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