On Oct 9, we upgraded
TRW Automotive Holdings Corp.
) to Outperform based on improved earnings in the second quarter
of 2013 and improved guidance for the year. In addition, benefits
from its market leading position and investment in innovative
technologies that enable it to achieve contract wins are the
other drivers for the bullish stance.
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Why the Upgrade?
On Jul 30, TRW reported earnings that increased 17.4% to $2.02
per share in the second quarter of the year from $1.72 (all
excluding special items) a year ago and exceeded the Zacks
Consensus Estimate of $1.70.
Revenues in the quarter grew 6.5% to $4.5 billion, driven by
strong demand for TRW's innovative technologies and higher
vehicle production volumes in North America and China. Revenues
were higher than the Zacks Consensus Estimate of $4.4 billion.
Following the release of the second quarter results, the Zacks
Consensus Estimate for 2013 increased 4.9% to $6.64 per share.
The Zacks Consensus Estimate for 2014 increased 3.4% to $7.66 per
share. Currently, TRW retains a Zacks Rank #2 (Buy).
TRW Automotive is globally recognized as one of the largest and
most diversified suppliers of automotive systems, modules and
components to Original Equipment Manufacturers and the related
aftermarket. The company benefits from its constant efforts to
upgrade and improve its vast product portfolio, which is capable
of generating top- and bottom-line growth even during a soft
TRW's credit rating was upped to 'BBB-' from 'BB+' by Standard
& Poor's (S&P) Ratings Services. The revision in TRW's
rating is based on solid performance by the company in the second
quarter of 2013, strong cash flow and expectation of better
performance in the future.
For full year 2013, TRW anticipates production of 16.1 million
units in North America and 18.6 million units in Europe. Revenues
for 2013 are expected in the range of $16.8 billion to $17.0
billion compared with $16.4 billion recorded in 2012.
Other Stocks to Consider
Some other stocks that are performing well in the industry where
TRW operates include
Magna International Inc.
). All these companies carry a Zacks Rank #1 (Strong Buy).