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Tracey Ryniec

Standard Motor Products, Inc.

SMP

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Standard Motor Products, Inc. (SMP - Analyst Report) has put together a steady stream of earnings beats after surviving the Great Recession of 2008. Earnings are expected to grow by the double digits in 2011. This Zacks #1 Rank (strong buy) is also a value stock, with a forward P/E of 12.8.

Standard Motor makes replacement parts for the automotive aftermarket industry. It has 2 major segments, Engine Management, which manufactures a full line of engine management related products, and Temperature Control, which makes replacement parts for car air conditioning and heating systems.

Standard Motor Beat By 23% in the Third Quarter

On Nov 1, Standard Motor reported its third quarter results and surprised on the Zacks Consensus Estimate for the 6th straight quarter. Earnings per share were 59 cents compared with the consensus of 48 cents. Earnings were just 43 cents a year ago.

Sales rose 3.8% to $236.2 million from $227.5 million in the third quarter of 2010. The Engine Management segment led the quarter, with sales rising 7.6%.

Temperature Control saw a decline of 5.1% which was blamed on a timing difference in customer buying patterns from the previous year. In 2011, customers places orders early in the year when the company offered a pre-season dating program.

In 2010, the summer turned out to be hotter than expected which resulted in a rash of air conditioning sales. For the first 9 months of the year, Temperature Control sales jumped 8.7% over 2010.

The company has been strict about cost controls and this was reflected in gross margins which rose to 27.3% from 26.4% a year ago.

Zacks Consensus Estimates Rise

Standard Motor sees the industry environment as remaining "healthy." The analysts are also optimistic.

Since the earnings report, the 2011 Zacks Consensus Estimate has moved up 4 cents to $1.51 per share.

That is earnings growth of 41%.

Further earnings growth of 9.5% is expected in 2012. The 2012 Zacks Consensus Estimate jumped to $1.65 from $1.60 in the last week.

A Value Stock

Standard Motor is trading near a 2-year high but shares still have value.

In addition to a P/E under 15, which is what I look for in a value stock, it also has a price-to-book ratio of 1.8. A P/B ratio under 3.0 usually indicates value.

To top it off, Standard Motor also has a price-to-sales ratio of 0.5. A P/S under 1.0 usually means a company is undervalued and SMP is well under that level.

Additionally, the company also has a stellar 1-year return on equity (ROE) of 15.3%.

Shareholders are also rewarded with a dividend, currently yielding 1.5%.

Standard Motor is a value stock that also has growth. That's not a bad combination to have right now.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at traceyryniec.

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