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Strattec Security (STRT)
NASDAQ:STRT
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Strattec Security
(NASDAQ:STRT)
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Rating:79Outperform
Price Target:
$99.00
▲(31.56% Upside)
Action:ReiteratedDate:02/06/26
The score is driven primarily by strong financial performance (low leverage, improved profitability, and sharply stronger free cash flow) and supportive technical trends (price above key moving averages with positive momentum). The outlook is tempered by earnings-call guidance for a modest second-half revenue decline and ongoing FX/labor/tariff headwinds, while valuation appears reasonable but lacks dividend yield support in the provided data.
Positive Factors
Conservative balance sheet
Extremely low leverage and a large cash cushion give Strattec durable financial flexibility. In a cyclical auto supply chain, minimal debt reduces refinancing and interest risk, supports continued capex discipline, M&A optionality and resilience to production downdrafts without eroding liquidity.
Strong cash generation
Recent substantial free cash flow and operating cash conversion indicate high quality earnings and self funding for organic programs. Sustained FCF supports capital allocation priorities, funds restructuring benefits and reduces reliance on external financing during OEM cycles.
Margin recovery and program wins
Improved margins tied to pricing, mix and new program content reflect structural improvements in product value and negotiating leverage with OEMs. If maintained, a raised gross-margin baseline (15%–16%) increases operating cash potential and buffers against commodity and labor cost swings.
Negative Factors
OEM production cyclicality
High revenue sensitivity to OEM production and platform cycles limits top-line visibility and can quickly reverse recent gains. Reduced vehicle builds or lost program content would lower volumes and underutilize fixed costs, pressuring margins and cash flow over the medium term.
FX, labor and tariff exposures
Meaningful sensitivity to currency moves, Mexican labor inflation and trade/tariff shifts creates recurring margin volatility. These factors are largely exogenous and can erode the margin baseline quickly, complicating multi-quarter planning and making results dependent on pass-throughs or cost offsets.
Historical margin & cash volatility
Although current profitability and cash flow improved, prior years showed negative FCF and volatile margins. This track record signals that cost, volume or supply shocks can reverse gains, limiting confidence in sustained margin expansion and making long-term forecasting and investment planning riskier.
Strattec Security (STRT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$376.81M
Dividend YieldN/A
Average Volume (3M)41.70K
Price to Earnings (P/E)13.7
Beta (1Y)1.49
Revenue Growth6.83%
EPS Growth46.38%
CountryUS
Employees3,365
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)1.71
Shares Outstanding4,179,778
10 Day Avg. Volume49,762
30 Day Avg. Volume41,695
Financial Highlights & Ratios
PEG Ratio1.02
Price to Book (P/B)1.13
Price to Sales (P/S)0.44
P/FCF Ratio3.89
Enterprise Value/Market Cap0.74
Enterprise Value/Revenue0.48
Enterprise Value/Gross Profit2.86
Enterprise Value/Ebitda5.40
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)6.25
Revenue Forecast (FY)$576.70M
Strattec Security Business Overview & Revenue Model
Company DescriptionStrattec Security Corporation designs, develops, manufactures, and markets automotive access control products under the VAST Automotive Group brand primarily in North America. The company offers mechanical and electronically enhanced locks and keys, passive entry passive start systems, steering column and instrument panel ignition lock housings, latches, power sliding side door systems, power tailgate and lift gate systems, power deck lid systems, door handles, and related products. It also provides full service and aftermarket support services for its products. The company markets its products to automotive and light truck original equipment manufacturers, as well as other transportation-related manufacturers; and through wholesale distributors, other marketers, and users of component parts, as well as certain products to non-automotive commercial customers. It also exports its products to Europe, South America, Korea, China, and India. Strattec Security Corporation was founded in 1908 and is headquartered in Milwaukee, Wisconsin.
