On Jan 23, 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.
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Standard Motor's adjusted earnings per share in the 2012-third
quarter went up 23.7% year over year to 73 cents, surpassing the
Zacks Consensus Estimate by 9 cents. Revenues increased 16.8% to
$276.0 million, ahead of the Zacks Consensus Estimate of $258.0
million, driven by the positive impact from the company's recent
acquisitions and strong performance of the company's Temperature
Control segment. Over the past four quarters, Standard Motors has
delivered an average surprise of 0.33%.
Following the release of the third quarter results, the Zacks
Consensus Estimate for 2012 increased 7.9% to $1.77 per share.
Moreover, the Zacks Consensus Estimate for 2013 also increased
6.3% to $2.03 per share. With the Zacks Consensus Estimates for
both 2012 and 2013 going up, the company retains a Zacks Rank #1
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, increase in the number of
automobiles on the road and rise in the average age of vehicles
in the U.S.
However, the company 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 Motor, other stocks that are performing well
in the industry where the company operates include
). It retains a Zacks Rank #2 (Buy).