Astec Industries on Tuesday lost nearly one-fourth of its market value after the Chattanooga-based asphalt and equipment maker reported third quarter earnings only about half what Wall Street had expected.
Astec had its most profitable quarter in six years this summer, but the results and outlook for the company were disappointing to investors who cut the share price of Astec stock by $11.76 per share, or 24.9 percent, to $35.51 - the lowest price for the company in more than two and a half years.
Astec earned $7 million, or 30 cents per share, on sales of $256.6 million in the third quarter. A year ago in the same period, Astec lost $2.7 million, or 12 cents per share, on sales of $252.1 million.
Despite the record profits, the results missed Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was that the company would earn 59 cents per share in the quarter.
"While the earnings were below our own expectation, we were pleased to earn our best reported third quarter result since 2012," Astec CEO Ben Brock said in the earnings announcement.
Brock said Astec's backlog of orders is down 20.2 percent from the same period a year ago, primarily because of a drop in orders for Astec's pellets machines.
"Our backlog, disregarding pellets, was flat year over year, reflecting continued stability in the industries we serve," Brock said. "As anticipated, our customers remained focused on work during the quarter which led to a slower order intake as the normal buying season started."
But Brock said since the end of the third quarter, orders have picked up.
"Our backlog and recent order intake has us optimistic on our outlook for the fourth quarter and the first half of 2019," he said.
Brock said he believes Astec's stock, which is down by 43 percent so far this year, is undervalued "and buying our stock back is a good investment and creates value for our shareholders."
In the third quarter, Astec repurchased approximately 297,000 shares of common stock for an aggregate purchase price of about $14 million.