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1. Company Snapshot

1.a. Company Description

Strattec 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.

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1.b. Last Insights on STRT

Strattec Security Corporation's recent performance was driven by strong Q3 earnings and revenue beat, beating the Zacks Consensus Estimate of $0.95 per share. The company's disciplined capital spending targets IT, efficiency and product growth, driving gains and margin strength. Additionally, Strattec's tariff-shielded model, cost-cutting moves and strong stock surge highlight its edge in the auto tech space. The company's robust balance sheet, with no parent-level debt, rising cash, and prudent capital allocation, positions it to weather industry volatility. Furthermore, Strattec's business model is insulated from direct tariff impacts, and its recent inclusion in the Russell 2000 and Russell 3000 indexes underscores its growth potential.

1.c. Company Highlights

2. Strattec Security's Q1 FY2026 Earnings: A Solid Start

Strattec Security Corporation reported a robust first quarter for fiscal year 2026, with revenue growth of nearly 10% and a gross profit margin expansion of 370 basis points to 17.3%. EBITDA margin also saw a significant increase, rising 310 basis points to 10.2%. The company's actual EPS came out at $2.22, beating estimates of $1.48. The strong financial performance was driven by higher sales, effective pricing actions, and cost reduction initiatives. With a current P/E Ratio of 11.82, the market seems to have a reasonable expectation of the company's future earnings growth, which analysts estimate to be around 3.0% for the next year.

Publication Date: Nov -23

📋 Highlights
  • Revenue & Margin Growth:: Revenue grew nearly 10%, gross profit margin expanded 370 bps to 17.3%, and EBITDA margin expanded 310 bps to 10.2%.
  • Cash Generation:: Generated $11M in cash, ending Q1 with $90M cash balance; restructuring action to save ~$1M annually.
  • Automation Investments:: $12.5M 2026 capex (2% of sales) for automation, with payback <1 year and results expected in Q2-HFY2026.
  • Operational Reorganization:: Sale-leaseback of Milwaukee facility, consolidating test lab to Auburn Hills, and relocating corporate offices.

Cash Flow and Balance Sheet

The company demonstrated its ability to generate cash, producing $11 million during the quarter and ending with $90 million on its balance sheet. This strong cash position provides Strattec with the flexibility to continue executing its transformation plans and potentially explore mergers and acquisitions. The company's financial health is further underscored by its EV/EBITDA ratio of 4.38, indicating a relatively low valuation compared to its earnings before interest, taxes, depreciation, and amortization.

Operational Progress and Challenges

Despite facing headwinds in the automotive industry, including supply chain disruptions, Strattec is better positioned to manage these challenges due to its ongoing transformation efforts. The company is making progress in modernizing its operations through automation, starting with its Mexico operations. Strattec's commercial efforts are focused on gaining new customers and securing future vehicle platforms with existing ones, which should drive future growth. As the company continues to assess its operations and product portfolio, it is taking steps to drive value, such as the planned sale-leaseback of its Milwaukee facility.

Future Outlook and Valuation

Strattec is optimistic about its future prospects, with a budgeted capital expenditure of $12.5 million for 2026, approximately 2% of its sales. The company expects to start seeing results from its automation investments in the second half of the fiscal year, with a payback period of less than one year. With a P/B Ratio of 1.21 and an ROE of 10.84%, Strattec appears to be reasonably valued. Its Free Cash Flow Yield of 22.67% is particularly noteworthy, suggesting that the company is generating significant cash relative to its market value.

3. NewsRoom

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Strattec to Participate in Upcoming Virtual Investor Conferences

Dec -02

Source: businesswire.com

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Buy These 4 Stocks With Solid Net Profit Margin to Boost Returns

Dec -01

Source: zacks.com

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Forget Profit, Bet on 4 Stocks With Increasing Cash Flows

Dec -01

Source: zacks.com

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Here's Why Momentum in Strattec Security (STRT) Should Keep going

Nov -25

Source: zacks.com

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STRT or VLVLY: Which Is the Better Value Stock Right Now?

Nov -21

Source: zacks.com

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Are Auto-Tires-Trucks Stocks Lagging Strattec Security (STRT) This Year?

Nov -19

Source: zacks.com

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Strattec Security (STRT) Upgraded to Strong Buy: Here's Why

Nov -05

Source: zacks.com

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STRT or VLVLY: Which Is the Better Value Stock Right Now?

