Astec Gains From Infrastructure Cycle and Aftermarket Growth

Astec Industries, Inc. ASTE is well positioned to benefit from the multi-year infrastructure spending cycle in the United States. The company also builds a more stable flow of spare parts that can cushion bottom lines throughout the cycle.

Astec manufactures equipment and components used throughout the road construction life cycle, from aggregate extraction to asphalt application. The company also sells industrial automation controls and telematics platforms.

Improving demand visibility for ASTE

Astec’s end markets benefit from continued investment in public infrastructure, with demand for asphalt and concrete plants remaining strong into late 2025. This favorable backdrop helps stabilize expectations for plant activity.

Astec ended 2025 with a consolidated backlog of $514.1 million, up 22.5% year-over-year as of December 31, 2025. This follows a mid-year low and supports a clearer shipping runway through 2026.

The Zacks Consensus Estimate for 2026 earnings is $1.59 million, suggesting year-over-year growth of 13%. The estimate for 2027 is $1.64 million, a growth of 3%.

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Consolidated implied orders also increased sequentially in the fourth quarter, driven by the Infrastructure Solutions segment. This trend is notable as infrastructure has been identified as the main driver of growth in the short term.

Focus on secondary market improves stability

Astec has focused on spare parts as an integral revenue stream that supports customer retention across cycles. A higher parts mix can reduce earnings volatility because it is tied to an installed base that continues to operate even when orders for new equipment fluctuate.

Parts sales grew 11.5% in 2025 and 19.7% year-over-year in the fourth quarter. Spare parts accounted for 30.7% of total sales in 2025, highlighting the growing contribution of recurring demand.

Portfolio expansion and innovation to drive growth

Astec strengthened its business in 2025 through targeted acquisitions and new product launches, adding more than $200 million in annual revenue. The TerraSource acquisition contributed $84.7 million in incremental net sales in 2025 and also reduced Materials Solutions’ year-end backlog, including a contribution of $53.2 million.

The company has also developed an innovation pipeline that includes new factory technologies, processing equipment and a digital platform. These efforts expand the installed base and can increase recurring parts opportunities as more equipment operates within Astec’s service and support ecosystem.

Astec currently sports a Zacks Rank #1 (Strong Buy). For context on the broader construction and mining equipment landscape, Caterpillar $CAT Inc. CAT and Terex Company TEX are two notable industry peers. In the same set of peers, CAT carries a Zacks Rank #2 (Buy), while TEX sports a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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