On Apr 3, we maintained our Outperform recommendation on
Standard Motor Product Inc.
), based on its strong brand recognition, less cyclical
end-market and efficient debt management measures and positive
impact from the recent acquisitions.
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On Mar 4, 2013, Standard Motor reported a profit of $6.5 million
or 28 cents per share in the fourth quarter of 2012 compared with
$3.9 million or 17 cents per share in the same quarter of 2011
(excluding non-operational gains and losses in both the
quarters). With this, the company has surpassed the Zacks
Consensus Estimate by 7 cents.
Consolidated net sales in the quarter rose 10.4% to $192.4
million in the quarter, surpassing the Zacks Consensus Estimate
of $188.0 million.
Following the release of the fourth quarter results, the Zacks
Consensus Estimate for 2013 increased 2.5% to $2.09 per share.
The Zacks Consensus Estimate for 2014 also edged up 0.9% to $2.28
per share. With the Zacks Consensus Estimates for both 2013 and
2014 going up, the company retains a Zacks Rank #2 (Buy).
Standard Motor benefits from its strong brand recognition and
wide customer base. With a focus on the aftermarket, the company
is less exposed to the cyclical automotive industry. The company
will benefit from the rising demand of repair products due to the
improved used vehicles market, increased automobiles on the road
and rise in average age of vehicles in the U.S.
In addition, Standard Motor will benefit from the recent
acquisitions. The company has acquired BLD, Forecast Trading and
Compressor Works, which have positive impacts on sales and will
continue to generate savings through optimization of product
costs and operating expenses, mostly in 2013.
However, Standard Motors faces challenges from concentrated
customer base. The company's top five customers include
Advance Auto Parts Inc.
O'Reilly Automotive Inc.
). These companies account for more than 10% of the company's
Other Stocks to Consider
Apart from Standard Motors, other stocks that warrant a look in
the same industry include
), which carries a Zacks Rank #1 (Strong Buy).