Standard Motor Stays at Outperform - Analyst Blog

By
A A A

We are reiterating our Outperform recommendation on Standard Motor Product Inc . ( SMP ). The leading manufacturer and distributor of automotive replacement parts continue to benefit from strong brand recognition and a less cyclical auto and auto parts industry.

Standard Motor, in the third quarter of 2012, reported a 23.7% growth in adjusted earnings per share to 73 cents from 59 cents in the year-ago quarter, surpassing the Zacks Consensus Estimate by 9 cents. Profits surged 22.6% to $16.8 million from $13.7 million in the corresponding quarter last year.

Total revenues increased 16.8% year over year to $276 million, beating the Zacks Consensus Estimate of $258 million. The growth was attributable to the positive impact from the company's recent acquisitions and strong performance of its Temperature Control segment.

Standard Motor benefits from its strong brand recognition and wide customer base. The company distributes products under Standard, Blue Streak, BWD Automotive and Niehoff brand for its Engine Management division. Under Temperature Control division, it distributes products under Hayden and Four Seasons brand. It also distributes products under private brands like CARQUEST and NAPA Auto Parts for both the segments.

With greater focus on aftermarket, the company is not significantly exposed to the cyclical automotive industry. The company is expected to benefit from the rising demand of repair products due to the improved used vehicles market, increase in the number of automobiles on the road and rise in the average auto age to 10.8 years in the U.S.

In addition, the company will reap the benefits from the recent acquisition of BLD, Forecast Trading and Compressor Works. The acquisition will enhance its revenues and reduce the costs of products by further emphasizing on low cost regions.

However, Standard Motor faces challenges from concentrated customer base. The top five customers including Advance Auto Parts Inc. ( AAP ) and O'Reilly Automotive Inc. ( ORLY ) accounts for more than 10% of the company's sales. Any fluctuation may have an adverse effect on the company's results.

Our Outperform recommendation on the stock is backed by a Zacks #1 Rank, which translates into a short-term (1 to 3 months) Strong Buy rating.



ADVANCE AUTO PT (AAP): Free Stock Analysis Report

O REILLY AUTO (ORLY): Free Stock Analysis Report

STANDARD MOTOR (SMP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AAP , ORLY , SMP

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

106,679,460
  • $17.03 ▲ 0.47%
101,357,777
  • $38.65 ▼ 5.57%
61,830,117
  • $89.89 ▼ 4.26%
54,116,071
  • $5.11 ▼ 4.49%
50,121,934
  • $101.06 ▲ 0.10%
49,993,927
  • $3.52 ▼ 1.40%
47,717,687
  • $11.44 ▼ 4.67%
44,793,169
  • $99.05 ▼ 0.93%
As of 9/22/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com