt-to-equity ratio falls below 1.5 over 12 months through sustained earnings generation that builds equity faster than debt growth. | ↓Deteriorating |
| CounterThe current ratio scores near the maximum in the quality composite, suggesting near-term liquidity is adequate even under elevated leverage. | ||
A sharp gap down of roughly 15% created an oversold technical condition, with support and resistance scores in the top decile — pointing to a mean-reversion opportunity if buyers step in at current levels. Technical breakdown | Price recovers at least 10% from current levels to partially close the gap, confirmed by volume expansion on up days. | ↑Improving |
| CounterGaps of this magnitude often reflect a genuine negative information event; if the underlying driver of the gap persists, a technical recovery may stall before filling the gap. | ||
The company has beaten consensus earnings estimates in three of the last four quarters, including the two most recent reports, with an average positive surprise of roughly 30% — suggesting the management team consistently under-promises and over-delivers.
→StableEarnings
- Expectation
- Earnings beats continue for at least 2 more consecutive quarters, each with a positive surprise exceeding 10%.
CounterAn in-line quarter at the oldest data point tempers the narrative, and the high-leverage balance sheet constrains the upside scenario; execution could deteriorate if aerospace cycle demand softens.
Free cash flow is negative relative to net income at approximately -5%, meaning the company is not converting reported profits into cash — a concern that reduces earnings quality and signals potential working capital or capital expenditure strain.
→StableQuality breakdown
- Expectation
- The free cash flow to net income ratio recovers above 50% over the next 4 quarters, confirming that earnings are converting into real economic cash.
CounterA Piotroski financial health score of 8 out of 9 signals broad financial health across multiple balance sheet and income dimensions, suggesting the negative free cash flow may be transient rather than structural.
At current prices, the stock offers roughly 5% upside to the analyst consensus target, producing a risk/reward ratio of approximately 1.2-to-1 — technically favorable in direction but still short of the minimum 1.5-to-1 threshold that would justify initiating a new position.
↓DeterioratingWarnings
- Expectation
- Risk/reward improves to at least 1.5-to-1 as either the price pulls back meaningfully or analysts raise their targets.
CounterThe thin-upside problem is a spot-price issue, not a fundamental one; a moderate pullback would re-open the setup, and a continued earnings beat streak makes an analyst target upgrade plausible.
A debt-to-equity ratio of 2.3 leaves the balance sheet meaningfully stretched, reducing financial flexibility and amplifying downside risk if revenue or cash flow disappoints.
↓DeterioratingBear case
- Expectation
- Debt-to-equity ratio falls below 1.5 over 12 months through sustained earnings generation that builds equity faster than debt growth.
CounterThe current ratio scores near the maximum in the quality composite, suggesting near-term liquidity is adequate even under elevated leverage.
A sharp gap down of roughly 15% created an oversold technical condition, with support and resistance scores in the top decile — pointing to a mean-reversion opportunity if buyers step in at current levels.
↑ImprovingTechnical breakdown
- Expectation
- Price recovers at least 10% from current levels to partially close the gap, confirmed by volume expansion on up days.
CounterGaps of this magnitude often reflect a genuine negative information event; if the underlying driver of the gap persists, a technical recovery may stall before filling the gap.
Per-dimension breakdown
Quality
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 7.4 |
| Gross margin | 2.5 |
| Op margin | 5.9 |
| Net margin | 4.2 |
| Current ratio | 9.9 |
| FCF quality | 1.7 |
| Moat | 6.0 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 34%
- ▸Earnings quality RED FLAG: 21% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
9.2/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 9.2 |
- ▸Strong growth: 27% YoY
Momentum
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 4.4 |
- ▸Oversold in uptrend (RSI 30)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.5 |
| Price target | 8.0 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (5.0) — signal dampened
- ▸Analyst upside: 23%
Insider
4.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 4.2 |
| notable moves | 3.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.8 |
| quality rank | 7.8 |
| growth rank | 6.3 |
- ▸Superior ROE vs peers
Technical
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.5 |
| support resistance | 9.8 |
| 52w position | 5.5 |
Risk (lower is worse)
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.4 |
| days to cover | 5.2 |
| volatility | 0.0 |
| put call | 4.4 |
| implied vol | 0.0 |
| beta | 6.2 |
| debt equity | 3.4 |
- ▸High IV: 114%
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:64d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.5<4.5
- ASYMMETRY:0.6<1.5@spot
Warning (0)
none
Reward-to-Risk
0.56
Upside
+6.7%
Downside
12.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $3.1B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 9.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.5<4.5, ASYMMETRY:0.6<1.5@spot) reinforce the read. Current asymmetry R:R is 0.56 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 9.2, Technical at 7.6, and Catalyst at 7.5; the weakest are Risk (lower is worse) at 3.5, Momentum at 3.5, and Insider at 4.1. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.56 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Beat Discipline Aerospace
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Negative Free Cash Flow Quality Risk
Trip ifFree cash flow turns positive and the free cash flow to net income ratio exceeds 50% for 2 consecutive quarters.
- P3Thin Upside Below Asymmetry Bar
Trip ifUpside to the analyst consensus target exceeds 20%, improving the risk/reward ratio above 1.5-to-1.
- P4High Leverage Balance Sheet Constraint
Trip ifDebt-to-equity ratio falls below 1.5.
- P5Post Gap Technical Recovery Setup
Trip ifPrice falls below $64 (more than 15% below current levels) without recovering the gap on elevated volume.