) delivered a big Q4 earnings and sales beat on February 28, and
management provided bullish guidance for 2013.
This prompted analysts to revise their estimates significantly
higher for both this year and next, sending the stock to a Zacks
Rank #1 (Strong Buy). Despite the strong earnings momentum, the
valuation picture still looks very reasonable with shares trading
at just 1.4x book value.
Visteon is a global automotive supplier that specializes in
climate, electronics and interiors systems, modules and components
for the major automotive manufacturers around the globe. Over 80%
of its sales come from outside of North America.
Strong Q4 Beat
Visteon delivered a big fourth quarter beat on February 28.
Adjusted earnings per share came in at $1.17, beating the Zacks
Consensus Estimate by 20 cents.
Sales rose 5% to $1.823 billion, well ahead of the consensus of
$1.782 billion. This increase was primarily driven by higher sales
in the 'Climate' segment, which saw higher production volumes in
Asia and North America.
The gross profit margin expanded 253 basis points to 10.9%.
Meanwhile, selling, general and administrative expenses held steady
at 5.6% of total sales. These factors led to a solid 27% increase
in earnings before interest, taxes, depreciation and amortization
Following strong Q4 results, management provided encouraging sales
and EBITDA guidance for 2013. This prompted analysts to revise
their estimates higher for both 2013 and 2014, sending the stock to
a Zacks Rank #1 (Strong Buy).
The 2013 Zacks Consensus Estimate is now $3.98, representing 37%
growth over 2012. The 2014 consensus is currently 38% higher at
The two biggest factors of the Zacks Rank are the 'Agreement' and
'Magnitude' of the analysts' estimates. As you can see in the chart
below, both of these factors are moving in the right direction:
The valuation picture looks reasonable for Visteon with shares
trading at 13x forward earnings, in-line with its historical
Its price to book ratio is just 1.4, which is also in-line with its
The Bottom Line
With strong earnings momentum and reasonable valuation, Visteon
offers investors attractive upside potential.
Todd Bunton is the Growth & Income Stock Strategist for
and Editor of the
Income Plus Investor service
VISTEON CORP (VC): Free Stock Analysis Report
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