Strattec Security (STRT) AI Stock Analysis

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Strattec Security

(NASDAQ:STRT)

70Outperform

Strattec Security's overall stock score of 70 reflects a strong financial foundation with positive growth indicators and strategic improvements. The earnings call underscored significant revenue and margin growth, supporting the company's robust outlook. However, technical analysis suggests caution with bearish momentum and market uncertainties such as tariff impacts and increased labor costs. The valuation is attractive, but the absence of a dividend yield may deter income investors.

Strattec Security (STRT) vs. S&P 500 (SPY)

Market Cap

$145.36M

Dividend YieldN/A

Average Volume (3M)19.67K

Price to Earnings (P/E)8.7

Beta (1Y)1.32

Revenue Growth7.69%

EPS Growth7934.59%

CountryUS

Employees3,365

SectorConsumer Cyclical

Sector Strength58

IndustryAuto - Parts

Share Statistics

EPS (TTM)4.00

Shares Outstanding4,172,217

10 Day Avg. Volume18,091

30 Day Avg. Volume19,674

Financial Highlights & Ratios

PEG Ratio0.00110

Price to Book (P/B)N/A

Price to Sales (P/S)0.32

Price to Cash Flow (P/CF)4.70

P/FCF Ratio4.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Strattec Security Business Overview & Revenue Model

Company DescriptionStrattec Security Corporation (STRT) is a leading manufacturer of automotive access control products. The company specializes in designing, developing, and producing mechanical and electronic locks, latches, and related security products primarily for the automotive industry. Headquartered in Milwaukee, Wisconsin, Strattec serves major global automotive manufacturers, providing high-quality and innovative solutions for vehicle security and access systems.

How the Company Makes MoneyStrattec Security makes money primarily through the sale of its access control products to original equipment manufacturers (OEMs) in the automotive sector. Its revenue streams are driven by contracts and partnerships with major car manufacturers, where it supplies components such as locks, keys, and other security systems that are integral to vehicle assembly. Strattec also benefits from aftermarket sales, where it provides replacement parts and services. In addition, the company engages in collaborative ventures with industry partners to enhance its product offerings and expand its market reach, thereby contributing to its earnings.

Strattec Security Financial Statement Overview

Summary

Strattec Security exhibits a commendable financial position with improving revenues and profitability, a debt-free balance sheet, and strong cash flows. The company is well-positioned for future growth with efficient cost management and liquidity. While the slight decline in the EBITDA margin and total assets warrants monitoring, the overall financial health is strong, providing a solid foundation for strategic expansion.

Income Statement

Positive

Strattec Security's income statement shows solid growth, with revenue increasing from $492.9M in 2023 to $552.8M in TTM (Trailing-Twelve-Months), a growth rate of 12.13%. The gross profit margin improved to 12.54%, indicating efficient production cost management. The net profit margin turned positive to 2.92% after a previous loss, reflecting improved profitability. However, the EBITDA margin decreased slightly from 7.01% to 4.67%, suggesting rising operating expenses.

Balance Sheet

Positive

The balance sheet is robust, with a strong equity position, as shown by an equity ratio of 58.39%. The company has no debt, reducing financial risk, and a healthy return on equity of 7.89%. The increase in cash reserves enhances liquidity, supporting future investments and operations. However, the total assets decreased slightly, which could be a potential concern if it continues.

Cash Flow

Very Positive

Strattec's cash flow is strong, with free cash flow increasing significantly to $31.58M from $2.48M annually, a growth rate of 1172.58%. The operating cash flow to net income ratio is robust at 2.47, indicating strong cash conversion. The company effectively manages its capital expenditures, enhancing free cash flow, which supports financial stability and growth opportunities.

TTM	Jun 2024	Sep 2023	Sep 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
552.80M	537.77M	492.95M	452.26M	485.30M	385.30M
	Gross Profit
69.32M	65.47M	42.15M	56.02M	78.66M	35.45M
	EBIT
18.85M	17.81M	-6.09M	8.90M	33.91M	-7.20M
	EBITDA
30.75M	37.65M	10.78M	28.86M	55.10M	12.13M
	Net Income Common Stockholders
16.15M	16.31M	-6.67M	7.02M	22.53M	-5.86M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
15.20M	25.41M	20.57M	8.77M	14.46M	11.77M
	Total Assets
140.28M	364.29M	340.93M	318.68M	310.56M	265.55M
	Total Debt
0.00	13.00M	13.00M	11.00M	12.00M	35.00M
	Net Debt
-15.20M	-12.41M	-7.57M	2.23M	-2.46M	23.23M
	Total Liabilities
63.95M	138.67M	129.91M	98.27M	97.13M	90.10M
	Stockholders Equity
74.93M	200.54M	184.96M	188.87M	181.65M	152.22M
Cash Flow		Free Cash Flow
31.57M	2.48M	-7.28M	-3.75M	26.22M	13.04M
	Operating Cash Flow
39.96M	12.27M	10.10M	10.44M	35.15M	25.42M
	Investing Cash Flow
-8.38M	-7.79M	8.90M	-14.33M	-9.02M	-12.35M
	Financing Cash Flow
63.00K	72.00K	-7.44M	-1.89M	-22.89M	-8.99M

Strattec Security Technical Analysis

Technical Analysis Sentiment

Negative

Last Price34.84

Price Trends

50DMA

43.12

Negative

100DMA

41.80

Negative

200DMA

38.14

Negative

Market Momentum

MACD

-2.26

Positive

RSI

35.71

Neutral

STOCH

31.92

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STRT, the sentiment is Negative. The current price of 34.84 is below the 20-day moving average (MA) of 38.38, below the 50-day MA of 43.12, and below the 200-day MA of 38.14, indicating a bearish trend. The MACD of -2.26 indicates Positive momentum. The RSI at 35.71 is Neutral, neither overbought nor oversold. The STOCH value of 31.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STRT.

