Strattec's $62M Cash Pile: A Micro-Cap With Big Financial Flexibility

Strattec Security STRT has emerged as a resilient micro-cap player with a strong financial footing, even amid industry-wide volatility. At the end of third-quarter fiscal 2025 (ended March 30, 2025), STRT reported its cash position at $62.1 million. Additionally, under its revolving credit facility, Strattec has roughly $47 million available. Thus, with a total liquidity cushion of more than $100 million, STRT has the wherewithal to sail through a volatile business environment.  

STRT has a debt-to-capitalization of 5.25%, significantly lower than the 27.79% of the composite stocks belonging to the industry. This strong balance sheet strength is not just about financial security but creates opportunities to invest in organic growth, comprising the upgrade of production equipment and IT infrastructure, along with creating new products to cater to rising customer needs.   

Thus, while the broader automotive landscape faces continued uncertainty, Strattec, a focused automotive technology supplier with a healthy balance sheet, is well-positioned to grow. For fiscal 2025 and fiscal 2026, STRT has witnessed upward earnings estimate revisions over the past 60 days. 

Do AXL & BWA Have a Strong Balance Sheet?

Both American Axle & Manufacturing Holdings, Inc. AXL and BorgWarner BWA operate in business lines that overlap as automotive technology suppliers, though they each focus on different areas of vehicle systems.

But both AXL and BWA have significantly higher exposure to debt capital than STRT. While AXL has a debt-to-capitalization of 81.46%, BWA’s debt-to-capitalization is 39.6%.

STRT’s Price Performance, Valuation & Estimates

Shares of STRT have jumped 139% over the past year, outpacing the 7.6% decline of the composite stocks belonging to the industry.

From a valuation standpoint, STRT trades at a trailing 12-month price-to-earnings (P/E) of 10.76x. This is below the broader industry average of 24.55x.

The Zacks Consensus Estimate for STRT’s fiscal 2025 earnings has witnessed upward revisions over the past 60 days.

STRT stock currently sports a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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