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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 Corporation's Earnings Beat Expectations

Strattec Security Corporation reported a strong second quarter fiscal year 2026, with sales growing 6% driven by pricing, favorable sales mix, higher content value, new program launches, and tariff recovery. The company's gross margin expanded 330 basis points to 16.5% due to multiple favorable factors, including pricing actions, higher production volumes, and restructuring savings. Net income nearly quadrupled year-over-year to $5 million or $1.21 per diluted share, beating analyst estimates of $0.93. Adjusted EBITDA for the quarter was $12.3 million, representing an adjusted EBITDA margin of 8.9% compared with 6.1% in the prior year second quarter. The actual EPS came out at $1.71, significantly higher than the estimated $0.93.

Publication Date: Mar -02

📋 Highlights
  • Sales Growth:: Increased 6% year-over-year driven by pricing actions, favorable sales mix, and new program launches.
  • Gross Margin Expansion:: Expanded 330 basis points to 16.5% due to pricing, higher production volumes, and restructuring savings.
  • Net Income Surge:: Rose to $5 million ($1.21 per diluted share), nearly quadrupling compared to the prior year.
  • Adjusted EBITDA:: Reached $12.3 million (8.9% margin), up from 6.1% in the prior year second quarter.
  • Year-to-Date EBITDA:: Grew 55% to $27.8 million with a 9.6% margin (up 290 basis points year-to-date).

Operational Highlights

The company's focus on power access products, including drive units, latching mechanisms, door handles, and digital key technology, continues to drive growth. Jennifer Slater mentioned that they are having discussions with existing and prospective customers to get their products spec-ed into platforms, which can last 5 to 7 years, indicating a strong pipeline for future growth.

Financial Position and Outlook

Strattec Security Corporation ended the quarter with a healthy cash position of $99 million and paid down another $2.5 million of debt. Capital expenditures for the fiscal 2026 will be less than $10 million, and they expect to generate about $40 million in cash from operations annually. The company expects revenue growth for the second half to be a decrease of 3% to 4% on a year-over-year basis. Analysts estimate next year's revenue growth at 2.0%.

Valuation Metrics

Strattec Security Corporation's current valuation metrics indicate a relatively attractive price. The P/E Ratio is 13.19, P/B Ratio is 1.51, and P/S Ratio is 0.63. The EV/EBITDA ratio is 5.25, indicating a reasonable valuation relative to its earnings. The company's ROE is 12.07%, and ROIC is 8.54%, demonstrating a good return on equity and invested capital. The Net Debt / EBITDA ratio is -1.86, highlighting the company's net cash position.

3. NewsRoom

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Is Strattec Security (STRT) a Solid Growth Stock? 3 Reasons to Think "Yes"

Feb -11

Source: zacks.com

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Strattec Security (STRT) is on the Move, Here's Why the Trend Could be Sustainable

Feb -11

Source: zacks.com

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Strattec Security Q2 Earnings Call Highlights

Feb -08

Source: defenseworld.net

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Strattec Security Corporation (STRT) Q2 2026 Earnings Call Transcript

Feb -06

Source: seekingalpha.com

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Strattec Security (STRT) Q2 Earnings and Revenues Top Estimates

Feb -05

Source: zacks.com

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Strattec Generated $14 Million in Cash from Operations in Second Quarter Fiscal 2026

Feb -05

Source: businesswire.com

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STRT vs. ATMU: Which Stock Is the Better Value Option?

Feb -02

Source: zacks.com

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Strattec Announces Fiscal 2026 Second Quarter Financial Results Conference Call and Webcast

Jan -27

Source: businesswire.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: 6.2/10

Value: 4.8

Growth: 3.7

Quality: 5.0

Yield: 8.0

Momentum: 8.0

Volatility: 8.0

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Standard Motor Products

A-Score: 5.8/10

Value: 6.7

Growth: 3.3

Quality: 4.3

Yield: 6.0

Momentum: 7.5

Volatility: 7.0

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Strattec Security

A-Score: 5.6/10

Value: 8.3

Growth: 6.6

Quality: 6.1

Yield: 0.0

Momentum: 9.0

Volatility: 3.3

1-Year Total Return ->

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Dana

A-Score: 5.3/10

Value: 6.0

Growth: 3.3

Quality: 3.1

Yield: 5.0

Momentum: 9.5

Volatility: 4.7

1-Year Total Return ->

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Monro

A-Score: 4.2/10

Value: 7.0

Growth: 2.4

Quality: 2.9

Yield: 8.0

Momentum: 2.0

Volatility: 3.0

1-Year Total Return ->

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Holley

A-Score: 4.1/10

Value: 6.5

Growth: 5.9

Quality: 2.6

Yield: 0.0

Momentum: 8.5

Volatility: 1.3

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

85.24$

Current Price

85.24$

Potential

-0.00%

Expected Cash-Flows