Standard Motor Products Inc.
) became a Zacks #1 Rank (Strong Buy) earlier this week in the wake
of its promising third quarter results. Furthermore, with a
price-to-book (P/B) ratio of 1.5, this automotive replacement parts
manufacturer makes a strong value proposition for investors.
Impressive Third Quarter
On October 30, Standard Motor Product revealed a 23.7% rise in
adjusted earnings per share to 73 cents for the third quarter,
beating the Zacks Consensus Estimate by more than 14%. The earnings
growth was attributable to higher sales and product cost savings
from recent acquisitions of BLD, Forecast Trading and Compressor
Works, as the company relocates additional manufacturing hours to
low cost regions.
Consolidated revenues in the quarter grew 16.8% to $276.0 million,
thanks in large part to recent acquisitions. The company's
Temperature Control segment also performed well with a 39.7% rise
in revenues to $95.2 million, despite the loss of business from a
Standard Motor Products expects to generate further savings in both
product cost and operating expenses with the integration of newly
acquired companies. It expects to achieve majority savings in 2013.
Earnings Estimates Moving Higher
The past 7 days have seen earnings estimates advance for both this
year and next. The Zacks Consensus Estimate for 2012 is up 5.5% to
$1.73 per share, suggesting year-over-year growth of more than 10%.
The Zacks Consensus Estimate for 2013 rose 4.2% to $1.99, which
would be a gain of more than 15% year over year.
Standard Motor Products has attractive valuation metrics as the
company's forward price-to-earnings (P/E) of 11.5x stands
significantly below the accepted level of 15.0x for a value stock,
while its P/B is below the benchmark of 3.0x. Furthermore, it has a
price-to-sales (P/S) ratio of 0.5 that is below the cut-off level
The chart below shows that shares of Standard Motor Products
continued to outperform estimates in the past three years. With
estimate lines moving up, the stock is likely to follow suit.
Headquartered in Long Island City, New York, Standard Motor
Products Inc. was founded in 1919. The $447.27 million company is
one of the leading manufacturers, distributors and marketers of
automotive replacement parts in the U.S. It supplies products to
warehouse distributors, large retail chains, original equipment
manufacturers and original equipment service part operations in the
U.S., Canada and Latin America.
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