We have upgraded the long-term recommendation (more than 6
months) on the shares of
Meritor Inc.
(
MTOR
) from Underperform to Neutral based on its expanding global
footprint, intensive focus on research and development, improved
results and a promising earnings outlook.
Meritor intends to win significant business propositions from
original equipment manufacturers (OEMs) in low-cost countries
across Asia and South America. The company aims to achieve $1
billion in Asian revenues in 5 years.
Moreover, the company is upgrading its research, development,
engineering and product design capabilities. In 2010, the company
had announced plans to invest $23 million over the next five years
in order to enhance its research and development capabilities at a
technical center in its Troy, Michigan headquarters.
In the first quarter of fiscal 2012, the Zacks #3 Rank (Hold)
company saw a profit of $11 million or 12 cents per share compared
with a loss of $3 million or 4 cents per share in the same quarter
of prior fiscal year (all excluding restructuring charges).
However, the profit was lower than the Zacks Consensus Estimate of
20 cents per share.
Including restructuring charges, profit was $13 million or 13
cents per share in the quarter under review compared with a loss of
$6 million or 7 cents per share in the prior-year quarter.
Sales went up 21% to $1.2 billion from the first quarter of
fiscal 2011. This increase in sales was primarily driven by
stronger truck demand in all regions.
Adjusted EBITDA rose 21.5% to $79 million from $65 million in
the first quarter of fiscal 2011 due to the positive impact from
increased sales, partially offset by higher material costs.
Adjusted EBITDA margin was flat at 6.8% compared with the same
period last year.
In the recent Mid-America Trucking Show, Meritor reaffirmed its
earnings guidance for fiscal 2012. The company anticipates revenues
to be $4.8 billion, adjusted EBITDA margin in the range of
8.2%-8.6%, adjusted profit in the range of $105 million-$135
million or $1.08-$1.39 per share for the full year. It compares
with a corresponding $4.6 billion, 7.5%, $82 million or 85 cents
per share in fiscal 2011.
Meritor is a global automotive parts manufacturer and supplier
to various customers in North America, Europe and other parts of
the world. It is a worldwide supplier of a broad range of
integrated systems, modules and components for commercial,
specialty and light vehicles worldwide, and has developed leading
positions in most of its markets.
The company operates manufacturing facilities in 19 countries
across North America, South America, Europe and Asia-Pacific. Some
of its big customers include
Volvo
AB
(
VOLVY
),
Navistar International Corporation
(
NAV
) and
Daimler AG
(
DDAIF
).
DAIMLER AG (
DDAIF
): Free Stock Analysis Report
MERITOR INC (
MTOR
): Free Stock Analysis Report
NAVISTAR INTL (
NAV
): Free Stock Analysis Report
VOLVO AB ADR B (
VOLVY
): Free Stock Analysis Report
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