Tenneco Inc. (TEN - Analyst Report)
is a Zacks #1 Rank (Strong Buy) meeting or beating earnings in the
three of the last four quarters. The company has also has an attractive valuation that will interest aggressive growth investors.
Tenneco Inc. designs, manufactures, and sells emission control and
ride control products and systems for light, commercial, and
specialty vehicle applications worldwide. The company offers
emission control systems, such as catalytic converters and diesel
oxidation catalysts to reduce harmful gaseous emissions; diesel
particulate filters to eliminate particulate matter emitted from
diesel engines; burner systems, which combust fuel and air inside
the exhaust system; and hydrocarbon vaporizers and injectors.
Tenneco Inc. was founded in 1987 and is headquartered in Lake
TEN Meets or Beats Expectations in Three of Last Four Quarters
Tenneco has met or topped the Zacks Consensus Estimate three of
the last four quarters. Over the course of the last four reports,
met earnings estimates in the September 2011 quarter and then
missed in the December 2011 quarter. The company beat the Zacks
Consensus Estimate in the two previous quarters which included a
31% earnings beat in the March 2011 quarter. As a result of the
big beat, the stock traded off by nearly 5% the next day.
The September 2011 quarter saw earnings of $0.67, in line with the
Zacks Consensus Estimate. Revenue for the quarter was $1.77
billion which was approximately $43 million less than
expectations. The stock traded lower by more than 10% the
Tenneco Recently Reported Earnings
On February 2, 2012 the company reported revenue of $1.78 billion
roughly $68 million less than the Zacks Consensus Estimate and
higher than the $1.57 billion reported in the year ago period. EPS
of $0.52 was $0.06 lower than estimates or a miss of 10%.
the report, the stock moved higher by 14%.
Earnings Estimates Bumped Up
Following the most recent earnings report, analysts bumped up
their earnings estimates for 2012. The Zacks Consensus Estimate
for 2012 EPS moved from $3.39 in February 2012 to the current
level of $3.44. The 2013 estimate spiked higher following the
recent earnings release, moving from $4.30 in February to the
current level of $4.36.
Tenneco valuation is very low and compares quite favorably to the
industry average. The trailing twelve months PE multiple of 14x
is higher than the 12x industry average, but not by much. The
forward PE of 10.6x has TEN trading at a discount to the industry
average of 10.9x. The price to book is a higher than the 1.8x
industry average. The price to sales multiple of 0.3x is below
the 0.5x industry average to round out the metrics that aggressive
growth investors usually look at.
When we look at the price and consensus chart for Tenneco, we see
a stock that has had some near term volatility. The run in early
2011 sent the stock well above the estimate line implying the
stock was overvalued. As future estimates came out for 2012 and
2013, the higher levels of earnings served to increase the stock
price bringing the stock to more reasonable valuations. The
Tenneco valuation is very reasonable due to the mature industry,
but the growth in earnings and its consistency in meeting or
beating the number is why the stock is a Zacks #1 Rank (Strong
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
service You can follow him at twitter.com/bbolan1