Markets
SMP

Standard Motor (SMP) Down 2% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Standard Motor Products, Inc.SMP . Shares have lost about 2% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Standard Motor Q1 Earnings and Revenue Beat Estimates

Standard Motor's adjusted earnings of $0.74 per share beat the Zacks Consensus Estimate of $0.65, an increase from $0.55 earned in the prior-year quarter. Adjusted earnings from continuing operations increased to $17.1 million from $12.6 million in the year-ago quarter.

Earnings from continuing operations on a reported basis, amounted to $16.4 million or $0.70 per share, rising from $12.7 million or $0.55 in the prior-year quarter.

Total revenue also rose to $282.4 million from $238.9 million a year ago, surpassing the Zacks Consensus Estimate of $264 million.

Gross profit in the first quarter of 2017 increased to $84.1 million from the year-ago quarter figure of $73 million. Adjusted operating income, excluding restructuring and integration expenses, improved to $26.7 million from $20 million in the year-ago quarter.

Segment Results

Revenues at the Engine Management segment rose to $211.3 million in the reported quarter from $180.6 million a year ago. Operating profit was $28.1 million (13.3% of sales) compared with $24.2 million (13.4% of sales) in the prior-year quarter.

Revenues at the Temperature Control segment increased to $70.3 million from $56.7 million a year ago. The segment recorded an operating profit of $4.7 million (6.7% of sales) compared with a profit of $2.4 million (4.2% of sales) in the first quarter of 2016.

Revenues at the All Other segment decreased to $774 million from $1.5 million a year ago. The segment recorded an operating loss of $6.04 million, narrower than $6.6 million in the first quarter of 2016.

Financial Position

Standard Motor had cash balance of $15.6 million as of Mar 31, 2017, compared with $13.4 million as of Mar 31, 2016. Total debt of the company was $111,000 as of Mar 31, 2017 compared with $158,000 as of Mar 31, 2016.

In the first quarter of 2017, Standard Motor used $26.8 million cash for operating activities compared with $1.3 million used in the prior-year period. Capital expenditures were $3.2 million, down from the year-ago level of $4.1 million.

Business Update

Apart from General Cable integration, the company will be relocating the balance of its Grapevine, TX operation to Reynosa, Mexico which is expected to be completed by the end of the year. Standard Motor also plans to shift its electronics plant in Orlando, FL, to an existing facility in Independence, KS to be complete by mid-2018. These actions are expected to lead to significant additional savings.

How Have Estimates Been Moving Since Then?

It turns out that fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

Standard Motor Products, Inc. Price and Consensus

Standard Motor Products, Inc. Price and Consensus | Standard Motor Products, Inc. Quote

VGM Scores

At this time, Standard Motor's stock has a subpar score of 'D' on both growth and momentum front. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth and momentum investors.

Outlook

The stock has a Zacks Rank #2 (Buy). We expect above average returns from the stock in the next few months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Standard Motor Products, Inc. (SMP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SMP

Other Topics

Earnings