Nov -05

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.41%)

6. Segments

Door Handles & Exterior Trim

Expected Growth: 4%

Strattec Security Corporation's Door Handles & Exterior Trim segment growth is driven by increasing demand for automotive accessories, rising vehicle production, and growing consumer preference for premium exterior trim features. Additionally, the company's focus on innovative designs, quality products, and strategic partnerships with OEMs contribute to its 4% growth rate.

Power Access

Expected Growth: 6%

Strattec Security Corporation's Power Access segment growth is driven by increasing demand for electrification in vehicles, rising adoption of advanced driver-assistance systems (ADAS), and growing need for secure and convenient access solutions. Additionally, the trend towards autonomous vehicles and electrification of commercial fleets further supports this growth.

Keys & Locksets

Expected Growth: 3%

Strattec Security Corporation's Keys & Locksets segment growth is driven by increasing demand for advanced security solutions, rising adoption of electronic access control systems, and growing need for secure authentication in various industries such as automotive, aerospace, and government.

Latches

Expected Growth: 4%

Strattec Security Corporation's Latches segment growth is driven by increasing demand for automotive security systems, rising vehicle production, and growing adoption of advanced safety features. Additionally, the company's strategic partnerships, innovative product offerings, and expanding global presence contribute to its growth momentum.

Aftermarket & OE Service

Expected Growth: 5%

Strattec Security Corporation's Aftermarket & OE Service segment growth is driven by increasing vehicle electrification, rising demand for advanced safety features, and growing need for secure vehicle access systems. Additionally, the company's strategic partnerships, expanding product portfolio, and geographic diversification contribute to its 5% growth rate.

User Interface Controls (Formerly Driver Controls)

Expected Growth: 5%

Strattec Security Corporation's 5% growth in User Interface Controls is driven by increasing demand for advanced automotive security systems, rising adoption of connected cars, and growing need for secure vehicle access and authentication. Additionally, OEMs' focus on enhancing user experience and convenience features, such as keyless entry and biometric authentication, contributes to the segment's growth.

Other

Expected Growth: 4%

Strattec Security Corporation's 4% growth is driven by increasing demand for automotive security systems, expansion into emerging markets, and strategic partnerships. Additionally, the company's focus on innovation, such as biometric authentication and vehicle access control, is expected to contribute to its growth.

7. Detailed Products

Locks and Latches

Strattec Security Corporation offers a wide range of locks and latches designed for various applications, including automotive, RV, and industrial uses.

Keys and Keyless Entry Systems

Strattec provides a variety of keys and keyless entry systems, including transponder keys, remote start systems, and push-button start systems.

Electronics and Antenna Systems

Strattec offers a range of electronics and antenna systems, including remote start systems, alarm systems, and GPS tracking systems.

Access Control Systems

Strattec provides access control systems, including biometric authentication, card readers, and electronic locks.

Custom Solutions

Strattec offers custom solutions for unique security and access control requirements, including design, engineering, and manufacturing services.

8. Strattec Security Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Strattec Security Corporation is moderate due to the presence of alternative security solutions.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Strattec's security solutions, making it difficult for customers to switch to alternative providers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers of security equipment and services, but Strattec's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants is high due to the relatively low barriers to entry in the security industry, and the potential for new companies to enter the market with innovative solutions.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the security industry, with multiple players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 6.79%
Debt Cost 6.33%
Equity Weight 93.21%
Equity Cost 9.45%
WACC 9.24%
Leverage 7.28%

11. Quality Control: Strattec Security Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Douglas Dynamics

A-Score: 6.4/10

Value: 5.8

Growth: 3.7

Quality: 5.7

Yield: 8.0

Momentum: 7.0

Volatility: 8.0

1-Year Total Return ->

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Standard Motor Products

A-Score: 5.6/10

Value: 5.4

Growth: 3.3

Quality: 3.8

Yield: 6.0

Momentum: 8.5

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
Strattec Security

A-Score: 5.6/10

Value: 7.9

Growth: 6.7

Quality: 6.0

Yield: 0.0

Momentum: 9.5

Volatility: 3.3

1-Year Total Return ->

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Dana

A-Score: 4.8/10

Value: 4.7

Growth: 3.3

Quality: 2.4

Yield: 5.0

Momentum: 9.0

Volatility: 4.7

1-Year Total Return ->

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Monro

A-Score: 4.1/10

Value: 7.3

Growth: 2.6

Quality: 2.8

Yield: 8.0

Momentum: 1.0

Volatility: 2.7

1-Year Total Return ->

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Holley

A-Score: 4.0/10

Value: 6.8

Growth: 5.9

Quality: 2.6

Yield: 0.0

Momentum: 6.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

78.8$

Current Price

78.8$

Potential

-0.00%

Expected Cash-Flows