Strattec Security (STRT) AI Stock Analysis

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Strattec Security

(NASDAQ:STRT)

Rating:78Outperform

Price Target:

$55.00

▲( 6.10% Upside)

Strattec Security's solid financial performance and positive earnings call contribute significantly to its overall score, highlighting the company's growth potential and strategic positioning. The low P/E ratio indicates moderate valuation appeal. The technical analysis suggests short-term challenges with potential overbought conditions, but overall, the stock is positioned well for future growth.

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

Market Cap

$216.07M

Dividend YieldN/A

Average Volume (3M)29.87K

Price to Earnings (P/E)10.5

Beta (1Y)1.29

Revenue Growth5.54%

EPS Growth398.82%

CountryUS

Employees3,365

SectorConsumer Cyclical

Sector Strength74

IndustryAuto - Parts

Share Statistics

EPS (TTM)1.50

Shares Outstanding4,168,104

10 Day Avg. Volume49,891

30 Day Avg. Volume29,874

Financial Highlights & Ratios

PEG Ratio5.66

Price to Book (P/B)0.79

Price to Sales (P/S)0.00

P/FCF Ratio5.27

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 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 access control products to automotive OEMs and the aftermarket. The company's key revenue streams include the production and sale of traditional mechanical locks and keys, electronic locking systems, and ignition lock housings. In addition to product sales, Strattec also earns from engineering and design services related to vehicle security systems, which are often integrated into larger projects with their OEM partners. Significant partnerships with major automotive manufacturers enhance Strattec's market reach and contribute to its earnings by ensuring a steady demand for its innovative security solutions. The company's focus on research and development allows it to adapt to evolving automotive technologies, further solidifying its revenue base.

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
34.22M	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
42.63M	25.41M	20.57M	8.77M	14.46M	11.77M
	Total Assets
355.89M	364.29M	340.93M	318.68M	310.56M	265.55M
	Total Debt
13.00M	13.00M	13.00M	11.00M	12.00M	35.00M
	Net Debt
-29.63M	-12.41M	-7.57M	2.23M	-2.46M	23.23M
	Total Liabilities
127.74M	138.67M	129.91M	98.27M	97.13M	90.10M
	Stockholders Equity
204.54M	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

Positive

Last Price51.84

Price Trends

50DMA

40.06

Positive

100DMA

41.50

Positive

200DMA

40.15

Positive

Market Momentum

MACD

4.02

Negative

RSI

70.59

Negative

STOCH

86.02

Negative

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 51.84 is above the 20-day moving average (MA) of 42.00, above the 50-day MA of 40.06, and above the 200-day MA of 40.15, indicating a bullish trend. The MACD of 4.02 indicates Negative momentum. The RSI at 70.59 is Negative, neither overbought nor oversold. The STOCH value of 86.02 is Negative, 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 25 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 1 New Risks

Q4, 2024

Strattec Security Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
STRT	78 Outperform	$216.07M	10.47	9.91%	―	5.54%	398.82%
CAAS	65 Neutral	$121.59M	4.22	8.05%	―	18.33%	-26.25%
MPAA	63 Neutral	$214.83M	―	-6.40%	―	4.26%	64.64%
Sector *	62 Neutral	$6.84B	11.22	2.83%	3.95%	2.65%	-21.93%
SRI	56 Neutral	$132.27M	―	-6.63%	―	-8.90%	-346.80%
KNDI	51 Neutral	$96.30M	―	-13.49%	―	3.21%	-6985.88%
SUP	39 Underperform	$14.24M	―	-80.07%	―	-3.63%	36.19%

* Consumer Cyclical Sector Average

Performance Comparison

STRT

Strattec Security

51.84

25.10

93.87%

CAAS

China Automotive Systems

4.03

0.96

31.27%

KNDI

Kandi Technologies

1.12

-0.99

-46.92%

MPAA

Motorcar Parts Of America

10.97

5.64

105.82%

SRI

Stoneridge

4.75

-11.62

-70.98%

SUP

Superior Industries International

0.48

-3.17

-86.85%

Strattec Security Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q3-2025)

% Change Since: 41.64%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Positive

The earnings call reflected a strong financial performance with significant cash generation, margin expansion, and strategic execution. Despite increased tariff costs and operational expenses, the company effectively mitigated risks and continued to focus on operational improvements and cost management.

Q3-2025 Updates

Positive Updates

Strong Cash Generation and Financial Position

Generated nearly $21 million in cash from operations in the third quarter, bringing the year-to-date total to $41.5 million. Maintained over $60 million in cash with limited borrowings, offering financial flexibility.

Significant Margin Expansion

Year-over-year gross margin expanded by 560 basis points, and sequentially by 280 basis points, reflecting improved earnings and cost management.

Substantial Increase in Net Income

Net income of $1.32 per diluted share, a more than three-fold increase from the previous year's third quarter.

Successful Strategic Pricing and Operational Improvements

Adjusted EBITDA increased to $12.9 million, representing 9% of sales, up from 4.4% in the prior year.

Proactive Tariff Mitigation Efforts

Mitigated about 30% of the $9-12 million tariff impact and engaged in pricing discussions and logistical adjustments to offset costs.

Negative Updates

Increased Tariff Costs

Faced $800,000 of additional tariff expenses due to U.S. trade policy changes, impacting financial results.

Higher Operational Expenses

Engineering, selling, and administrative expenses rose to $16 million, up $3.3 million from the prior year, due to investments in transformation initiatives.

Ongoing Tariff and Industry Volume Uncertainties

Continued macro uncertainty, including tariffs and industry volume pressures, could impact future performance.

Company Guidance

During the STRATTEC third quarter fiscal year 2025 conference call, the company reported generating nearly $21 million in cash from operations in the quarter, contributing to a year-to-date total of $41.5 million. The company achieved a notable gross margin expansion of 560 basis points year-over-year, and a sequential margin increase of 280 basis points, driven by strategic pricing actions and operational improvements. Net income per diluted share rose over three-fold from the previous year to $1.32, with adjusted EBITDA reaching $12.9 million, representing 9% of sales, up from 4.4% in the prior-year period. The restructuring of operations in Mexico and Milwaukee is expected to yield annualized savings of approximately $5 million. STRATTEC is actively mitigating the potential $9 million to $12 million cost impact from new U.S. tariffs, having already offset 30% and pursuing further commercial recoveries. The company’s cash position stands robust at $62.1 million, with significant liquidity available under its revolving credit facilities. STRATTEC continues to focus on operational efficiencies and organic growth, while exercising caution in capital allocation amidst market uncertainties.

Strattec Security Corporate Events

Business Operations and StrategyFinancial Disclosures

Strattec Security Reports Strong Q3 2025 Financial Results

Positive

May 8, 2025

On May 8, 2025, STRATTEC Security Corporation announced its financial results for the third quarter of fiscal year 2025, ending March 30, 2025. The company generated $20.7 million in cash from operations and reported a net income of $5.4 million, a significant increase from the previous year. The company also highlighted its efforts in cost reduction, including restructuring operations in Mexico and Milwaukee, which are expected to generate $5 million in annual savings. Despite challenges from tariffs, STRATTEC is implementing mitigation strategies and focusing on operational excellence to enhance earnings power.

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.

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.