With Astronics Corp. shares trading at their lowest level since September 2013, the East Aurora aircraft electronics and lighting manufacturer is planning to buy back up to $50 million of its stock.
“This share repurchase initiative reflects the company’s belief that our shares represent an attractive investment opportunity,” said Peter J. Gundermann, Astronics’ president and chief executive officer.
Astronics shares hit an all-time high of $66.61 in early April of last year, but have steadily declined since summer as investor concerns mounted about the company’s ability to replace revenues from a key contract from Apple Inc. at its test systems business. The decline accelerated earlier this month when Astronics’ fourth-quarter profits fell short of analyst forecasts and the company warned that its sales this year would be roughly flat, rather than the 10 percent increase that analysts expected.
Astronics shares rose 4 percent, or $1.01, in early afternoon trading on Thursday to $29.41.
The buyback is “a step in the right direction,” said analyst Ken Herbert of Canaccord Genuity. “We can appreciate the vote of confidence that the buyback provides.”
“At a minimum [it] highlights that management has been listening to investor concerns and is defending its stock,” Herbert said in a note to investors. “The signaling from the buyback is more important, considering the stock movement and significant drop in confidence in the business.”
If Astronics spends all of the $50 million it is authorized to spend on the buyback, it could add 10 cents to 15 cents per share to Astronics’ earnings, Herbert estimated.