ATRO Outperforms Industry in a Month: How to Play the Stock?

Astronics Corporation ATRO stock has gained 25.5% in the past month, outperforming the Zacks Aerospace-Defense Equipment industry’s growth of 14% and the broader Zacks Aerospace sector’s return of 6.9%. It also came above the S&P 500’s return of 0.4% in the same time frame.

Other industry players like Kratos Defense & Security Solutions KTOS and Rocket Lab USA, Inc. RKLB have also delivered a similar stellar performance in the past month. KTOS and RKLB shares have risen 35.5% and 44.3%, respectively, in the said period.

ATRO’s recent gains may attract investor interest. However, before buying the stock, it is important to assess whether the company’s fundamentals can support long-term growth or if the recent rise is only short-term. Reviewing ATRO’s growth stability can help investors make a well-informed decision.

Tailwinds for ATRO

Astronics is seeing favorable demand trends across both defense and commercial aerospace markets. Higher global defense spending is supporting the demand for military aircraft programs, while expanding air travel is encouraging airlines to invest in cabin power access and in-flight connectivity solutions, directly benefiting the company’s product portfolio.

The company recently released its preliminary results for 2025, highlighting this positive momentum. Preliminary fourth-quarter revenues were $236-$239 million, exceeding the company’s guidance, while full-year revenues reached about $860 million, reflecting solid year-over-year growth. Strong order activity also supported visibility, with preliminary bookings of roughly $257 million in the quarter and full-year orders of around $924 million.

These industry tailwinds are expected to remain supportive. The company’s preliminary 2026 revenue outlook of $950-$990 million implies continued growth, driven by sustained defense investments and ongoing airline spending on aircraft upgrades. Higher volumes are also expected to support improved profitability and cash flow.

ATRO’s Estimates

The Zacks Consensus Estimate for 2026 sales implies year-over-year growth of 14.5%.

The Zacks Consensus Estimate for 2026 earnings implies year-over-year growth of 35%.

Further, the upward revision in the company’s 2026 earnings estimates over the past 60 days suggests investors’ increasing confidence in this stock’s earnings generation capabilities.

ATRO Stock Reflects Discounted Valuation

In terms of valuation, ATRO’s forward 12-month price-to-sales (P/S) is 2.36X, a discount to the industry average of 12.81X. This suggests that investors will pay a lower price than the company's expected sales growth compared with its industry average.

Other industry peers, on the contrary, are trading at a premium to ATRO. While Kratos is trading at a forward 12-month P/S of 10.95X, Rocket Lab is trading at 51.47X.

Liquidity Position

ATRO has a current ratio of 2.87. The ratio, being more than one, indicates that ACHR possesses sufficient capital to pay off its short-term debt obligations.

ROIC

ATRO’s Return on Invested Capital stands at 15.77%, well above the industry average of 3.30%. This indicates that the company is generating strong returns on its investments and using its capital far more efficiently than most of its peers.

Risks to Consider Before Choosing ATRO

Aerospace-defense companies, such as Astronics, Kratos and Rocket Lab, continue to face supply-chain challenges, including shortages of raw materials, rising input costs and limited availability of skilled labor. These issues add pressure to production schedules and overall efficiency.

The recent increase in U.S. tariffs on imports from many trading partners is expected to further intensify these challenges. For Astronics, this could lead to delays in product deliveries and weigh on its operating performance.

Should You Buy ATRO Stock Now?

Astronics is supported by its discounted valuation, improving earnings outlook, solid growth prospects, strong liquidity position and efficient use of capital. However, caution is warranted as the aerospace and defense industry continues to face challenges such as supply-chain constraints, higher input costs and limited availability of skilled labor, which could affect production timelines and margins.

Investors who already own ATRO shares may consider continuing to hold them, given the company’s long-term growth potential. Meanwhile, new investors may prefer to wait for greater clarity on how these industry challenges evolve before taking a position.

Astronics currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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