How the Company Makes MoneyStrattec Security generates revenue primarily through the sale of its automotive locking systems and security products to original equipment manufacturers (OEMs) and the aftermarket. The company's revenue model is based on the production and distribution of mechanical locks, electronic locks, and key systems, which are essential components in vehicle manufacturing and security. Key revenue streams include direct sales to automotive manufacturers, contracts for the supply of security solutions, and aftermarket sales of replacement keys and locks. Additionally, Strattec benefits from partnerships with major automotive companies, enabling it to secure long-term contracts and maintain a steady flow of income. The company also invests in research and development to innovate and expand its product offerings, which can lead to increased market share and profitability.
Strattec Security Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call emphasized meaningful progress from Strattec's transformation: strong revenue growth, sizable margin expansion (330 bps), substantial EPS growth (adjusted EPS +163%), robust cash generation, and a very healthy balance sheet with $99M cash and minimal debt. These operational and financial improvements materially outweigh near-term headwinds, which include FX and Mexico labor costs, tariff and supply-chain pressures, an expected modest revenue decline in the back half (down ~3%–4% YoY), and one-time charges raising SAE in the quarter. Management provided clear actions (cost savings, inventory strategy, SAE guidance, and capex discipline) to address the challenges and reiterated confidence in the longer-term margin baseline (15%–16%) and $40M annual cash generation goal.Q2-2026 Updates
Positive Updates
Revenue Growth
Sales of $137.5 million in Q2, up 6% year-over-year driven by pricing, favorable mix, new program launches, higher content value and $1.3 million of tariff recovery.
Gross Margin Expansion
Gross margin of 16.5% in the quarter, expanding 330 basis points year-over-year (gross margin increased $5.6 million to $22.7 million). Year-to-date gross margin expanded 350 basis points to 16.9%.
Significant EPS and Net Income Improvement
Net income nearly quadrupled year-over-year to roughly $4.9–$5.0 million (about $1.20–$1.21 per diluted share). Adjusted diluted EPS grew 163% year-over-year to $1.71, with adjusted net income of $7.1 million.
Adjusted EBITDA and Margin Gains
Adjusted EBITDA of $12.3 million for the quarter (adjusted EBITDA margin 8.9% versus 6.1% in prior-year quarter). Year-to-date adjusted EBITDA was $27.8 million, up 55% year-over-year with a margin of 9.6% (up 290 bps).
Strong Cash Generation and Balance Sheet
Operating cash flow of $13.9 million in the quarter (up 48% YoY) and $25.2 million year-to-date (up 21% YoY). Free cash flow of $11.3 million in the quarter and $21 million YTD. Cash balance of $99 million and total debt of $2.5 million (down from $8 million prior fiscal year). Company expects roughly $40 million annual cash from operations.
Cost Savings and Transformation Progress
Implemented voluntary retirement and other FY26 restructuring actions expected to generate $3.4 million in annualized savings. Captured $1.7 million in restructuring savings in the quarter and $3 million YTD; cumulative pricing actions (including tariff recoveries) of ~$8 million year-to-date.
Capital Allocation Discipline
Q2 CapEx of $2.6 million (focused on new product programs and equipment), YTD CapEx ~$4.2 million, with full-year CapEx expected to be less than $10 million. Priorities: organic growth programs, process modernization/automation, preserving flexibility, and evaluating M&A.
Negative Updates
Near-Term Revenue Outlook
Company expects the second half of the fiscal year to be down approximately 3% to 4% year-over-year as pricing laps, OEM production forecasts moderate, and industry headwinds persist.
Foreign Exchange Headwinds
Negative foreign exchange impact of approximately $1.6 million in the quarter and $2.1 million year-to-date. Management noted continued FX headwinds and that a 5% change in the dollar/peso equates to an approximate $4 million annualized gross margin impact.
Elevated Mexico Labor Costs
Higher labor costs in Mexico of about $1.2 million in the quarter and approximately $2.3 million year-to-date related to annual merit increases, pressuring margins.
Tariff and Supply Chain Pressures
Incurred approximately $900,000 increase in tariff costs in the quarter (partially offset by $1.3 million tariff recovery). Supply chain incidents (supplier fire) and ongoing chip constraints caused some platform impacts and required mitigation actions.