Strattec Security Risk Analysis

Strattec Security disclosed 21 risk factors in its most recent earnings report. Strattec Security reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Strattec Security Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
STRT	70 Outperform	$145.36M	8.70	8.16%	―	7.69%	7934.59%
MPAA	68 Neutral	$174.88M	―	-6.40%	―	4.26%	64.64%
CAAS	65 Neutral	$111.33M	3.72	8.64%	―	12.94%	-20.38%
Sector *	60 Neutral	$7.23B	11.55	3.67%	4.04%	2.96%	-13.54%
SRI	50 Neutral	$105.26M	―	-6.20%	―	-6.92%	-215.11%
KNDI	48 Neutral	$101.34M	―	-1.59%	―	-11.61%	-22.20%
SUP	48 Neutral	$69.33M	―	-89.61%	―	-8.51%	9.63%

* Consumer Cyclical Sector Average

Performance Comparison

STRT

Strattec Security

34.84

12.93

59.01%

CAAS

China Automotive Systems

3.69

0.75

25.51%

KNDI

Kandi Technologies

1.16

-1.34

-53.60%

MPAA

Motorcar Parts Of America

8.93

3.43

62.36%

SRI

Stoneridge

3.78

-11.54

-75.33%

SUP

Superior Industries International

2.33

-1.42

-37.87%

Strattec Security Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: -8.92% | Next Earnings Date: Apr 24, 2025

Earnings Call Sentiment Positive

The earnings call presented a generally positive outlook with significant improvements in cash flow, revenue, and margins, alongside strategic pricing gains and product line growth. However, challenges such as increased labor costs and declines in sales to specific customers were acknowledged, alongside the uncertainties posed by tariffs.

Highlights

Strong Cash Flow from Operations

Generated $9.4 million in cash from operations during the quarter, totaling approximately $21 million for the first half of the fiscal year, a significant improvement over the previous year.

Revenue Growth

Revenue grew almost 10% despite the previous year's quarter benefiting from $4 million in retroactive pricing.

Margin Improvement

Adjusted EBITDA margin expanded by 180 basis points.

New Annualized Pricing Captured

Captured about $8 million in new annualized pricing, expected to begin realizing in the third quarter.

Strong Performance in Power Access and Engineered Latches

Sales of power access products increased by 27% year over year, and engineered latches grew by 20%.

Net Income Increase

Net income for the second quarter rose by 29% to $1.3 million.

Adjusted EBITDA Growth

Adjusted EBITDA for the quarter was $8 million, up 60% compared to the previous year.

Lowlights

Increased Labor Costs

Labor costs rose by $1.4 million due to a 20% government-mandated wage increase in Mexico.

Stellantis Sales Decline

Sales to Stellantis were down about 10% year over year in the quarter.

Tariff Uncertainty

Ongoing concerns about tariffs affecting the automotive industry, with potential implications for strategic evaluation.

Company Guidance

During the second quarter of fiscal year 2025, Strattec Security Corporation demonstrated solid financial performance and strategic progress. The company generated $9.4 million in cash from operations, contributing to a total of approximately $21 million in cash flow for the first half of the fiscal year. Revenue increased by almost 10%, and adjusted EBITDA margin expanded by 180 basis points. Notably, power access product sales surged by 27% year-over-year, while engineered latches grew by 20%, offsetting declines in key and lockset sales. The company achieved $8 million in new annualized pricing, anticipated to take effect in the third quarter. Additionally, Strattec reduced its preproduction tooling cost balances by $10.5 million, nearly halving the amount since the fiscal year's start. Gross profit rose by 27% to $17.2 million, benefiting from favorable foreign exchange and higher production volumes. Adjusted EBITDA for the quarter was $8 million, reflecting a 60% increase from the previous year, with an adjusted EBITDA margin of 6.1%. Strattec ended the quarter with $42.6 million in cash, emphasizing operational efficiencies and organic growth as key capital priorities.

Strattec Security Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Strattec Security Announces COO Retirement in 2025

Neutral

Mar 31, 2025

On March 31, 2025, Strattec Security Corporation announced the upcoming retirement of Rolando J. Guillot, the Senior Vice President – Operations and Chief Operating Officer, effective September 30, 2025, after a 35-year tenure. The company has initiated an executive search to find a new operations leader, which could impact its operational continuity and strategic direction.

Business Operations and StrategyFinancial Disclosures

Strattec Security Reports Revenue Growth in Q2 2025

Positive

Feb 6, 2025

On February 6, 2025, STRATTEC Security Corporation announced its fiscal second-quarter results for 2025, highlighting a revenue increase to $129.9 million driven by new program launches and customer demand. The company reported a net income of $1.3 million and significant cash generation from operations. The quarter also saw efforts in restructuring U.S. manufacturing operations and investments in talent and leadership to support strategic objectives, with a focus on profitability and market opportunities.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.