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Motor Products, Inc. (SMP - Analyst Report)
been on the Zack’s radar for some time now and recently moved back into
Zacks Rank 1 spot. Back in early November
with the stock around $18, we noted the parts company as a good value
a forward price to earnings multiple of 12.8 and a moderate dividend
yield of 1.5%.
It was also cited for its momentum and growth about 40 days later.
earned recognition through a
string of earnings beats and stable growth after the Great Recession of
and automotive bailouts. SMP proved
itself to not only be a survivor, but a thriving company with room to
Standard Motor is a small cap company
that makes replacement parts for the automotive aftermarket industry.
It has 2
major segments, Engine Management, which manufactures a full line of
management related products, and Temperature Control, which makes
parts for car air conditioning and heating systems.
distribute parts under our own
brand names, such as Standard, BWD, Hayden and Four Seasons, and
private labels around the world.
quarter the company reported
Earnings per share of 59 cents compared with the consensus of 48 cents.
Earnings were just 43 cents a year ago.
This strength came predominantly via the Engine Management Segment.
rose 3.8% to $236.2 million
from $227.5 million in the third quarter of 2010. The Engine Management
led the quarter, with sales rising 7.6%.
Back on November 1, Standard beat Zacks
consensus estimates by 23% and surprised analysts for the 6th
quarter in a row. They will be releasing
Q4 results later today and expectations are for SMP to earn 16 cents a
share. Their earnings date was pushed back a bit
from its original release due late last month.
Motor Products' profit has
risen year over year by an average of 37.6% over the past five
Revenue has now gone up for three straight quarters and analysts are
for growth to exceed 11% in the coming year (FY2012).
the strength in sales and
pricing that we have been seeing across the automotive industry, it
logical that Standard Motor will reap those benefits. We also
saw strength in the parts companies
like Auto Zone and O’Reilly Auto Parts.
After the Report
Normally we wouldn’t write about a
stock reporting that day, but with SMP, I believe there are three ways
prospective investor can look at the situation.
1. If the report is good or in-line
with estimates and guidance for the future is in-line or better that
you may see a pullback in the stock, which would allow for a more
2. If the report blows away estimates
and forward guidance is at the top of the range or better shares may
higher. Even with a move higher, the value will remain and the stock
momentum in the days and
weeks following the report.
3. If the report is just plain lousy
and they miss on all levels, then perhaps it may be time to reevaluate
and look for another stock.
possibility of a completely
devastating report that misses estimates sharply is low; but remembers
weather has been mild this winter (their
Temperature Control segment was weak last quarter) and economic growth
spotty and slow.
SMP represents a stock that
could still have some serious value in a market that remains cautiously
with a P/E that is below the market historical average of 15 and a
recent history of earnings growth.
are above the 50 and 200 day
moving averages, which you can look to for support on a move lower.
A Levy is the Momentum Stock
Strategist for Zacks.com. He is also the Editor in charge of the
Whisper Trader Service.