) revealed that it expects original equipment (OE) revenues
between $6.4 billion and $6.8 billion for 2013, including
commercial vehicle revenues of $0.9 billion-$1.1 billion. This
reflects an anticipated rise of 4.9%-11.5% from OE revenues of
$6.1 billion in 2012.
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OE revenues mean revenues generated from parts sold directly for
use by original equipment manufacturers (OEMs). As a result,
demand for OE parts market is mainly a function of the vehicles
production volumes by OEMs.
Tenneco believes higher light vehicle production in North
America, South America and China will act as a catalyst for OE
revenues growth during the year. However, the company thinks
commercial vehicle revenues will mainly improve later in the year
when vehicle manufacturers prepare for regulatory changes (Tier 4
final, Europe Stage 4 off-road and Euro VI) coming into effect in
For 2014, the leading supplier of automotive OEM parts
anticipates OE revenues between $7.2 billion and $7.7 billion,
including commercial vehicle revenues of $1.3 billion to $1.6
billion. The improvement in the year will be driven by betterment
of macroeconomic conditions globally, resulting in stronger light
and commercial vehicle volumes. Further, the company expects to
benefit from significant incremental commercial vehicle content
as regulatory changes take place.
Tenneco's projections were based on forecasts made by IHS
). For 2013, IHS Automotive expects OE light vehicle production
to go up 3% in the regions where Tenneco operates. According to
IHS, full-year production is expected to rise 3% in North
America, 9% in China, 4% in South America and 8% in India but
decline 3% in Europe due to uncertain macroeconomic environment.
Tenneco, a Zacks Rank #5 (Strong Sell) stock, reported an
adjusted profit of $40.0 million or 66 cents per share in the
fourth quarter 2012, up 25% from $32.0 million or 53 cents in the
corresponding quarter a year ago. However, earnings missed the
Zacks Consensus Estimate by 2 cents.
Revenues decreased 1.7% to $1.75 billion, which was lower than
the Zacks Consensus Estimate of $1.78 billion. Excluding
substrate sales and currency impact, revenues increased 1.9% to
$1.39 billion. The year-over-year increase in revenues was
attributable to a rise in sales volume of light vehicles in North
America and China and higher North American aftermarket sales.
While we prefer to avoid Tenneco until we see signs of
improvement in the company's performance, other auto stocks that
are worth a look include
Commercial Vehicle Group Inc.
). They carry a Zacks Rank #1 (Strong Buy).