Can the Next Infrastructure Wave & Acquisitons Drive ASTE's Growth?

Astec Industries Inc.’s ASTE end markets are benefiting from sustained public funding for highways and bridges, with states committing significant dollars by late 2025 and industry forecasts pointing to growth in U.S. transportation construction in 2026. That backdrop has helped keep asphalt and concrete plant demand strong, particularly late in the year.

Astec is also seeing incremental demand tied to data center-related infrastructure. Combined with supportive federal programs and state budgets, that demand adds another layer to equipment and parts activity, extending the broader public spending tailwind.

Astec’s backlog rebounded after a mid-year dip, improving visibility into shipments. Consolidated backlog ended 2025 at $514.1 million, up 22.5% year over year, and implied consolidated orders advanced sequentially in the fourth quarter, led by Infrastructure Solutions.

The durability angle is the aftermarket. Parts sales rose 11.5% in 2025 and increased 19.7% year over year in the fourth quarter, with parts representing 30.7% of total 2025 sales. A larger installed base and improving service levels are supporting recurring demand that can dampen volatility from order timing.

Astec also has financial flexibility to support operational and growth initiatives. At year-end 2025, liquidity totaled about $314.7 million, and net debt to adjusted EBITDA was approximately 2.0x, within the company’s stated target range.

Product development supports the longer runway. The company has advanced an innovation pipeline that includes new plant technologies, processing equipment, and a digital platform, with an emphasis on expanding the installed base and recurring parts opportunities.

Astec has used acquisitions to reshape its portfolio and add capacity. Targeted deals and new product launches in 2025 added more than $200 million in annual revenues. TerraSource, acquired in July 2025, contributed $84.7 million of incremental net sales in 2025. The company followed with the acquisition of CWMF, which closed Jan. 2, 2026, for $67.5 million in cash on a cash-free, debt-free basis. Management expects the deal to be accretive to earnings per share, lift gross and adjusted EBITDA margins, and deliver synergies by the end of the first year. CWMF generates about $50 million in annual revenues and strengthens customer reach and capacity in Infrastructure Solutions.

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

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To sum up, Astec’s growth is tied to a multi-year U.S. infrastructure spending cycle, where demand for asphalt and concrete plants has stayed constructive. Astec is working to pair that cycle with more recurring, less timing-sensitive revenues. Backlog recovery, a bigger parts mix and targeted acquisitions are also key to that effort.

Astec currently sports a Zacks Rank #1 (Strong Buy). For context on the broader construction and mining equipment landscape, Caterpillar Inc. CAT and Terex Corporation TEX are two notable peers. CAT carries a Zacks Rank #2 (Buy), while TEX shows 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 originally published on Zacks Investment Research (zacks.com).

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