Technology

Why Is Cooper-Standard (CPS) Down 24% Since Last Earnings Report?

A month has gone by since the last earnings report for Cooper-Standard (CPS). Shares have lost about 24% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cooper-Standard due for a breakout? Before we dive into how investors and analysts have reacted as 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.

Cooper-Standard Q3 Earnings Miss Estimates, Revenue Tops

Cooper-Standard Holdings Inc. reported adjusted loss of 31 cents per share in third-quarter 2019 against the Zacks Consensus Estimate of earnings of 82 cents. The year-ago quarter’s profit was $1.05 per share. Unfavorable volume and mix, foreign exchange, as well as the sale of the company’s Anti-Vibration Systems resulted in the underperformance.

In the quarter under review, the company generated revenues of $729 million, lower than the year-ago figure of $862 million. However, revenues topped the Zacks Consensus Estimate of $703 million.

During the reported quarter, adjusted net loss was $5.2 million against the year-ago net income of $19.1 million. Adjusted EBITDA declined to $43.5 million from $69.6 million recorded in the third quarter of 2018.

Segmental Performance

Sales in the North America segment were $393.7 million, down from the year-ago figure of $471.5 million. During the quarter, adjusted EBITDA in the segment came in at $62.6 million, down from $71.6 million recorded in the prior-year period.

Sales in the Europe segment were $197.4 million, down from $228.3 million in third-quarter 2018. However, the segment’s adjusted EBITDA was $6.7 million, up a whopping 622% year over year.

The Asia Pacific segment reported sales of $112.6 million in the reported quarter, down from $136.2 million in third-quarter 2018. The segment recorded negative EBITDA of $22.9 million versus $1.2 million in third-quarter 2018.

The company’s South America segment generated sales worth $25.2 million during the quarter under review, slightly lower than $25.6 million in third-quarter 2018. The segment reported loss of $2.9 million, wider than the prior-year loss of $1.7 million.

Financials

Cooper-Standard had $323.1 million of cash and cash equivalents as of Sep 30, 2019 compared with $264.9 million on Dec 31, 2018. The company had long-term debt of $736 million, representing a debt-to-capital ratio of 44.4%

2019 Guidance

For 2019, the company anticipates sales in the range of $3-$3.1 billion, down from the previous view of $3-$3.2 billion. It expects adjusted EBITDA in the band of $190-$210 million, down from the earlier guidance of $270-$300 million. Further, the company expects capital expenditure in the range of $165-$175 million versus the prior guided range of $175-$185 million.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -143.48% due to these changes.

VGM Scores

At this time, Cooper-Standard has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Cooper-Standard has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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

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