On June 7, we maintained our Outperform recommendation on
Standard Motor Product Inc.
) based on its strong brand recognition, less cyclical
end-market, efficient debt management measures, and impressive
2013-first quarter performance.
Why the Reiteration?
On May 3, Standard Motor reported a staggering 82.6% rise in
adjusted earnings per share to 42 cents in the first quarter of
2013 from 23 cents in the year-ago quarter. Earnings per share
also surpassed the Zacks Consensus Estimate by 10 cents. Profits
went up 79.6% to $9.7 million from $5.4 million in the year-ago
Total revenue increased 9% to $230.7 million, missing the Zacks
Consensus Estimate of $234.0 million. The year-over-year growth
in revenues was attributable to the positive impact from the
company's acquisitions and strong performance of the company's
Temperature Control segment.
Following the release of the first quarter results, the Zacks
Consensus Estimate for 2013 increased 5.9% to $2.33 per share.
Moreover, the Zacks Consensus Estimate for 2014 increased 5.8% to
$2.55 per share. With the Zacks Consensus Estimates for both 2012
and 2013 going up, the company retains a Zacks Rank #1 (Strong
Standard Motor benefits from its strong brand recognition. With a
focus on the aftermarket, the company is less exposed to the
cyclical automotive industry. The company will benefit from
rising demand for repair products on the back of 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 over 10% of its revenues.
Other Stocks to Consider
Apart from Standard Motor, other stocks that are performing well
in the broader industry include
Tower International, Inc.
). It retains a Zacks Rank #1 (Strong Buy).
ADVANCE AUTO PT (AAP): Free Stock Analysis
O REILLY AUTO (ORLY): Free Stock Analysis
STANDARD MOTOR (SMP): Free Stock Analysis
TOWER INTL INC (TOWR): Free Stock Analysis
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