SAE (Selling, Administrative & Engineering) Volatility
SAE rose to $17.9 million (13% of sales) in the quarter due to a $1.7 million one-time voluntary retirement charge, $800,000 in transformation costs, and $700,000 in talent investments. Management expects SAE to settle to roughly 10%–11% of sales in the back half excluding one-time items.
Inventory Build and Near-Term Cash Impact
Inventory was intentionally increased by ~$7 million to improve customer responsiveness, which pressured cash flow in the quarter. Management also flagged that restructuring and transformation cash costs will impact Q3 cash flow.
Automotive Production Risk
Industry forecasts indicate flat to moderate declines in North American automotive production; company remains exposed to OEM production rates which constrain near-term demand visibility.
Company Guidance
The company guided to a slight sequential sales improvement in Q3 but said second-half fiscal 2026 sales are expected to be down roughly 3%–4% year‑over‑year, while aiming to sustain a raised gross margin baseline in the 15%–16% range as it advances toward its longer‑term goal; SG&A (SAE) is expected to normalize to about 10%–11% of sales in the back half of the year. Management reiterated operational targets including roughly $3.4 million of annualized savings from fiscal ’26 restructuring and a voluntary retirement program (with only ~$400k realized in Q2 and run‑rate reaching about $800k per quarter by Q4), an annual operating cash generation target of about $40 million, and fiscal 2026 capital expenditures of less than $10 million. They also flagged continued headwinds from foreign exchange (about $1.6 million in Q2 and an approximate $4 million annualized gross‑margin impact for every 5% move in USD/MXN), noted tariff recoveries (about $1.3 million in Q2), and emphasized balance‑sheet flexibility with $99 million of cash and just $2.5 million of total debt while remaining open to M&A.Strattec Security Financial Statement Overview
Summary
Strong overall fundamentals: profitability has rebounded into TTM with healthy margins (gross ~15.9%, operating ~5.4%, net ~4.1%), the balance sheet is conservatively positioned (debt-to-equity ~0.02), and cash generation is strong (TTM operating cash flow ~$76.1M; free cash flow ~$67.8M). The main risk is historical cyclicality/volatility in margins and cash flow.Income Statement
Results have rebounded meaningfully versus the loss year in 2023, with profitability improving steadily into 2025. TTM (Trailing-Twelve-Months) revenue is $586.0M and margins are healthy for the group (gross margin ~15.9%, operating margin ~5.4%, net margin ~4.1%). Revenue has also continued to grow across recent periods, supporting scale benefits. The key weakness is that margins have been volatile over the cycle (strong 2021, pressured 2022–2023), suggesting earnings sensitivity to cost and volume swings.78
Positive
Balance Sheet
Balance sheet strength is a clear positive: leverage is very low, with TTM (Trailing-Twelve-Months) debt-to-equity at ~0.02 and equity of ~$236.8M against ~$392.2M of assets. Returns on equity have recovered to ~10.8% TTM (Trailing-Twelve-Months) after being negative in 2023, indicating improved profitability without relying on debt. The main watch item is that returns have been inconsistent historically, which can limit valuation support if profitability softens again.90
Very Positive
Cash Flow
Cash generation is currently strong: TTM (Trailing-Twelve-Months) operating cash flow is ~$76.1M and free cash flow is ~$67.8M, a sharp improvement from weak/negative free cash flow in 2022–2024. Free cash flow is broadly aligned with earnings (free cash flow to net income ~0.91 TTM), which supports quality of profits. The drawback is historical volatility—recent years included negative free cash flow and low cash conversion—so durability of the current run-rate remains the key question.83
