Episode Details

Astronics Corporation (ATRO) Q2 2026 — Q2 2026 (thirteen weeks ended July 4; the Item 2.02 8-K hit EDGAR at 16:20 ET on Tuesday August 11, so Wednesday August 12 is the reaction session): revenue 260.0M USD up 27.0 pct, adjusted EPS 0.70 USD vs a 0.59 USD bar. Both lines BEAT; the stock rose 17.33 pct. Astronics beat the TOP of its own guidance by 10.0M USD, raised the full-year outlook a third time and set a third consecutive record backlog - and the shares rose 17.33 pct. The quarter is not in dispute. The price is: at 93.45 USD the market pays 24.5x this year's EBITDA for a supplier with 68.1 pct of sales in one end market. THE CALL: AVOID (2/5, LOW - A GREAT QUARTER AT A FULL PRICE) — base-case value ~$60.54 vs ~$93.45 today. KEY METRICS: - CALL: AVOID, 2/5. Fair value 58.38 USD vs the 93.45 USD close - 37.5 pct below the tape and 32 pct below the 85.98 USD Street average. Five years of free cash flow discounted at 9.5 pct with a 14x exit on 2031 EBITDA: bear 34.44, base 60.54, bull 78.02. - THE BEAT IS REAL: revenue 260.0M USD, up 27.0 pct, and 10.0M USD ABOVE the top of the 245-250M USD the company guided in May. The Street sat at 245.3M USD - the FLOOR of that range. The bar was not cut: the 0.59 USD EPS bar was above the 0.49 USD adjusted delivered in Q1. - EPS BASIS, PROVEN: GAAP diluted EPS was 0.75 USD - 35.06M USD over 46.535M shares. The 0.70 USD the feeds carry is the company's ADJUSTED figure - five cents BELOW GAAP, because the bridge normalises tax to 25 pct and removes 8.08M USD. Reported tax was 2.79M USD, a 7.4 pct rate. - MARGIN, ON THE ADJUSTED SERIES: adjusted operating margin went 8.9 to 16.6 pct, up 770bp; adjusted Aerospace margin 16.3 to 21.4 pct. Adjusted EBITDA was 51.5M USD at a 19.8 pct margin. A soft prior-year base flatters the reported figures; the adjusted series removes it. - THE BACKLOG QUESTION: backlog is a record 780.6M USD, a third straight high, up 20.9 pct. But revenue grew 27.0 pct, so coverage FELL from 3.15x a quarter of shipments to 3.00x. 82 pct converts inside twelve months - 640M USD against roughly 1.08B USD of forward revenue. - WHERE THE ORDERS CAME FROM: bookings were a record 306.2M USD, book-to-bill 1.18, trailing 1.13. But Aerospace alone was 1.02, and stripping the 27.4M USD MV-75 award takes it to 0.91. Test Systems booked 63.1M USD including a 44.7M USD US Army full-rate production order. - TEST SYSTEMS IS AN OPTION, NOT A DRAG: 22.7M USD of sales, 8.7 pct of the group, at a 2.6 pct margin with 4.1M USD recognised at zero margin. Segment backlog went 73.7M to 123.3M USD - 5.4 quarters of cover against 3.0 for the group. Our base case assumes no further gain there. - WE DIFFER FROM THE STREET: 5 firms cover ATRO - 3 strong buy, 1 buy, 1 hold, no sells - yet the 85.98 USD average target sits 8.0 pct BELOW the 93.45 USD close. On August 12 Craig-Hallum CUT to 95 from 100, TD Cowen held at 100, Truist reiterated Buy with no target. What to watch: UP: another book-to-bill above 1.15 in November with backlog coverage rising rather than falling; capital spending falling back toward depreciation in 2027. DOWN: narrowbody build-rate pauses, cabin-refit deferrals, working capital absorbing the growth. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.