Very Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 586.03M | 565.07M | 537.77M | 492.95M | 452.26M | 452.26M |
| Gross Profit | 97.56M | 84.58M | 65.47M | 42.15M | 56.02M | 56.02M |
| EBITDA | 51.77M | 40.41M | 37.65M | 10.78M | 28.86M | 28.86M |
| Net Income | 27.14M | 18.68M | 16.31M | -6.67M | 7.02M | 7.02M |
Balance Sheet | ||||||
| Total Assets | 392.25M | 391.45M | 364.29M | 340.93M | 319.13M | 310.56M |
| Cash, Cash Equivalents and Short-Term Investments | 99.03M | 84.58M | 25.41M | 20.57M | 8.77M | 14.46M |
| Total Debt | 2.50M | 11.29M | 20.52M | 17.46M | 16.64M | 15.40M |
| Total Liabilities | 129.23M | 145.02M | 138.67M | 129.91M | 99.19M | 97.13M |
| Stockholders Equity | 236.80M | 221.59M | 200.54M | 184.96M | 188.40M | 181.65M |
Cash Flow | ||||||
| Free Cash Flow | 67.78M | 64.52M | 2.48M | -7.28M | -3.75M | 26.22M |
| Operating Cash Flow | 76.10M | 71.68M | 12.27M | 10.10M | 10.44M | 35.15M |
| Investing Cash Flow | -8.07M | -7.16M | -7.79M | -118.00K | -14.33M | -9.02M |
| Financing Cash Flow | -11.81M | -4.94M | 72.00K | 1.58M | -1.89M | -22.89M |
Strattec Security Technical Analysis
Positive
75.25
Price Trends
81.89
Positive
75.41
Positive
68.55
Positive
Market Momentum
2.79
Negative
59.65
Neutral
76.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STRT, the sentiment is Positive. The current price of 75.25 is below the 20-day moving average (MA) of 85.50, below the 50-day MA of 81.89, and above the 200-day MA of 68.55, indicating a bullish trend. The MACD of 2.79 indicates Negative momentum. The RSI at 59.65 is Neutral, neither overbought nor oversold. The STOCH value of 76.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for STRT.
Strattec Security Risk Analysis
Strattec Security disclosed 26 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $376.81M | 13.69 | 12.30% | ― | 6.83% | 46.38% | |
73 Outperform | $134.26M | 3.97 | 9.19% | ― | 16.72% | 5.35% | |
64 Neutral | $524.22M | -20.12 | -5.54% | ― | -3.20% | -257.73% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
56 Neutral | $247.11M | -7.33 | -12.26% | ― | -4.91% | -331.53% | |
51 Neutral | $206.52M | 113.76 | 0.75% | ― | 6.72% | ― | |
48 Neutral | $195.26M | -2.74 | -71.46% | ― | 46.09% | 46.01% |
* Consumer Cyclical Sector Average
STRT
Strattec Security
89.80
39.30
77.82%
CAAS
China Automotive Systems
4.42
-0.17
-3.70%
MPAA
Motorcar Parts Of America
10.64
0.27
2.60%
SRI
Stoneridge
8.47
4.28
102.15%
INVZ
Innoviz Technologies
0.94
0.15
19.26%
HLLY
Holley
4.28
1.51
54.51%
Strattec Security Corporate Events
Business Operations and StrategyFinancial Disclosures
Strattec Security Delivers Strong Fiscal Q2 Results, Restructuring Advances
Positive
Feb 5, 2026
On February 5, 2026, Strattec reported results for its fiscal second quarter ended December 28, 2025, highlighting a 6% year-on-year increase in net sales to $137.5 million, driven by pricing actions, favorable mix, new program launches and tariff recovery. Gross margin improved to 16.5% from 13.2% as higher volumes, $1.7 million in restructuring savings and pricing more than offset higher labor, tariffs and unfavorable foreign exchange, while net income attributable to Strattec rose to $4.9 million, or $1.20 per diluted share, with adjusted EBITDA climbing to $12.3 million and an 8.9% margin. Cash generated from operations reached $13.9 million in the quarter, boosting cash and equivalents to $99.0 million against just $2.5 million in debt, and the company advanced fiscal 2026 restructuring initiatives—including a voluntary early retirement program and Mexico operational changes—expected to deliver $3.4 million in annualized savings, reinforcing its balance sheet strength and operational flexibility amid anticipated softer U.S. auto production and ongoing FX headwinds.
The most recent analyst rating on (STRT) stock is a Buy with a $99.00 price target. To see the full list of analyst forecasts on Strattec Security stock, see the STRT Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.